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Mr Philip Hollobone (Kettering) (Con)
The Secretary of State for Health (Mr Jeremy Hunt)
Under this Government, the amount recovered from international visitors has trebled from £81 million to £289 million. Yesterday, I announced that we were going further by introducing upfront ID checks and payment for elective care, stopping IVF being available for those who pay the health visa surcharge and asking GPs to help to identify European citizens at the point of registration so that we can recharge their costs to their home country.
Mr Hollobone
My constituents in Kettering welcome the Government’s latest crackdown on this abuse of our national health service at a time when we are struggling to find enough money to pay for the care of elderly people who have paid into the NHS all their lives. We simply cannot afford to provide a free international health service.
Mr Hunt
My hon. Friend is absolutely right. It is a national health service, not an international health service. I was disappointed to see comments from the Opposition yesterday that the money this would raise would be a drop in the ocean—[Hon. Members: “It is.”] We are seeking to raise £500 million. That is enough to finance 5,000 GPs, who could help the constituents of everyone in this House.
Mr Ben Bradshaw (Exeter) (Lab)
Is it not a coincidence that, whenever we hear about disastrous figures for NHS performance and a huge deterioration in waiting times, as we did at the weekend, the Government re-announce yet another measure to crack down on health tourism? Is not the main problem with our health and social care system the fact that it is chronically underfunded, and that this Government are doing nothing about it?
Mr Hunt
I will tell the right hon. Gentleman what we are doing about the underfunding. We are raising three times more from international visitors than when he was a Health Minister, and that is paying for doctors, nurses and better care for older people in his constituency and in all our constituencies.
Dr Sarah Wollaston (Totnes) (Con)
Given the Government’s stated objective of reducing health inequalities, will the Secretary of State set out how he will guarantee that those who are, for example, homeless or who have severe enduring mental illness—the most disadvantaged in our society, who are unlikely to have the required documentation—will receive the treatment they need?
Mr Hunt
I can absolutely reassure my hon. Friend. What we are doing is based on good evidence from hospitals such as Peterborough hospital, which has introduced ID checks for elective care and has seen absolutely no evidence that anyone who needs care has been denied it. This is not about denying anyone the care they need in urgent or emergency situations; it is about ensuring that we abide by the fundamental principle of fairness so that people who do not pay for the NHS through their taxes should pay for the care we provide.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
Has the Secretary of State actually been recently to a clinical commissioning group like ours in Huddersfield, where one more duty would really break the camel’s back? We have just heard that the CCG is changing its constitution, excluding GPs and totally changing the nature of the CCG. Like most of them, our CCG is under-resourced and under stress, and asking it to do something else like this, which will be complex, difficult and perhaps impossible, will kill the poor bloody animal.
Mr Speaker
With reference to foreign nationals, and including a question mark at the end of the hon. Gentleman’s observations.
Mr Peter Bone (Wellingborough) (Con)
When I was in the travel industry, I learned that anyone wanting to travel to, say, America had to have medical insurance. Could it not be a requirement for people coming into this country to ensure that they had such insurance?
Mr Hunt
We looked at this extremely carefully, and I have a lot of sympathy with what my hon. Friend is saying. People do not have to have medical insurance if they visit countries such as America as a tourist, and we do not want to insist on that for visitors to this country because of our tourism industry here. We concluded that it was better to have a system in which people who get a visa to come and live here have to pay a surcharge. That is why we have introduced the visa health surcharge, which raises several hundred million pounds for our NHS.
Helen Jones (Warrington North) (Lab)
I have always supported the view that we are not running an international health service, but as well as directing his energies towards that question will the Secretary of State direct them towards stopping the waste of money that occurs elsewhere in the NHS when highly trained surgeons and theatre teams are forced to wait to operate because beds are not available for their patients and have to spend their time doing nothing? How much is wasted in that way because of the chronic underfunding that this Government have introduced?
Rehman Chishti (Gillingham and Rainham) (Con)
The Parliamentary Under-Secretary of State for Health (David Mowat)
My hon. Friend will be aware that polio was eradicated from the UK in the 1980s. However, between 25% and 80% of sufferers go on to development post-polio syndrome, a condition that, although not life-threatening, can be debilitating. The NHS response centres on structured self-management and pain relief and increasing referrals to both physio and occupational therapy.
Rehman Chishti
As parliamentary ambassador for the British Polio Fellowship, I know that 93% of people are unaware of post-polio syndrome. Low awareness among GPs, and in the NHS more generally, is leaving patients waiting for up to six years for a diagnosis. Will the Government agree to fund a PPS awareness campaign?
David Mowat
I congratulate my hon. Friend on his work for the British Polio Fellowship, which is a good charity that makes a real difference. He is right that the condition is difficult to diagnose; the symptoms are vague and there is no definitive test. NICE is updating its best practice, and the British Polio Fellowship has developed guidelines that we all need to use to build GP awareness of the condition.
Jim Shannon (Strangford) (DUP)
As the Minister said, there is no specific test for diagnosing PPS, so will he outline what information is offered to medical professionals to diagnose and treat the syndrome to ensure that the symptoms are correctly collated and not put down to other untestable issues, such as fibromyalgia?
David Mowat
As I said, the symptoms are vague and there is no definitive test. As my hon. Friend the Member for Gillingham and Rainham (Rehman Chishti) pointed out, awareness of the condition among GPs is not as high as it could be, so we need to do more, with the NICE guidelines and the work of the British Polio Fellowship, on GP education, training and information.
Chris Green (Bolton West) (Con)
Lucy Frazer (South East Cambridgeshire) (Con)
The Secretary of State for Health (Mr Jeremy Hunt)
In the last four years, 31 trusts have been put into special measures—more than one in 10 of all NHS trusts. Of those, 16 have now come out, and I congratulate the staff of Addenbrooke’s and all at Cambridge University Hospitals NHS Foundation Trust, which came out of special measures last month.
Let me also take this opportunity to thank Professor Sir Mike Richards, who has announced his retirement as chief inspector of hospitals. His legacy will be a safer, more caring NHS for the 3 million patients who use it every week. He can feel extremely proud of what he has achieved.
Chris Green
Royal Bolton hospital was in special measures four years ago, but it has since come out following a huge amount of hard work. The trust is now running a surplus, which is being reinvested into patient care. Will my right hon. Friend join me in congratulating all the staff on their excellent hard work?
Mr Hunt
I am happy to do so. It is a fantastic example of what is possible in challenging circumstances with a lot of pressure on the frontline, so the staff should feel proud. Trusts put into special measures go on to recruit, on average, 63 more doctors and 189 more nurses and see visible improvements in the quality of patient care.
Lucy Frazer
The Secretary of State is right to congratulate Addenbrooke’s, which came out of special measures in the last month due to the dedication of its staff, but we still need to reduce pressure on the A&E. One way of doing that is to increase care locally in rural hubs. Does the Secretary of State agree that money spent on the minor injuries unit at Ely’s Princess of Wales hospital would be money extremely well spent?
Mr Hunt
I remember visiting my hon. Friend in Ely last autumn, and I know how much she campaigns and cares for her local health services. The Cambridgeshire and Peterborough CCG knows the importance of Ely’s minor injuries unit. It is setting up some public engagement meetings, but if any changes are deemed necessary, I reassure her that there will be a formal consultation before anything happens.
Heidi Alexander (Lewisham East) (Lab)
The Heath Secretary’s self-congratulatory tone is astonishing. In the last year, the number of people waiting longer than four hours in A&E has increased by 63%, the number of people waiting on trolleys has gone up by 55%, and the number of delayed discharges is up by 22%. While all of us want hospitals in special measures to improve, what is the Health Secretary’s answer to those urgent problems that affect the NHS across the board?
Mr Hunt
I will tell the hon. Lady what is happening in the NHS compared with when her party was in power: 130 more people are starting cancer treatment every single day; 2,500 more people are being seen in A&Es within four hours every single day; and there are 5,000 more operations every single day. None of that would be possible if we cut the NHS budget, which is what her party wanted to do.
Neil Coyle (Bermondsey and Old Southwark) (Lab)
Norfolk and Suffolk NHS Foundation Trust has been taken out of special measures, despite continued growth in the number of people with mental health problems dying in unexpected or avoidable circumstances from things such as suicide. “Panorama” and the Health Foundation have shown that in 33 trusts the number of avoidable deaths has doubled in the last three years as those trusts have collectively experienced a real-terms cut of £150 million. What specific measures is the Secretary of State taking to tackle the problem of avoidable deaths of people with mental health problems?
Mr Hunt
We have committed, and the Prime Minister affirmed the commitment only last month, to spend £1 billion more every year on mental health services, but we recognise that it is not just about money. It is also about having a proper suicide prevention plan—we have updated the plan—and making sure that, across the NHS, we properly investigate and learn from avoidable deaths. That is why, following the tragedy of what happened at Southern Health, we have now started a big new programme—the first of its kind in the world—whereby every trust will publish its number of avoidable deaths quarterly.
Huw Merriman (Bexhill and Battle) (Con)
Mr Hunt
I join my hon. Friend in doing that. It is really important, contrary to what the former shadow Health Secretary, the hon. Member for Lewisham East (Heidi Alexander), says, that we praise NHS staff when they do remarkable things. There is a lot of pressure everywhere in the NHS, and praising NHS staff is not being self-congratulatory; it is recognising when a good job is being done.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
Further to the very important question of my hon. Friend the Member for Bermondsey and Old Southwark (Neil Coyle), Members on both sides of the House may have seen “Panorama” last night. Frankly, it was shocking and disgusting. I am ashamed to live in a country where in the past year there have been over 1,000 more unexpected deaths under the care of our mental health trusts. That is not a reflection of a country that cares equally about mental health and physical health. In spite of what the Secretary of State just told us, the money is not getting to where it is intended. What is he actually going to do to ensure that no person in our country—not a single person—loses their life because they have a mental health condition for which they are not being treated properly?
Mr Hunt
I agree with the hon. Lady that there is a huge amount that we need to do to improve mental health provision in this country, but a huge amount has been done and is being done. As she knows, we are now seeing 1,400 more people every day with mental health conditions. We are committing huge amounts of extra money to mental health provision, and we are becoming a global leader in mental health provision, certainly according to the person in charge of the Royal College of Psychiatrists. We have to support the efforts happening in the NHS, because we are one of the best in the world.
Simon Hoare (North Dorset) (Con)
The Secretary of State for Health (Mr Jeremy Hunt)
Last month the Prime Minister made a major speech in which she made it clear that improving the mental health of children and young people is a major priority for this Government. My Department will work with the Department for Education to publish an ambitious Green Paper outlining our plans before the end of the year.
Simon Hoare
I am grateful to my right hon. Friend and the Prime Minister for their commitment to this important area of health and the parity that the Government are giving it. Does the Secretary of State agree that, as well as providing mental health support in both schools and colleges, community hospitals, due to their locality, status and scale, can often provide a useful forum for providing these vital services?
Mr Hunt
I am pleased that my hon. Friend raises that point, because when we discuss mental health we often talk about services provided by mental health trusts but do not give enough credit to the work done in primary care, both in community hospitals and by general practitioners, who have a very important role as a first point of contact. He is absolutely right to make that point.
Dame Rosie Winterton (Doncaster Central) (Lab)
Will the Green Paper look at the role that educational psychologists could play not only in providing support and assistance to young people with mental health problems but in preventive work? Cuts in local authority budgets have meant that the service has become quite fragmented, but there are practical ways in which it could be improved to help young people with mental health problems.
Mr Hunt
The right hon. Lady is absolutely right. We have looked into this and realised that there are two issues when it comes to improving children’s and young people’s mental health. The first is improving access to specialist care for those who need it. The other is prevention: the work that can be done by teachers within schools and in training people in mental health first aid. Those kinds of things can make a huge difference and we want to make sure we do them both.
Mr Charles Walker (Broxbourne) (Con)
I welcome the Secretary of State’s focus on child and adolescent mental healthcare, but what is he going to do about out-of-area transfers, which too often mean that children are found beds 200 or 300 miles away from their home? That is not in anyone’s interest, and it certainly is not in a child’s interest to be that far away from their support network.
Mr Hunt
I thank my hon. Friend for his continuing campaign on mental health issues. He is right to say that this situation is completely unacceptable, not least because if we want a child to get better quickly, the more visits from friends and family they can have, the better it is and the faster their recuperation is likely to be. We have commissioned 56 more beds, so the total number of beds commissioned for children is at a record 1,442, but we are determined to end out-of-area treatments by the end of this Parliament.
Ian Austin (Dudley North) (Lab)
No one is going to disagree with what the Secretary of State has said, but it is not going to help people at Dove house in Dudley, which has been helping people with mental health problems since the 1970s but faces closure this year, for the want of quite a small amount of money. Will he look at this personally and do everything he can to keep this valuable facility open? It is closing because Dudley is losing 20% of its funding, which compares with the figure of just 1% in Surrey, which he represents.
Mr Hunt
Dudley CCG has seen its funding go up, and we are asking all CCGs to increase the proportion of their spend on mental health. I am happy to look into the situation the hon. Gentleman talks about, but I will be very disappointed if increasing resources are not going into mental health provision in Dudley.
Mark Pawsey (Rugby) (Con)
Will the Secretary of State say a little more about how children’s mental health services can work more closely with schools and the education system more broadly?
Mr Hunt
I am happy to do that. Some interesting innovation is going on in many parts of the country. In Hove, a school I visited has a CAMHS––child and adolescent mental health services—worker based full-time in the school. That had a transformational effect, as it meant teachers always had someone they knew they could talk to and their understanding of mental health improved. That is the kind of innovation we want to encourage.
Mr Gregory Campbell (East Londonderry) (DUP)
Further to that, what pressure and persuasiveness is the Minister bringing to bear in the education system, particularly in primary schools, where young people have, on occasion, had this kind of a diagnosis and problems have been created within the school environment?
Mr Hunt
This is a very important issue because, as the hon. Gentleman knows, half of all mental health conditions are diagnosed before or become established before people are 14, and the sooner we catch them, the better the chance of giving someone a full cure. We therefore need to find a way whereby there is some mental health expertise in every primary school, so we can head off some of these terrible problems.
Barbara Keeley (Worsley and Eccles South) (Lab)
As my hon. Friends the Members for Bermondsey and Old Southwark (Neil Coyle) and for Liverpool, Wavertree (Luciana Berger) have already said, last night’s “Panorama” showed that mental health services are not funded properly. At the Norfolk and Suffolk mental health trust funding cuts led to community teams being disbanded, a loss of staff and the loss of in-patient psychiatry beds. Most disturbing of all is to hear parents talk of what happens to their children when they are denied support in a crisis—when they are self-harming or suicidal but there are no in-patient beds. One parent called it a “living nightmare”. We do not need any more warm words from this Secretary of State—we need action to make sure that mental health services are properly funded and properly staffed.
Mr Hunt
Let me tell the hon. Lady what action is happening this year. The proportion of CCG budgets being assigned to mental health is increasing from 12.5% to 13.1%, which is an increase of £342 million. That is action happening today because this Government are funding our NHS.
Craig Williams (Cardiff North) (Con)
The Parliamentary Under-Secretary of State for Health (Nicola Blackwood)
The Government recognise the value of surrogacy in helping people who cannot have children to create a family. Surrogacy legislation is now more than 30 years old. In view of changes across society, it is time for an independent review of the legislation, so we have asked the Law Commission to include a project about surrogacy in its proposed work programme for 2017 to 2019.
Craig Williams
The Minister will be aware of the work of my constituent Nicola and Surrogacy UK, to which I pay tribute. I very much welcome the Minister’s answer, but will she say something specifically about the remedial order to address the situation for single parents, for which my constituent Nicola is waiting?
Nicola Blackwood
My hon. Friend has raised this difficult case with me before, and my sympathies go to his constituent. He is right that the High Court has judged that the current provisions for parental orders are discriminatory. The Government are obliged to act within a reasonable timescale, so we will be introducing a remedial order this spring. I am pressing for that to happen by May, but I am in the hands of the business managers. I shall keep the House and my hon. Friend updated.
Karin Smyth (Bristol South) (Lab)
The Minister of State, Department of Health (Mr Philip Dunne)
Sir Robert Naylor’s report on the NHS estate will be published shortly. In developing his recommendations, he has worked and engaged with leaders from across the NHS. This will ensure that his recommendations are informed by sustainability and transformation plans, and are designed to help to support their successful delivery.
Karin Smyth
I look forward to seeing the report, which has been due “shortly” for a while. Knowle West health park in my constituency is exactly the sort of community-based model that we should be promoting in STPs. It was established by the NHS and the council to prevent illness, to promote good health and to assist recovery after medical treatment. However, the NHS Property Services regime means that its bill has increased more than threefold—from £26,000 to £93,000. What assurances can the Government give that the Naylor report will ensure that there is co-operation on estates planning so that my constituents, who rely on the health park’s contribution to preventing ill health, can face the future with confidence?
Mr Dunne
We have already accepted one of Sir Robert Naylor’s recommendations ahead of the publication of his report, which is to look into bringing together NHS Property Services and other estates services in the NHS. With regard to allocations to the clinical commissioning group, the Department of Health has provided £127 million to CCGs precisely to contribute towards increases in the move towards market rents for property.
James Duddridge (Rochford and Southend East) (Con)
Keith Vaz (Leicester East) (Lab)
In Leicester, the CCG is proposing to close a walk-in centre in North Evington and move it to another part of the city. Rather than being a walk-in centre, it will become a drive-in centre. Does the Minister agree that it is important that local people are consulted fully on the proposals?
Mr Dunne
As the right hon. Gentleman knows, service reconfigurations require public consultation. I am not sure whether that particular walk-in centre qualifies, but I am happy to have a look at that. A number of walk-in centres were established under the previous Government in a random way, and they need to be located more appropriately for local people.
Sir Simon Burns (Chelmsford) (Con)
Does my hon. Friend agree that the driving force of STPs is to improve and enhance patient care for our constituents? With regard to the STP for mid-Essex, will he confirm that no proposal that has been put forward involves any closure of an A&E and that, far from downgrading the existing A&Es, this is about upgrading the quality of care for my constituents?
Mr Dunne
My right hon. Friend is a regular attender at Health questions, and I am pleased to be able to confirm to him, once again, that the success regime for mid-Essex is looking at the configuration of the three existing A&Es, none of which will close, and each of which might develop its own specialty.
Justin Madders (Ellesmere Port and Neston) (Lab)
Analysis of the STPs by the Health Service Journal this week found that a substantial number of A&E departments throughout the country could be closed or downgraded over the next four years. The Royal College of Emergency Medicine has described that approach as “alarming”. Over the past month, we have all seen images of A&E departments overflowing and stretched to the limit, so surely now is not the time to get rid of them. Will the Minister pledge today that the numbers of both A&E beds and A&E departments will not be allowed to reduce below their current level?
Mr Dunne
The hon. Gentleman is right to point out that the STPs are looking at providing more integrated care across localities. A number of indicative proposals have to be worked through. At the moment, NHS England is reviewing each of the STPs, and the results will be presented to the Department for its consideration in the coming weeks and months. On bed closures, I gently remind him that, in the past six years of the previous Labour Government, more than 25,000 beds were closed across the NHS. In the six years since 2010, fewer than 14,000 were closed by this Government and the coalition.
Marie Rimmer (St Helens South and Whiston) (Lab)
Liz McInnes (Heywood and Middleton) (Lab)
The Parliamentary Under-Secretary of State for Health (David Mowat)
The relationship between health and social care budgets is complex. A recent study by the University of Kent has shown that, for every pound spent on care, hospital expenditure falls by between 30p and 35p. The hon. Lady will also be aware that there has been an increase in delayed transfers of care over the past two years, which has resulted in an increase in the number of unavailable hospital beds. Our best estimate of that increase is around 0.7% of total NHS bed capacity due to the increase in social care delays.
Marie Rimmer
It is quite amazing that the Minister is prepared to stand up and accept that there is a crisis in the NHS caused by the lack of social care provision. The crisis in social care means that more and more local authorities are reduced to just washing, feeding and toileting our elderly people. The crisis in residential care means that people from homes are going into the hospitals and choosing to leave the patients with the most complex needs, because they cannot afford the staff to look after them—
Mr Speaker
Order. I apologise for interrupting the hon. Lady, but we must have a question: one sentence and a question mark, thank you.
Marie Rimmer
There is no comfort for our elderly people. It is not too late for the Government to act. I ask the Minister to look at protecting social care funding. Will he bring forward the £6 billion and the £700 million—
Mr Speaker
Order. I am sorry, but there is a lot to get through. It is not fair on other colleagues.
Mr Speaker
Order. I am sorry. I say to the hon. Lady without fear of contradiction that we must spread things out evenly.
David Mowat
I agree that budgets make a difference, which is why we are increasing spending by £7.6 billion over this Parliament, but so do leadership, grip and best practice. Some 50% of all delayed transfers that are due to social care delays occur in 24 local authorities. Many other local authorities have virtually no delays. I recently visited the IASH team—Integrated Access St Helens—in the hon. Lady’s own constituency, which, working with Whiston hospital, has achieved spectacular results and some of the best outcomes in the country. I am sure that she will want to join me in congratulating those responsible.
Liz McInnes
My local council of Rochdale has had to make cuts of £200 million in the past six years. It has a further £40 million of cuts to implement, which will pile the pressure on our social care budgets. The 2% precept will raise only £1.4 million, which is a drop in the ocean when our total adult social care budget is £80 million. With our hospitals reporting a 70% increase in delayed discharges, I call on the Minister to bring forward the better care fund scheduled for the end of this Parliament so that our social care services can cope now.
David Mowat
As a direct answer to the hon. Lady’s question on the improved better care fund, let me tell her that it will be allocated in such a way that the combination of the fund and the precept will address real need. That is what we will be doing during the remainder of this Parliament, starting from April. We spend more on adult social care in this country than Germany, Canada and Italy, but it is very important that we spend it well.
Helen Whately (Faversham and Mid Kent) (Con)
It was good to hear my hon. Friend referring to the University of Kent’s research.
Under the guidance of the vanguards and the sustainability and transformation plan, NHS and social services in Kent are working closer together than ever before, although there is still further to go. Does my hon. Friend agree that it is vital that we overcome the barriers between social services and the NHS so that they operate more as one system, meaning that patients can get the sort of care they need in the right place, preferably at home?
David Mowat
My hon. Friend makes a good point about the success of the vanguard in Kent. Last week I visited the care home vanguard in Sutton, which has achieved a 20% reduction in A&E admissions due to better integration and the sort of things that she mentions as being successful in Kent.
Andrew Stephenson (Pendle) (Con)
If the Minister watched BBC News last night, he might have seen footage showing the extreme demand for treament in Royal Blackburn hospital’s A&E department and the pressure that it is under. We could point to social care changes but, in reality, the situation is down to the closure of Burnley general hospital’s A&E department in 2008 under the previous Labour Government. What more can we do to support and reduce pressure on A&E departments?
David Mowat
My hon. Friend is correct in so far as two thirds of all delayed transfers of care are a consequence of internal NHS issues, not issues between the NHS and councils. The issue regarding Blackburn and Burnley is part of that.
Barbara Keeley (Worsley and Eccles South) (Lab)
Recent figures on delayed transfers of care ranked Salford 105th out of 154, with 533 delayed days in November 2016. Sir David Dalton has said that overcrowding at Salford Royal hospital is due to its
“inability to transfer patients safely to an alternative care setting”,
and that changes to social care funding are “urgently required”. Salford Council’s budget has been cut by 40% since 2010, leading to the loss of £18 million from social care budgets. Salford royal hospital, rather than the council, is now providing social care. I know that the Health Secretary respects Sir David. Does Minister accept Sir David’s view about the need for funding changes, or will he continue to find people to blame for cuts inflicted by his Government?
David Mowat
Conservative Members very much respect Sir David Dalton. I remind the hon. Lady that she stood for election on a slogan of not a penny more for local government, so it is entirely inappropriate for her to say different things now. There is now an opportunity in Manchester, through the devolution deal, to integrate care and the NHS more effectively, and I expect that to happen.
Paul Blomfield (Sheffield Central) (Lab)
The Parliamentary Under-Secretary of State for Health (David Mowat)
Best trend data come from the GP patient survey, which collates feedback from more than 2 million patients biannually. The most recent results show that 92% of patients found their appointment to be convenient—a slight increase on previous results—and that 86% of respondents rated their overall experience of their GP’s surgery as good.
Paul Blomfield
The Minister knows that there was a 30% rise in waiting times in 2016—that is one of the key concerns that constituents raise with me. Local GPs tell me that one of the main pressures they face is the failing social care system. The Minister knows that the answers he gave a moment ago do not address the problem, so will he commit to doing something meaningful?
David Mowat
The answer I gave a moment ago was the results of the GP patient survey. The Government and I accept that the country needs more GPs. GPs are the fulcrum of the NHS, and we have plans for a further 5,000 doctors working in primary care by 2020. We intend to add pharmacists, clinical pharmacists and mental health therapists as part of the solution.
John Howell (Henley) (Con)
David Mowat
The Government are committed to GPs offering appointments seven days a week, 8 am until 8 pm, by 2020. By 2018, we will have rolled that out in London. Part of this is about GPs working smarter in integrated hubs of between 30,000 and 40,000 patients, thus enabling them to spread out and to offer services such as pharmacy, physio and social care.
Joan Ryan (Enfield North) (Lab)
In a survey of Enfield North residents that I conducted, 58% agreed that it is difficult to get a GP appointment. The Royal College of General Practitioners has calculated that Enfield needs 84 more GPs by 2020, but between 2010 and 2014, we lost 12 practices and had only one opened. If the 5,000 GPs appear by 2020, what will the Minister do to ensure that Enfield gets those it needs?
David Mowat
As I said earlier, we will have 5,000 further doctors working in general practice by 2020. A chunk of those will be available for every part of the country, and Enfield is included in that. I do accept that the GP system is under stress and that we need more GPs, and the points that the right hon. Lady makes are right.
Dr Andrew Murrison (South West Wiltshire) (Con)
Employing more GPs is, of course, important, but the Minister is right to say that so is collaboration. How far have we got with spending the £1 billion earmarked by the Chancellor in 2014 for improving GP surgeries? Does the Minister share Ara Darzi’s vision of more polyclinics, which will enable GPs to work more closely together?
David Mowat
The vision set out in the GP five year forward view is of substantially more spend in the community and of an increase, as a proportion, in the amount of money in the NHS going to people in primary care. Part of that will be in polyclinics and the estate generally. As I say, one of the most innovative things we have found in the GP vanguards is that when they start to put together groups of 30,000, 40,000 and 50,000 patients in a GP hub, the quality of care increases dramatically. We are going to accelerate that.
Andrew Rosindell (Romford) (Con)
The Parliamentary Under-Secretary of State for Health (Nicola Blackwood)
The challenges facing our health system are significant, so we do need to improve the uptake of those innovative technologies that can improve efficiency and patient outcomes to help to meet that challenge, while also providing a pool for investment for innovators. By capitalising on advances in genomics, data, digital health and informatics, the accelerated access review will improve access to cost-effective new products.
Andrew Rosindell
I know that the Minister will agree with me when I say that it is vital that we endeavour to ensure that the NHS gets better value for money for the drugs bill so that we can afford to get more of the latest innovative products to patients more quickly, but does she also agree that much more work needs to be done alongside the accelerated access review and the forthcoming life sciences strategy to achieve that objective?
Nicola Blackwood
I completely agree with my hon. Friend. Medicines are the second highest area of spending in the NHS after staff, and it is vital that the NHS gets best value from that investment. That is why I am pleased that the House supported our recent Bill on the cost of medicines and medicine supplies, which will enable us to tackle unjustified price rises for unbranded generic medicines. We are also working closely with NHS England to promote the use of the new wave of biosimilar medicines and to ensure cost-effective prescribing behaviour.
Nic Dakin (Scunthorpe) (Lab)
When will the Government publish their response to the accelerated access review, and will that include a consideration of how to improve patient access to molecular diagnostics?
Andrea Jenkyns (Morley and Outwood) (Con)
Nicola Blackwood
The National Institute for Health and Care Excellence and NHS England are working together to better manage access to new drugs and medical technologies for rare diseases. We are also working on the UK strategy for rare diseases and its implementation. It has 51 commitments to be implemented by 2020 to improve the lives of constituents such as my hon. Friend’s.
Greg Mulholland (Leeds North West) (LD)
A simple but life-saving use of medical apparatus is tube feeding. Will the Minister join me in welcoming the fact that this is Feeding Tube Awareness Week, which is raising awareness of this important issue and giving support to all the thousands of families in which children or other family members are tube fed?
Nicola Blackwood
I thank the hon. Gentleman for drawing our attention to this issue. Sometimes the simplest solutions are the most effective. We want to make sure that such innovations are driven across the NHS more effectively, which is exactly what our academic health service networks are there for.
Pauline Latham (Mid Derbyshire) (Con)
Nicola Blackwood
AMR is a global issue. We are world leaders in this, and we are working proactively with international partners to identify new and innovative approaches to the treatment of a range of challenging resistant infections, including malaria.
Siobhain McDonagh (Mitcham and Morden) (Lab)
The Parliamentary Under-Secretary of State for Health (Nicola Blackwood)
We are absolutely determined that we will improve access to cost-effective, innovative medicines, including breast cancer drugs. That is exactly why we introduced the cancer drugs fund.
Siobhain McDonagh
The Minister will know that “cost-effective” is not an easy thing to define. Many women will not get access to the breast cancer drugs they need unless there is a review of how NICE assesses cost-effectiveness. Will she support an independent review of those processes, and will she say something about off-patent cancer drugs?
Nicola Blackwood
The hon. Lady and I have debated this in the House before. It is worth looking at our record. The cancer drugs fund has helped 95,000 people to access cancer drugs, to the tune of £1.2 billion, and NICE has approved three breast cancer drugs, while there are others that it has not yet approved. It is important that politicians do not intervene in this debate, as these are very difficult decisions that will always be challenging in the situation where the NHS has a finite budget.
Mr Speaker
If the hon. Member for Brecon and Radnorshire (Chris Davies) were standing because he has a cancer-related question, I would call him, but if he is not, I will not. He is, so I will.
Chris Davies (Brecon and Radnorshire) (Con)
Nicola Blackwood
We have continual discussions with the Welsh Government to make sure that these issues are kept under review. I shall definitely write to my hon. Friend about this. I shall also be happy to meet him if he would like to discuss it in further detail.
Jo Churchill (Bury St Edmunds) (Con)
Does the Minister agree that not one subject that we have discussed today would not be improved by the better transfer of patient data? How is the Department working towards linking social care with the acute sector, with GPs, with mental health services, with innovation and with cancer drugs in order to understand where we can best target patient outcomes and spend our resources?
Nicola Blackwood
My hon. Friend has a leading role with her private Member’s Bill so she is well aware that we are working very hard to improve the connection of patient data, particularly through the role of the national data guardian and her 10 safeguarding rules, which will make sure that we not only protect patient data more effectively but are able to share it in an effective way that improves patient care.
Mr Speaker
Time is against us, but I would like to make a little further progress with Back Benchers’ questions. I call Michelle Donelan.
Michelle Donelan (Chippenham) (Con)
The Minister of State, Department of Health (Mr Philip Dunne)
Developing a variety of routes into nursing is a priority to widen participation and reflect the local populations served by nurses. That is why we have developed a new nursing associate role and nursing degree apprenticeships, which are opening up routes into the registered nursing profession for thousands of people from all backgrounds and allowing employers to grow their own workforce locally.
Michelle Donelan
Are there any plans to roll out the associate role to include Wiltshire, and to enable the new nursing degree apprenticeship schemes to be offered in larger further education colleges so that counties like Wiltshire that have no university can still make that provision?
Mr Dunne
We have announced the first 1,000 nursing associates. In fact, the first cohort commenced at the beginning of this month. I visited, in Queen’s hospital, Romford, the first very enthusiastic group of nursing associates. We have announced a second wave of 2,000 associate roles. I regret to say that Wiltshire does not have any of those at the moment, but that will not stop it bidding for them in future. I will look at my hon. Friend’s point about further education colleges.
Andy Burnham (Leigh) (Lab)
When the Secretary of State scrapped the nursing bursary, he claimed that his reforms would lead to an increase in nursing applications. Last week, figures from UCAS showed that there had been a drop in nursing applications of 23%—a worrying trend when the demands of Brexit will mean that we need more home-grown nurses. Will he scrap this disastrous policy or, at the very least, give Greater Manchester the ability to opt out of it and reinstate the nursing bursary?
Mr Dunne
I urge the right hon. Gentleman not to indulge in scaremongering about the number of people applying to become nurses. There are more than two applications for each of the nursing places on offer to start next August. He needs to be careful about interpreting this early the figure for applications from EU nationals, which has gone down significantly, because it coincided with the introduction of the language test for EU nationals.
Dr Philippa Whitford (Central Ayrshire) (SNP)
With the reduction of 23% in applications to English nursing schools, the Minister might want to re-look at the policy. There has been a significant drop—a 90% drop—in EU nationals applying. With one in 10 nursing posts in NHS England vacant and a cap on agency spend, who exactly does the Minister think should staff the NHS?
Mr Dunne
I say gently to the hon. Lady that there are 51,000 nurses in training at present. The number of applications through the UCAS system thus far suggests that there will be more than two applicants for each place. As I have just said to the right hon. Member for Leigh (Andy Burnham), the reduction in application forms requested by EU nationals has coincided with the introduction of a language test.
Dr Whitford
Language test applications were more than 3,500 last January, so the reduction after the language test was from that to 1,300. In December, there were only 101 applications. This cannot all be blamed on the language test, so what is the Minister going to do to protect nursing numbers?
Mr Dunne
There are over 13,000 more nurses working in the NHS today than there were in May 2010. As I have just said to the hon. Lady, the language test came into effect from July last year, since when the number of applicants has been somewhat steady. It is down very significantly, but that is because, frankly, we have had applications from nurses from EU countries who have not been able to pass the language test.
Rob Marris (Wolverhampton South West) (Lab)
The Parliamentary Under-Secretary of State for Health (David Mowat)
The national standard is that we expect 85% of all cancer patients to receive initial treatment within two months of an urgent referral. For cancer overall, the most recent data indicate that we achieve 82%, and for prostate cancer around 78%, against that standard. The lower figure for prostate is due to the fact that the pathways are more complex than average.
Rob Marris
I am disappointed by the figures, but at least they are available. When I asked this as a written question last month, the information was not available, nor was information available about the number of vacancies for prostate cancer surgeons, their training or the equipment that they use, because that information, I am told, is not collected centrally. When will the Department collect adequate information to run the health service properly?
David Mowat
More information was published on cancer by clinical commissioning groups since the back end of last year than at any time in the history of the NHS. [Interruption.] The hon. Gentleman is right to say that prostate is grouped with neurological cancers in general, and that is the type of surgeon being employed. But the fact is that the Government have been incredibly transparent in terms of information published on cancers.
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)
Last Saturday was World Cancer Day. The theme was unity, and I am still wearing my unity band with pride. We must do all we can to beat cancer, yet the Government are coming to their three-year anniversary of not meeting the 62-day wait target. Treatment quickly after diagnosis is crucial for tackling all cancers. Will the Minister outline what he is doing to ensure that that target is once again met so that patients receive timely treatment?
David Mowat
The volume has increased greatly, and there are something like 2,000 more people being diagnosed every day. The hon. Lady is right: of the eight cancer standards against which we judge ourselves, we meet seven, and the 62-day one has not been met. We need to do more to achieve that, and the cancer strategy set out a pathway for doing so. We have particularly invested in the early diagnosis component; we have invested £200 million in early diagnosis and getting a 31-day all-clear or referral for treatment. That is the pathway to meeting the 62-day target. She is right to raise this, because it is an important indicator and we need to do better.
Pauline Latham (Mid Derbyshire) (Con)
The Secretary of State for Health (Mr Jeremy Hunt)
We know that a strong primary care system is the bedrock of the NHS, which is why I am pleased to announce today that NHS England will publish the new GP contract, agreed by the Government, NHS England and the British Medical Association. It will see almost £240 million extra invested in GP services; require GPs to establish whether overseas visitors are eligible for free care, allowing the NHS to better recoup the costs of that care; and improve access for patients by removing extra funding if GPs regularly close for afternoons during the working week.
Pauline Latham
Will the Secretary of State consider putting a GP in every A&E department so that they can additionally triage patients who are not so ill and advise them to go home and see their own GP on another occasion?
Jonathan Ashworth (Leicester South) (Lab)
With respect to A&Es, diverts have been at twice the level of last year, 4,000 people have had urgent operations cancelled, 18,000 people a week in January were waiting on trolleys in corridors, and nine out of 10 hospitals have been overcrowded and are at unsafe levels. I have even read in the Secretary of State’s local paper that his local hospital had to put patients in the gym overnight. Does the Secretary of State agree with the Prime Minister that the crisis facing our NHS amounts to a “small number of incidents”?
Mr Hunt
The NHS is under a lot of pressure, but what we never get from the hon. Gentleman is any solutions. Our solution is 600 more A&E consultants since 2010, 1,500 more A&E doctors, 2,000 more paramedics, and 2,500 more people being seen within four hours every day. His solution at the last election was to cut the NHS budget by £1.3 billion.
Jonathan Ashworth
The Secretary of State’s solution has been to blame everybody else but never take responsibility himself.
What is the Secretary of State going to do about the crisis that we are now facing in staffing? Last week, we learned that half of junior doctors are abandoning specialist training. We have already heard that applications for nursing degrees are down by a quarter following the axing of the student bursary and we heard today that there is a shortage of midwives. I know that the right hon. Gentleman has been in the US and that he will try to give us his alternative facts, but when will he give us an alternative plan and deal with the staffing crisis—an issue that the Minister of State, the hon. Member for Ludlow (Mr Dunne), could not respond to a few moments ago?
Mr Hunt
Let us look at the reality, instead of the hon. Gentleman’s rhetoric. In his own local trust in Leicester, there are 246 more nurses than in 2010 and 313 more doctors. Some 185 more patients are being seen in A&E every day and next year a new £43 million emergency floor will open at the Leicester Royal Infirmary. That is because we are backing the NHS instead of wanting to cut its budget.
Mr John Baron (Basildon and Billericay) (Con)
The Parliamentary Under-Secretary of State for Health (David Mowat)
My hon. Friend is right to say that we now publish one-year survival rates for every CCG in the country, and I agree that that is a beacon of light and a transformative step. It also shows differences of more than 10% between the best and the worst, which is unacceptable. The transparency itself will bring improvement, but we have also recently established 16 cancer alliances, whose sole job is to roll out best practice and investigate and bear down on poor performance.
John Pugh (Southport) (LD)
Derek Thomas (St Ives) (Con)
David Mowat
The current stroke strategy was produced in 2007 and our priority is to implement it fully. Frankly, in my time as a Minister, I would prefer to have detailed implementation plans and not more strategies. My hon. Friend refers to the great differences in performance across the country, in particular in access to speech and language therapy, and we need to achieve better on that.
John Mc Nally (Falkirk) (SNP)
The Parliamentary Under-Secretary of State for Health (Nicola Blackwood)
I pay tribute to the work of the charity the hon. Gentleman mentioned, which does very important work, and have sympathy for the case he mentioned. The UK’s rare diseases strategy has 51 recommendations, which are driving changes through the NHS and improving the life chances of patients with rare diseases. Our genomics work is also bringing life-changing improvements to patients with rare diseases by diagnosing them faster and improving their chances of receiving treatment quicker.
Mark Menzies (Fylde) (Con)
The Minister of State, Department of Health (Mr Philip Dunne)
I am grateful to my hon. Friend for recognising the work that went into reopening the A&E at Chorley last month. I am delighted, in particular, by the work that was done by the Deputy Speaker and my hon. Friend the Member for South Ribble (Seema Kennedy).
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
Andrew Selous (South West Bedfordshire) (Con)
Young people with severe anxiety can spend years out of school and become very isolated. Does the Secretary of State agree that we need to think more imaginatively about community and voluntary solutions to reach out to those young people, whose futures we must not give up on?
Norman Lamb (North Norfolk) (LD)
Mr Hunt
I am always somewhat disappointed by the right hon. Gentleman’s rhetoric, given that we are spending about £1 billion more every year than when he was mental health Minister. This April, we will reintroduce maximum waiting times for eating disorders. As he knows, we have committed to publish pathways for all conditions during this Parliament. That will include his constituent who, I agree, is waiting much too long at the moment.
Jake Berry (Rossendale and Darwen) (Con)
Some GP practices in east Lancashire have, through sheer frustration, started publishing the number of missed appointments. When will the Secretary of State consider giving GPs the power that they want, and that the public want them to have, to charge those who miss repeated GP appointments, including in east Lancashire?
Paula Sherriff (Dewsbury) (Lab)
Mr Hunt
May I gently tell the hon. Lady that I do not think our debates on the NHS are helped by her taking my comments out of context? I was quoting Chris Hopson, from NHS Providers, talking about a specific week when he said there were, in that week, a small number of incidents. We recognise the pressures across the NHS, which is why this Government are backing the NHS with record funding.
Mr Steve Baker (Wycombe) (Con)
A small business in my constituency was driven out of business by slow payments for relatively small sums by NHS providers. Will he ensure strict compliance with the guidelines for timely payments?
Mr Dunne
My hon. Friend will be aware that best practice for NHS bodies is to pay within 30 days. I am pleased to be able to tell him that figures for the quarter ending in September show that the Department of Health paid 98.4% of our bills within five days—one of the best performances across government.
Steven Paterson (Stirling) (SNP)
The Royal College of Psychiatrists warns that half of all child and adolescent mental health training posts are unfilled. With 11% of trainees being EU nationals, how do the Government plan to avoid a Brexit-inspired staffing crisis?
Dr Tania Mathias (Twickenham) (Con)
My constituent, Nicola Johnson, has had primary breast cancer. The secondary was discovered at 10 months. Will the Minister meet me and Nicola, because she falls within the six-month to 12-month period? She is eligible for neither pertuzumab nor trastuzumab emtansine.
Nicola Blackwood
I shall be very happy to meet my hon. Friend about that very difficult case.
Ms Margaret Ritchie (South Down) (SDLP)
What further efforts have been made to increase the level of nurses’ pay, many of whom have high levels of training, expertise and qualifications?
Several hon. Members rose—
Mr Speaker
Demand dramatically exceeds supply, as usual, but we will have one last question. I call Tom Pursglove.
Tom Pursglove (Corby) (Con)
Thank you, Mr Speaker. Corby and east Northamptonshire is taking thousands and thousands of new homes. What reassurance can Ministers give to my constituents that GP services will keep up with housing growth?
Housing White Paper
(7 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text
The Secretary of State for Communities and Local Government (Sajid Javid)
With permission, Mr Speaker, I would like to make a statement on the Government’s housing White Paper “Fixing Our Broken Housing Market”, copies of which I have placed in the Libraries of both Houses. I had hoped, Mr Speaker, that this housing White Paper would dominate the headlines this morning, but it seems that someone else has beaten me to it. [Laughter.]
Mr Speaker
Let me just gently say to the right hon. Gentleman that I did make my statement to the House first. [Applause.] We should not have clapping, as the hon. Member for Colne Valley (Jason McCartney), a strict proceduralist, correctly points out. I am glad that the right hon. Gentleman is in such fine fettle and good humour.
Sajid Javid
Touché, Mr Speaker.
Our housing market is broken. Since 1970, house price inflation in Britain has far outstripped that in the rest of the OECD. The idea of owning or renting a safe, secure place of one’s own has, for many, now become a distant dream. Over the past seven years the Government have done much to help. We have taken action on both supply and demand, and the results have been positive. Last year saw a record number of planning permissions granted, and the highest level of housing completions since the recession. Between 1997 and 2010, the ratio of average house price to average income more than doubled, from 3.5 to 7. In the five years to 2015, however, it crept up to just over 7.5—just a little but still heading in the wrong direction.
Behind the statistics are millions of ordinary working people. I am talking about the first-time buyer who is saving hard but will not have enough for a deposit for almost a quarter of a century, or the couple in the private rented sector handing half of their combined income straight to their landlord. The symptoms of this broken market are being felt by people in every community, and it is one of the biggest barriers to social progress that this country faces, but its root cause is simple: for far too long, we have not built enough houses. Relative to population size, Britain has had western Europe’s lowest rate of house building for three decades. The situation reached its nadir under the last Labour Government, when, in one year, work began on just 95,000 homes—the lowest peacetime level since the 1920s.
Thanks to the concerted effort of central and local government, last year 190,000 new homes were completed, but it is still not enough. To meet demand, we have to deliver between 225,000 and 275,000 homes every year. In short, we have to build more of the right houses in the right places, and we have to start right now. Today’s White Paper sets out how we will go about doing just that. House building does not just happen. Meeting the unique needs of different people and different places requires a co-ordinated effort across the public and private sectors. There is no magic bullet; rather, we need action on many fronts simultaneously.
First, we need to plan properly so that we can get the right homes built in the right places. To make this happen, we will introduce a new way of assessing housing need. Many councils work tirelessly to engage their communities on the number, design and mix of new housing in their area, but some duck the difficult decisions and fail to produce plans that meet their housing need. It is important that all authorities play by the same rules. We need to have a proper conversation about housing need, and we need to ensure that every local area produces a realistic plan that it reviews at least every five years.
Once we know how many homes are needed we need sites on which to build them, so the White Paper contains measures to help identify appropriate sites for development—not simply empty spaces but useable, practical sites where new homes are actually required. I can reassure the House that this will not entail recklessly ripping up our countryside. In 2015, we promised the British people that the green belt was safe in our hands, and that is still the case. The White Paper does not remove any of its protections.
Government should not be in the business of land banking, however, so we will free up more public sector land more quickly. We will increase transparency around land ownership, so that everyone knows if someone is unfairly sitting on a site that could be better used. Moreover, people need a say on the homes that are built in their area, so everywhere must have a plan in place and ensure that communities are comfortable with the design and appearance of new homes.
The second area of focus is all about speeding up the rate of build-out. At the moment, we are simply not building quickly enough. Whether that is caused by unacceptable land banking or slow construction, we will no longer tolerate such unjustified delays. We will speed up and simplify the completion notice process; we will make the planning system more open and accessible; we will improve the co-ordination of public investment in infrastructure and support timely connections to utilities; and we will tackle unnecessary delays caused by everything from planning conditions to great crested newts.
We will give developers a lot of help to get building, and we will give local authorities the tools to hold developers to account if they fail to do so. Local authorities also have a vital role to play in getting homes built quickly, and I am therefore looking again at how they can use compulsory purchase powers. We will also introduce a new housing delivery test to hold them to account for house building across their local area.
Finally, the White Paper explains how we will diversify the housing market. At present, around 60% of new homes are built by just 10 companies. Small independent builders can find it almost impossible to enter the market. This lack of competition means a lack of innovation, which in turn leads to sluggish productivity growth, so we will make it easier for small and medium-sized builders to compete. We will support efficient, innovative and underused methods of construction such as off-site factory builds. We will also support housing associations to build more and explore options to encourage local authorities to build again, including through accelerated construction schemes on public sector land. We will encourage institutional investment in the private rented sector, and we will make life easier for custom builders who want to create their own home.
Together, these measures will make a significant and lasting difference to our housing supply. It will, however, take time, but ordinary working people need help right now. We have already promised to ban letting agents’ fees, and this White Paper goes further. We will improve safeguards in the private rented sector, do more to prevent homelessness and help households that are currently priced out of the market. We will tackle the scourge of unfair leasehold terms, which are too often forced on hard-pressed homebuyers. We will work with the rental sector to promote three-year tenancy agreements, giving families the security that they need to put down their roots in a community.
In the past few years, we have seen almost 300,000 affordable home units built in England. We have seen housing starts increase sharply, and we have seen more people getting on the property ladder, thanks to schemes such as Help to Buy. We now need to go further—much further—and meet our obligation to build many more houses of the type that people want to live in in the places where people want to live. That is exactly what this White Paper delivers. It will help the tenants of today who are facing rising rents, unfair fees and insecure tenancies; it will help the homeowners of tomorrow to get more of the right homes built in the right places; and it will help our children and our children’s children by halting decades of decline and fixing our broken housing market. It is a bold, radical vision for housing in this country, and I commend it to the House.
John Healey (Wentworth and Dearne) (Lab)
I thank the Secretary of State for the customary copy of his statement just beforehand, but really, I have to say, “Is this it?” When the Housing Minister himself admits that the Government’s record on housing is feeble and embarrassing, we had hoped for better. In fact, we needed better. This afternoon’s statement will desperately disappoint millions of people struggling month to month with a cost of housing crisis.
I have to say that the statement was feeble beyond belief. After seven years of a Conservative Government, the Secretary of State says that we need to have “a proper conversation” about housing need, and his top priority is a “new housing delivery test”. How many times before have we heard Ministers say that they will free up more public sector land more quickly?
It is also clear today that we have not just a housing crisis in this country, but a crisis in the Conservative party about what to do about it. The huge 200-page Housing and Planning Act 2016 is not even mentioned today. We heard a boast beforehand of radical action on planning from the Secretary of State, but it has been stamped on by the Prime Minister today. We have heard of rows between Conservative Back Benchers and the Secretary of State, and that local councillors have resigned as a result of the right hon. Gentleman’s decisions. This White Paper is not a plan to fix the housing crisis, and it will do nothing to reverse the seven years of failure on housing that we have seen since 2010.
Let me turn to some of the areas where we needed strong action in today’s statement. The first is home ownership. There were 1 million more homeowners under Labour, but seven years under the Conservatives has seen home ownership falling, and it is in freefall for young people. Yet this White Paper confirms that the Tory party has given up on home ownership, because it waters down the promise to help those who need help to get a first foot in the housing market. I thus say to the Secretary of State: why not reverse the cuts to investment in new affordable homes to buy that has resulted in the number of new low-cost homes built falling to just 7,500 a year? Why not stop those earning over £100,000 getting help through Help to Buy, and make it available only to first-time buyers, not to second-time or subsequent buyers?
Secondly, there is homelessness. After being cut to record lows under Labour, the number of people sleeping rough on our streets has more than doubled, but we did not hear a single mention of that in the statement. Why can the Secretary of State not accept that this shames us all in a country as decent and well off as ours, and why will he not adopt the Labour plan to end rough sleeping within a Parliament?
Thirdly, we need action to help renters. How will simply working “with the rental sector to promote three-year tenancy agreements” help the country’s 11 million current renters? Why will the Secretary of State not legislate for longer tenancies, tied to predictable rent rises and decent basic standards?
Finally, there is the need to build more homes. The Government have pledged to build a million new homes by 2020, but last year the total number of newly built houses was still less than 143,000, while the level of new affordable house building has hit a 24-year low. We need to see all sectors—private house builders, housing associations and councils—firing on all cylinders to build the homes that we need. Why will the Secretary of State not drop the deep Tory hostility to councils, and let them build again to meet the needs of local people?
It is tragically clear from the statement that seven years of failure on housing are set to stretch to 10. We were promised a White Paper, but we have been presented with a white flag. This is a Government with no plan to fix the country’s deepening housing crisis.
Sajid Javid
Today, the right hon. Member for Wentworth and Dearne (John Healey), as shadow Housing Minister, had a chance. He had a chance to adopt a cross-party approach, to behave like an adult—a mature person—and to help with the difficulties that have faced so many people, under many Governments, for more than 30 years. Instead, he chose to play cheap party politics.
I could respond in the same way. As I said in my statement, work began on only 95,000 homes—the lowest number since the 1920s—in a particular year, and I believe that the right hon. Gentleman was the Housing Minister at the time. However, that is not what people want to hear. People want to hear the truth. They want to hear Governments, and politicians more generally, recognise the size of the problem. They want them to recognise that at this moment, in every one of our constituencies, young people are staring into the windows of estate agents, their faces glued to them, dreaming of renting or buying a decent home, but knowing that it is out of reach because prices have risen so high. The vast majority of that rise in prices took place when Labour was last in power, more than doubling as a ratio to income, from 3.5 times to 7. But people also want to know what we are doing about it, and that is what is in the White Paper.
The right hon. Gentleman asked a number of questions. He mentioned home ownership. Home ownership declined as a percentage under Labour: it declined sharply, because not enough homes were being built. It is time the right hon. Gentleman took responsibility for that. He asked about homelessness. Just over a week ago, on a Friday, we debated the Homelessness Reduction Bill in the House. It was Labour shadow Ministers who tried to destroy that Bill by tabling fatal amendments, and the only reason they backed off was that they were begged to do so by housing and homelessness charities, including Crisis. That is where Labour stands on homelessness.
The right hon. Gentleman talked about renters. We have recognised in the White Paper that we should have a policy that meets the needs of not only those who want to own their own homes, but those who want to rent decent homes. Finally, the right hon. Gentleman talked about councils, and what he said proved that he had not listened to any of my statement. He came into the Chamber with a pre-written speech, not wanting to listen to any part of the debate. If he had listened carefully, he would know that what he wanted me to say was exactly what I said.
The truth is that the right hon. Gentleman had a chance and he flunked it. I do not think that many of his colleagues are with him on this issue. I sense that many of them want a cross-party approach: they want a Government to work with politicians on both sides of the House to deal with the issue once and for all. I certainly know, having dealt with many of his colleagues on local councils, that local Labour leaders are working with the Government because they have given up on this excuse for an Opposition.
Mr Andrew Mitchell (Sutton Coldfield) (Con)
There is much to be welcomed in the White Paper. It is essential for us to build new communities and new homes, but to build them in the right places. I am also pleased that the Government have decided not to relax the green belt rules further. The Secretary of State has rightly described those rules as sacrosanct. However, does he understand the deep anger that is felt throughout Sutton Coldfield, where the reasonable views of 100,000 people have been totally ignored by a Labour council during a deeply flawed process involving the unnecessary building of 6,000 homes on our green belt, and their frustration at the fact that the Government have not been able to stop that process?
Sajid Javid
I know that my right hon. Friend feels passionately about this issue, and I am pleased that he pointed out that the White Paper refers to the retaining of protections for the green belt. He referred to a particular case in his constituency. When local authorities have made a proper assessment of housing need and that assessment has been signed off by an independent planning inspector, it is important for us not to get in their way.
Alison Thewliss (Glasgow Central) (SNP)
I thank the Secretary of State for giving me advance sight of his statement, and for providing me with a copy of the White Paper. I must say that it is pretty thin. I have it here: this bit is the substance, and this bit is the consultation. However, it was good to hear the Secretary of State acknowledge the gap between the Tory Government’s rhetoric on house building and their actual record. It is always nice to observe a recognition of failure on their part.
We have embarked on another year, and we have yet another housing Bill, with no solutions in sight. We should contrast that with what is being done by the Scottish Government—[Hon. Members: “Oh no!”] The Tories would do well to listen to what I am saying, because we have a record of success. Having exceeded our targets for the previous Parliament, our Housing Minister, Kevin Stewart, has set a target of 50,000 affordable homes in the current Session. We already have local housing strategies and strategic housing investment plans—comprehensive five-year plans which each local authority is required to produce. The Secretary of State might want to have a look at the Glasgow SHIP, which was published recently.
In his statement, the Secretary of State mentioned building on brownfield land. It must be recognised that contaminated, derelict brownfield land may need significant Government investment to make it ready for use, and the £1 billion fund will not go far enough to deal with the contamination that exists. The statement referred to ways of achieving progress in respect of land planning applications. Quality is also important, as is place-making. We need only look at the example of North Kelvin Meadow in Glasgow. The local community felt that what was being proposed was not good enough, and had to take their objection all the way through the Scottish Government’s planning process.
The Secretary of State mentioned types of innovative house building. The Commonwealth games village in Glasgow was built through the use of such innovative methods, and there are other great examples in Scotland that show what can be done. I am glad to note that insurance issues are being considered, because they are incredibly important.
Finally, may I ask the Secretary of State to consult the Private Housing (Tenancies) (Scotland) Act 2016 for examples of good practice? Will he acknowledge the existence of the elephant in the room—the continual ideological pursuit of the right to buy, which is ruining people’s opportunities to gain access to affordable housing?
Sajid Javid
I want all the people of the United Kingdom to have access to decent homes, to rent or to buy, and that, of course, includes the people of Scotland. As the hon. Lady knows, my remit is only for England, and that is the focus of the White Paper. She mentioned a number of English policies, including the right to buy. We are very proud of that policy, whether it relates to council homes or to our commitment to housing association tenants. I think it right for us to support people who want to own their homes, as well as those who want to rent decent homes. However, there is one thing that both Scottish and English people require in order to have access to decent homes, and that is a decent income, which means having a job. I think that the situation would have been very different for Scottish people if the hon. Lady had had her way and Scotland had become independent.
Mr Peter Lilley (Hitchin and Harpenden) (Con)
I congratulate my right hon. Friend on bringing a Macmillan-like sense of urgency to tackling the housing crisis, which causes or aggravates most of the social problems we face. The first step is being honest about how many homes we need and where we need them, so I welcome his bringing forward a new standard methodology for assessing housing need. Can he reassure me that that will include the affordability of housing, so that it deals with the places where the pressure is most acute?
Sajid Javid
My right hon. Friend makes a very important point. The starting point has to be that every local authority makes a realistic assessment of need, and in order for it to be realistic, it must look at the market pressures locally, which of course include affordability.
Mr Clive Betts (Sheffield South East) (Lab)
I welcome the Government’s recognition that the housing need in this country cannot be met by building homes for sale alone, and that we also need homes that people can afford to rent. May I therefore seek two points of clarification? In the case of schemes that receive public money, will the Homes and Communities Agency, councils and housing associations be allowed to negotiate the right tenure mix for each scheme, including through funding being made available for social housing where that is appropriate? Secondly, on section 106 agreements, will councils now be free to negotiate with developers the right types of affordable housing in each scheme, and will the requirement to give preference to starter homes be dropped?
Sajid Javid
I always listen carefully to what the Chair of the Select Committee on Communities and Local Government has to say, and he highlights an important issue. He asked two specific questions. On tenure mix and the use of public money, we will certainly make sure that that money is used to help promote homes that are available for rent, whether through the HCA or by working with councils and housing associations. We will also require all local authorities, when they go through their plan-making process, to think about the tenure and the mix that is required in the area, and to allocate accordingly. That will also stretch to when section 106 agreements are applied.
Sir Nicholas Soames (Mid Sussex) (Con)
Mid Sussex District Council is keen to build homes, and many people in my constituency work diligently to produce neighbourhood plans, only for them to be undermined by the ruthless behaviour of some rogue developers. Does my right hon. Friend agree that if we are to deliver the imaginative vision he has outlined to the House today, we need to curb that sort of behaviour?
Sajid Javid
My right hon. Friend highlights the importance of neighbourhood plans. I know that he is aware of the current Bill going through Parliament, the Neighbourhood Planning Bill, which is strengthening that part of the plan-making process, but I think he will also be pleased to see in this White Paper the further steps that we are taking to achieve precisely what he wants: local communities being taken more seriously through their neighbourhood plans.
Ms Karen Buck (Westminster North) (Lab)
Constituencies such as mine will be stripped of desperately needed social housing by the proposals in the Housing and Planning Act 2016 for the forced sale of high-value properties. In the spirit of what the right hon. Gentleman is saying today and the White Paper, can he confirm that he will no longer proceed with that policy?
Sajid Javid
I cannot confirm that, because we are committed to allowing people who live in housing association homes the right to buy. We have started a process of pilots, as I think the hon. Lady will be aware; some 3,000 homes, I think, are involved in that. Once that is complete, we will decide how exactly to take the policy forward.
Mr Richard Bacon (South Norfolk) (Con)
What lessons can we learn from the Netherlands and Germany, and how can we encourage land pooling, as in Germany, where local authorities work in collaboration with landowners to make serviced plots of land available so that individuals and families can bring forward their own self-build and custom house building schemes?
Sajid Javid
I thank my hon. Friend for the work he has done to promote self-build and custom build. That is certainly one lesson we can learn from the Netherlands and Germany, and I have seen some good examples in those countries. He also mentioned land pooling, and there are some fantastic examples in the Netherlands; I went to see them, and they were so good that I put them in the White Paper.
Tim Farron (Westmorland and Lonsdale) (LD)
I hope the Secretary of State will forgive me, but I think he flatters himself if he thinks that even on a quiet news day this White Paper would have deserved headlines; it is an unambitious and disappointing paper. I want to pull out one particular aspect of it. The paper refers to a family outside London in the market for an affordable home as being on an average income of £80,000 a year. I wonder if I may respectfully ask what planet he is living on. Average incomes in my constituency are £26,000 a year. Does that not prove that what we really needed was a commitment to genuinely affordable homes and the building of 1 million new council homes? Will the Secretary of State instead commit the capital funding to do that, and to lift the borrowing cap so that councils can build again?
Sajid Javid
First, may I thank the hon. Gentleman for turning up today? The answer to his question is more supply—whether it is council homes, housing association homes or private sector homes, we need more supply. That is the only way to tackle affordability.
Anna Soubry (Broxtowe) (Con)
Conservative-run Broxtowe Borough Council is doing everything it can to defend our green belt, but that is very difficult because the previous Labour-Lib Dem administration approved a plan for thousands of houses on our green belt. But the biggest problem the council has is that many small builders are having real problems getting access to finance, particularly because of the risk weighting. What steps is my right hon. Friend taking to make sure that small and medium-sized builders have better access to financing, so that, when we can, we build those new homes?
Sajid Javid
My right hon. Friend makes a very good point. I have talked about the importance of having more small builders. With finance, one particular way that we are helping is through the new home building fund, launched in September with £3 billion of funding, much of it available to the small and medium-sized house building sector. There are also a number of other measures beyond finance in the White Paper to help that sector, and I know that when my right hon. Friend sees them, she will welcome them.
Kate Hoey (Vauxhall) (Lab)
Does the Secretary of State have any special plans to deal with the very difficult situation in inner-city areas, particularly along the river, such as in my constituency, where we have owners coming from way outside this country and leaving flats empty for a very long time? Are the Government not prepared to buy up some of that land themselves and allow local councils to build truly affordable housing?
Sajid Javid
The hon. Lady might be aware that some of the type of land she refers to will be public land—it might be owned by different Departments or even local government—and there is a lot in the White Paper on what is called the accelerated construction programme, whereby Government can work together with councils and the private sector to develop more quickly.
More generally, the hon. Lady talks about empty homes, but in fact the number of empty homes in England has fallen to its lowest level since records began—the figure is just over 200,000; there is still more to do—and that is partly because of some of the changes we made to the new homes bonus, which gives local councils incentives to bring those homes back into use.
Mr Mark Harper (Forest of Dean) (Con)
Conservative-run Forest of Dean District Council is working hard to get its local plan in place. It gives out planning permissions to get new homes put in place, but gets frustrated when developers do not build them, and then the same developers put in speculative applications and argue that there is no land supply, because they are not building their own houses. I welcome what is in the White Paper, but what more can my right hon. Friend do to make sure those developers build the houses? As the excellent Housing Minister has said, people cannot live in planning permissions, they need houses.
Sajid Javid
My right hon. Friend makes an important point. He is right that many local authorities rightly get frustrated when they take those difficult decisions and then do not see the houses being built. There is a lot in this White Paper to tackle that. I gave one example a moment ago in my speech about compulsory purchase in the most extreme cases, but councils will also have new tools. For example, they will be able to put a time limit in place when they give a planning permission, so that it will expire if the developer does not create the homes in time. Also, completion notices will become much easier to serve, which will allow a local authority, when a developer has stalled, to end the planning permission and try again with someone else.
Mr David Winnick (Walsall North) (Lab)
May I tell the Secretary of State that house prices in my part of the country are far removed from those in London and the south-east, yet many, many people are still unable to buy because of low wages? What they require first and foremost is decent, secure rented accommodation, which will come, in the main, from the public and voluntary sector. May I add that in all the years I have done this job, not one—literally, not one—person has ever asked me to be rehoused in the private sector?
Sajid Javid
I agree with the hon. Gentleman that we need more decent homes for rent. However, this comes back to the same problem, whether in renting or buying, which is that we need a greater supply of homes, particularly for rent. There is a lot in the White Paper that will encourage what we are calling Build to Rent. When local authorities are plan-making, we want them to think about rented accommodation, but we also want to support the sector that will build homes specifically for rent.
Nusrat Ghani (Wealden) (Con)
I welcome the White Paper, which will enable families to secure a home or to feel secure in their present home. However, the lack of infrastructure funding in my constituency presents a barrier to development, with concerns around amenities, broadband and road and rail networks. Will my right hon. Friend confirm that the housing infrastructure fund will provide vital new money to overcome those issues in areas such as Wealden?
Sajid Javid
That is right; my hon. Friend is right to focus on the housing infrastructure fund. It was announced in the last autumn statement, and it goes live in April this year. It is just one of the new ways in which we are trying to ensure that, when local authorities make decisions, the infrastructure can quickly be put in place to support them.
Rosie Cooper (West Lancashire) (Lab)
My constituents feel that localism is all but dead. Will the Secretary of State expand on how he intends to strengthen the planning laws to ensure that their voices are heard much more loudly than those of the avaricious developers who are trying to thwart the local plan and defy any remaining vestiges of localism?
Sajid Javid
We rightly follow a policy of letting local authorities set out their plans and determine what is right for their area, but it is important to ensure that that is not used by some authorities—it is only some—as an excuse for avoiding making tough decisions. We have a housing shortage in virtually every part of England. That includes much of the south-east, and I can think of areas in the north as well. We can tackle that only if local authorities are honest about their needs and if they plan on that basis.
Jake Berry (Rossendale and Darwen) (Con)
People across my constituency will welcome the White Paper, which will make a huge change to people’s opportunities to buy their own home. I particularly welcome the changes in tenure that are set out in the document. Will the Secretary of State think about whether we also need to update the leasehold enfranchisement legislation to take account of the fact that our housing stock is moving towards mixed tenure?
Sajid Javid
Yes, I can confirm to my hon. Friend that I am doing that. The process has already begun, and I talk a bit about it in the White Paper. I am particularly interested in the possibility that abuse is taking place when people buy a stand-alone home—not a flat—on a leasehold basis. I have seen some of the agreements relating to how the ground rents work, and I am looking into the matter. A consultation has been announced in the White Paper.
Fiona Mactaggart (Slough) (Lab)
House prices in Slough have risen by 39% over the past two years, which is faster than anywhere else in the country, and our affordability ratio is something like double the one that the Secretary of State quoted. What is he going to do for places such as Slough that are built up to their boundaries but are surrounded by Conservative councils that simply will not provide homes in their areas? We are now housing people who commute to London, but we cannot find homes that the local nursery nurses, street cleaners and other people that our community really needs can afford.
Sajid Javid
One thing that we can do better across the country is to take density more seriously. We need to use the available land that is not green belt much more efficiently. Many cities and big urban areas across Europe have managed density a lot better than we have, and the White Paper contains a requirement that, when local authorities put plans in place, they start to take density seriously. We will even be setting out indicative requirements for provisions that could really help in some urban areas.
Mark Pritchard (The Wrekin) (Con)
I welcome the Secretary of State’s statement, and the protection in the White Paper for greenfield sites and the green belt. I have a question on the issue of appeals. The Muxton ward in my constituency currently has three public inquiries taking place, and a fourth might be coming along. What further reforms to the appeals process could be introduced while ensuring that developers and local authorities can still use the right of appeal under planning legislation?
Sajid Javid
My hon. Friend makes a good point. People have a right to appeal, and many cases go to appeal in our constituencies, but frankly, some of them are frivolous cases that really should not be appealed. One reason why that happens is that there is currently no cost attached to making an appeal. It is free, so many people do it. That is going to end, and we have announced in the White Paper that we are introducing a fee.
Ann Coffey (Stockport) (Lab)
Some councils have fallen short of meeting their housing need for years because their local plans have protected the green belt, limiting the supply of land. If that is also the Secretary of State’s priority, how is he going to achieve his ambition for safe, secure homes, particularly for families who do not want to live in high-rise flats, on the scale that he has outlined today?
Sajid Javid
Approximately 13% of the land in England is green belt. There is therefore a huge amount of land that is not, and that land should be the priority. We should use brownfield land, we should increase density and we should encourage better co-operation with neighbours. That should always be the priority. There are cases when a local authority decides that the tests for using the green belt have been met, and when that is properly done and the site has been inspected by the planning inspectorate, the local community can decide to build there, but that should not be the priority. The priority must be brownfield sites and better use of density.
Sir Desmond Swayne (New Forest West) (Con)
If it is not in the interests of builders to sufficiently reduce price by increasing supply to the necessary extent, is not the answer to afford greater empowerment to the public sector?
Sajid Javid
There are lots of answers to that question. My right hon. Friend is absolutely right that there is an important role for the public sector to play, whether indirectly through housing associations or through councils. There are excellent examples of councils with house building programmes. A diversity of supply is required, and the public sector has a role to play in that.
Lucy Powell (Manchester Central) (Lab/Co-op)
I am pleased that the Government have finally recognised that the housing market is broken, but I disagree with the Secretary of State’s prescription that supply is the only answer. In Manchester, we have built thousands of new homes and upgraded all the council homes to a decent standard, but far and away the worst-quality housing in Manchester is in the private rented sector. It is unfit for human habitation, infested, damp and dirty, and it is being paid for, by and large, by the taxpayer through housing benefit. When will the Government intervene in that broken market?
Sajid Javid
Whether homes are made available to rent or to buy, certain standards must be met. It is important that we apply high standards and that we do not have a race to the bottom. I beg to differ from the hon. Lady’s assertion, however, because Manchester also has a supply problem—[Interruption.] The No. 1 problem is a supply problem. Manchester, like so many other parts of Britain, has not built enough homes.
John Penrose (Weston-super-Mare) (Con)
Will the Secretary of State confirm that the White Paper encourages building up, not out, in urban areas? That should reduce the pressure on the green belt, regenerate urban centres, cut commuting times and make rents and mortgages more affordable. What assessment has he made of the number of new urban sites that could be released for housing in that way, and of the size of the corresponding fall in development on greenfield sites?
Sajid Javid
I can confirm to my hon. Friend that that is an important measure in the White Paper. I also want to congratulate him on his work to promote density. He has shared with me and others many examples from around the world of this being done properly. One thing that I am particularly interested in—it is in the White Paper—is making better use of our transport hubs. They often have huge car parks, for example, and much of that space could be used to create high-density housing in a location that people would find highly desirable, with the car parks being put underground. That is among the good examples from around the world, and I am glad that my hon. Friend is encouraging such plans.
Several hon. Members rose—
Mr Speaker
Order. On my reckoning, at least 60 colleagues are still seeking to catch my eye. It will be almost impossible to accommodate them all, but I will be helped if people can confine themselves to asking one-sentence questions without preamble, and if the Secretary of State can continue to make his pithy replies. On the matter of simple, one-sentence questions, I call Mr Barry Sheerman.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
The big lie at the heart of our housing policy is that we can create new houses on brownfield land. All the research shows that the brownfield land that is good for building has already been used. The fact is that we have to build on greenfield land to give people the chance of having a decent home. Why does the Secretary of State not have the courage to build on greenfield land?
Sajid Javid
A colourful one-sentence question, Mr Speaker. I do not agree with the hon. Gentleman. Take Madrid, for example, where the housing density is more than four times that of London. I do not know whether the hon. Gentleman has been to Madrid, but he would find that it is a perfectly beautiful, well-designed city that shows what can be done with density.
Sir Oliver Letwin (West Dorset) (Con)
I hugely welcome this well-balanced package, but may I invite the Secretary of State to be a bit more optimistic about the prospects for consensus? Did he notice, as I did, that despite the sound and fury the shadow Housing Minister remarkably did not actually disagree with anything in the White Paper?
Sajid Javid
My right hon. Friend points out that the shadow Minister has realised what he could actually have done when he was Housing Minister.
Tracy Brabin (Batley and Spen) (Lab)
The Secretary of State says that people yearn for honesty and truth. Travelling around my constituency, I am frequently shocked by the standard of the private housing stock. The English housing survey reveals that 29% of private rented homes are still non-decent. In the spirit of honesty and truth, why did the Government block Labour’s proposal to require landlords to let properties that are fit for human habitation?
Sajid Javid
The legislation already contains requirements and standards for housing, including for rented accommodation. If we start frivolously introducing unnecessary new regulations, that will just increase the burdens on house builders and push up costs even further.
Robert Jenrick (Newark) (Con)
Some of the large developments around Newark have gained a bad name with my constituents due to the common practice of large developers, such as Persimmon, selling freehold properties but then ensuring that residents pay rip-off prices for many years for management company rents, the cost of putting up a satellite dish, and so on. It is an outrageous practice that is hurting the working people of this country, so will the Secretary of State consider banning it?
Mr Iain Wright (Hartlepool) (Lab)
Will the Secretary of State outline how the White Paper aligns with the industrial strategy? How will the Government collaborate with the construction industry on skills, the supply chain, innovation and regional imbalances to ensure that the house building challenge can be met?
Sajid Javid
There is an important link, and one example relates to skills. I mentioned earlier the importance of factory build and its promotion. That requires a different type of skill set, and the Government need to support that, but it will help more generally with the skills challenge. We will have a new immigration policy following our departure from the European Union, so we must think carefully about that and the link with the construction industry.
Sir Peter Bottomley (Worthing West) (Con)
The majority of the new homes that my right hon. Friend has announced will be leasehold; many leaseholders are subject to abuse. May I ask that his consultation on the abuse and misuse of leasehold includes changing commonhold procedures so that they actually work, so that those with unfair conditions get stopped by the Competition and Markets Authority, and landlords gain nothing by trying to exploit leaseholders?
Sajid Javid
I can confirm that that is in the White Paper as part of the consultation on leasehold, which is partly due to my hon. Friend’s work in this area.
Melanie Onn (Great Grimsby) (Lab)
Modular housing will not be the panacea to this country’s housing crisis. Traditional house building will provide the majority of housing in the immediate future in which people want to live. There is no mention in the White Paper of the critical shortage of skilled people in the building industry, so how will the Secretary of State build and meet his targets without the people to do it?
Sajid Javid
No one is saying that modular homes and factory build will be the panacea, but they do have an important contribution to make. Traditional building remains important and that will remain the case for many years to come. Part of trying to get more skills into the sector involves the apprenticeship levy, which comes into place in April. I was proud to introduce it as Business Secretary and have already heard about construction companies’ plans to take on more apprentices.
Kit Malthouse (North West Hampshire) (Con)
I welcome the standardisation of the calculation of housing supply for local authorities. Will the Secretary of State confirm that that means that no permission should be granted outside the envelope of approved local and neighbourhood plans?
Mr Ivan Lewis (Bury South) (Lab)
My constituents are worried about proposals to build on the green belt, but we need more affordable homes. What will the White Paper do to force developers that are sat on brownfield sites and refusing to develop them to get on with building?
Sajid Javid
The White Paper contains several measures to deal with that. There is no easy answer, but there can sometimes be good reasons, such as if a developer has another project to go on once it finishes the current one. Some developers do take too long to turn planning permission into homes, however, so the measures in the White Paper include changes to completion notices and the ability to attach conditions to planning permission. We are also consulting on a new measure for large developments to allow local authorities to take into account a developer’s track record.
Crispin Blunt (Reigate) (Con)
Will my right hon. Friend confirm that it is still Government policy that London’s green belt is a priceless asset for both the nation and London? Will he further confirm that if a local authority ducks difficult decisions and fails to produce a local plan, it cannot short-cut its way out of that through a £2.5 billion development where the green belt is at its narrowest around London, earning a nice little £1 billion for the developer and the landowner?
Sajid Javid
It would be inappropriate for me to discuss a particular planning application, but I can confirm that protections for green belt are as strong as ever. In fact, the White Paper sets out for the first time much more clearly the steps that we expect a local authority to take before it even considers the green belt, including having to show that it has looked at all reasonable alternatives.
Peter Dowd (Bootle) (Lab)
How does the Secretary of State intend to help local authorities purchase land under compulsory purchase orders when he has devastated their budgets by up to 60%? He should be holding himself to account for his failures, not local authorities.
Sajid Javid
We are specifically consulting on the possibility of local authorities holding auctions using a compulsory purchase order, so they would not necessarily be buying land themselves.
David Mackintosh (Northampton South) (Con)
In high-growth areas, such as my constituency, the key issue is ensuring that we have the infrastructure for schools, healthcare, transport and community facilities. Will my right hon. Friend please give us more details of how the infrastructure fund for housing will work in practice to provide and ensure that we have both housing and infrastructure?
Sajid Javid
The £2.3 billion fund, which was announced in the autumn statement, will be launched in April and will be run by DCLG. It will involve a bidding process, through which local councils and possibly other parties can bid directly for the necessary infrastructure. I am conscious that many colleagues are eager to get more details, so we will publish them as soon as possible.
Andy Burnham (Leigh) (Lab)
My hon. Friend the Member for Manchester Central (Lucy Powell) is right that it is time to take much tougher action against absent private landlords who rake in housing benefit but do not reinvest a penny of that money into the upkeep of their properties. Councils should be given much simpler powers to issue CPOs when properties are below a decent standard. We should send a clearer message to landlords: respect our communities or get out of Greater Manchester.
Sajid Javid
The right hon. Gentleman will know that what we want all landlords, whether offering rented accommodation or homes for sale, to meet certain standards, but the underlying problem is that one reason why landlords can sometimes extract a higher rent or set more difficult terms is the lack of supply of homes. That applies to Manchester as much as anywhere else.
Mary Robinson (Cheadle) (Con)
I am pleased to hear the Secretary of State reiterate that the green belt is safe in our hands. In Stockport, however, the Greater Manchester spatial framework has proposed plans to build more than 4,000 houses on the green belt in my constituency. Will he reassure me, my constituents and the 3,600 people who signed my petition that the green belt is safe in our hands and that there are no plans to remove any restrictions on it?
Sajid Javid
We have made it clear in the White Paper that the green belt will retain all the protections that it enjoys today. For the first time, we have clearly set out what we expect a local authority to go through to demonstrate that it has looked at all other reasonable alternatives.
Helen Hayes (Dulwich and West Norwood) (Lab)
Can the Secretary of State confirm whether he remains committed to the definition of an affordable home as one costing up to 80% of market rent or £450,000 to buy in London? Can he confirm what now counts as a starter home? Will local authorities still be subject to draconian compliance directives if they fail to deliver them?
Sajid Javid
We want to see more starter homes being rolled out. A process has already begun that will include homes sold at a 20% discount, but it will also include other types of affordable homes for ownership.
Oliver Dowden (Hertsmere) (Con)
My constituency is entirely green belt, apart from developed areas, and it provides vital protection against London urban sprawl. Can the Secretary of State therefore confirm that, if my local council makes a determination that it cannot meet its needs assessment without sacrificing the green belt, the plan must be upheld by planning inspectors?
Sajid Javid
My hon. Friend understands that I cannot talk about a particular plan or application, but I can confirm that we have thought very carefully about measures that will help areas, such as his constituency and mine, that have huge amounts of green belt. As part of that, we are asking all local authorities to do more to co-operate with their neighbours. One of the requirements in the White Paper is a statement of common purpose, which we will consult on. Every single local authority will be required to talk to its neighbours and come up with a statement of common purpose.
Caroline Lucas (Brighton, Pavilion) (Green)
In Brighton and Hove alone there are 26,000 people on the housing waiting list, so why will the Secretary of State not lift the borrowing cap so that councils can start building again? He keeps talking about supply, and here he has a very practical way of doing it. Building on the green belt has risen fivefold in the past five years. How is he going to protect the green belt?
Sajid Javid
The councils asked for more borrowing powers two years ago so that they could build homes. We did that in last year’s Budget, and there is still lots of headroom—I think it is almost £300 million.
Jason McCartney (Colne Valley) (Con)
I welcome the philosophy of the right houses in the right places, but what advice can the Secretary of State give to my constituents who keep seeing Labour-run Kirklees building the wrong four-bedroom detached houses in the wrong places on greenfield sites with scant regard for school places, infrastructure and collection of section 106 money?
Sajid Javid
We expect all councils to come up with the right plans for their area. One of the tests that we apply is to ask the independent Planning Inspectorate to look at those plans, which cannot be adopted until they have gone through that process. When my hon. Friend looks at the changes, he will welcome how we have become more robust about that.
Lilian Greenwood (Nottingham South) (Lab)
Nottingham City Homes recently won national recognition for Palmer Court, its newly built scheme for older people in Lenton, but across our city vulnerable tenants in supported housing are deeply worried by the proposal to cap local housing allowance. If the Secretary of State is serious about providing safe and secure homes, why does he not take this opportunity to drop that proposal?
Sajid Javid
One of the things the hon. Lady will find in the White Paper is a requirement for all local authorities to account in their plans for everyone in their community, including older people and disabled people. She specifically asks about how we can help supported housing, and there is an ongoing consultation. We are carefully looking at all the issues.
Mims Davies (Eastleigh) (Con)
There is a wild west, adversarial, Lib Dem, lazy planning attitude in my constituency, and I welcome page 63 of the White Paper, which says that disabled people’s needs and older people’s needs will be considered. I also welcome the protection of ancient woodland because, at the moment, the only answer in Eastleigh is “out of space” development dropped on ancient woodland.
Sajid Javid
I agree with my hon. Friend on both counts. First, the words “Lib Dem” and “lazy” do go well together. Secondly, she is right about ancient woodland. She has spoken to me about that on a number of occasions, and in the White Paper I did not see why ancient woodland should have less protection than the green belt, as is the case currently. That is why we are upgrading the protection of ancient woodland to the same level as green belt.
Mr Speaker
The hon. Member for Leeds North West (Greg Mulholland) is not lazy. He is hyperactive.
Greg Mulholland (Leeds North West) (LD)
Thank you, Mr Speaker. For the Secretary of State to call anyone lazy when these few pages are the best he can do is pretty pathetic. It is also pathetic that he has done nothing in his term to ensure that the right houses are being built in the right places. Will he speak to Bramhope & Carlton and Pool in Wharfedale parish councils about why they are facing yet more development of greenfield and green-belt land for the kind of housing that is not necessary? Will he speak to local Conservative councillors who oppose his planning policies?
Sajid Javid
Not a day goes by when I do not speak to councillors across the country. What many of them will welcome today is the requirement for everyone to play by the same rules. They all understand the need for homes in their area, and I suggest the hon. Gentleman does the same.
Bob Blackman (Harrow East) (Con)
I welcome the White Paper’s measures to combat homelessness, but part of the solution is direct commissioning of housing. The progress on direct commissioning is not very good so far. What action can my right hon. Friend take to make sure that that is speeded up so that homes are provided for the people who desperately need them?
Sajid Javid
I commend my hon. Friend’s work on homelessness, particularly through his Homelessness Reduction Bill, which is making its way through Parliament. He is right about the importance of commissioning, which has a role to play and is something that I am looking at carefully.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
The National Audit Office estimates that the total Government spend on housing in the last financial year was £28 billion, but a staggering £20.9 billion of that total was spent on housing benefit. Is that not a demonstration that rents are too high and that even people in work cannot afford them? Did the Secretary of State give any consideration to reforming housing benefit when putting together the White Paper?
Sajid Javid
The hon. Lady will know that housing benefit has already been reformed, but she is right to make the link between housing benefit and high rents. Again, that is a symptom of the fact that for far too long we have not been building enough homes.
John Glen (Salisbury) (Con)
I warmly welcome today’s White Paper, which has a balanced, pragmatic range of solutions. Will the Secretary of State give consideration to situations where local authorities find themselves held to ransom by developers who refuse to make concessions in the section 106 agreement process and frustrate local communities by subsequently not delivering the infrastructure that they said they would deliver?
Sajid Javid
That is often a problem, and my hon. Friend makes a good point. In the White Paper he will see that we refer to some changes that will come about, following the consultation that has already happened, both to section 106 and the community infrastructure levy payments. I think that will help.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
We desperately need new houses, but development is not always popular with the public. The key issue is infrastructure. The best proposal I have ever seen is building new garden villages and putting in schools, roads and infrastructure at the same time. The Government have had a pilot, but is it something that they will take forward?
Iain Stewart (Milton Keynes South) (Con)
What flexibility does the White Paper propose for places such as Milton Keynes? Milton Keynes wants to expand properly as part of the Oxford to Cambridge corridor, but housing developments are now being proposed to meet short-term housing targets that risk undermining the planning for long-term growth?
Sajid Javid
My hon. Friend makes a good point. When plans are put together, they should look at the long-term land supply—not just over the following five years but beyond that to the required need. Also, there should be more co-operation with neighbouring local authorities on putting together the plans, which is where the proposed new statement of common purpose will help.
Kerry McCarthy (Bristol East) (Lab)
I am glad the Minister eventually came around to realising the need to tackle land banking and developers sitting on properties, so the moves on completion notices and compulsory purchase are very welcome. But when will he start to listen to council leaders, who, despite his answer to the hon. Member for Brighton, Pavilion (Caroline Lucas), are still saying they need the borrowing cap lifted? They need the freedom to borrow more so that they can build more houses.
Sajid Javid
We have increased local councils’ borrowing ability, but where the most ambitious councils that have good, sensible plans want to come forward to do a deal with central Government, we are listening. That invitation is in the White Paper.
William Wragg (Hazel Grove) (Con)
Can a self-imposed housing target become the exceptional circumstance to build on the green belt?
Sajid Javid
My hon. Friend helps me to highlight, again, the way in which we have tackled the green belt in this White Paper by keeping all its existing protections and demonstrating, for the first time, exactly all the hoops a local authority has to go through to show us categorically that it has looked at all other reasonable options.
Steve McCabe (Birmingham, Selly Oak) (Lab)
Further to the point raised by my hon. Friend the Member for Nottingham South (Lilian Greenwood), surely the Minister has to accept that his plans are going to lead to a reduction in the supply of supported housing in the midlands but an increase in London? That is a problem he could fix; that is a market he is breaking.
Sajid Javid
A consultation on supported housing is going on at the moment and the results will be out in due course.
Mr Peter Bone (Wellingborough) (Con)
Does the Secretary of State agree that housing demand would fall if we could reduce the third of a million people coming into this country each year?
Sajid Javid
I have looked at this issue carefully and I am not sure it makes the kind of difference my hon. Friend believes it does. Two thirds of housing demand has nothing to do with immigration; it is to do with natural population growth, particularly through people living longer, and that will have to be catered for regardless. Even if immigration was to fall to zero, we would still have a deficit of some 2 million homes and people would still be in overcrowded homes, so we would still have to keep building.
Rachael Maskell (York Central) (Lab/Co-op)
Not a single new social home has been commissioned in York under this Tory Government and the Tory-led council, and we have no local plan because the proposals were so unworkable. How will this White Paper help to deal with York’s housing crisis?
Sajid Javid
It will help York in many of the ways in which it will help across the country, for example, through the requirement for every local authority to undertake an honest assessment of need and plan on that basis.
James Berry (Kingston and Surbiton) (Con)
My constituents are shocked at Lib Dem and residents association-controlled Elmbridge Borough Council’s proposals to allow mass development on the green belt by Surbiton. I therefore welcome my right hon. Friend’s protection of the green belt, but will he confirm that building on the green belt is and will remain possible only in defined exceptional circumstances?
Kate Green (Stretford and Urmston) (Lab)
I note with alarm that the White Paper says the Secretary of State plans to review the size standards, as we know from University of Cambridge research in 2014 that house sizes in this country are among the smallest in Europe. We do not want to move to building lots of rabbit coops that are not good for young families, so will he offer the House assurances that he will proceed with great caution in this area?
Sajid Javid
Yes, I can offer that assurance. This is why we are having this consultation; it is in response to some of the innovation taking place in the industry. It is right to look at this, but it is also important that we do not have a race to the bottom.
Mr Speaker
The ever-vigilant Speaker’s Secretary has just pointed out that from the Government Benches I called Mr Wragg followed by Mr Bone. It was not in any way calculated.
Dr Tania Mathias (Twickenham) (Con)
I very much welcome the White Paper. What support is the Secretary of State giving to key workers who are trying to access homes in areas with very high property prices?
Sajid Javid
There are two parts to my answer on that. First, I point to our commitment to help with the creation of more affordable homes, both for rent and to buy. A lot of that will be through the support provided through housing associations, including the £1.4 billion of extra funding in the last autumn statement. In the longer term, we have the issue of pushing up supply, because that is the only way in which we shall tackle the affordability issue once and for all.
Derek Twigg (Halton) (Lab)
My constituency is the most heavily urbanised in Cheshire. Most of the available brownfield sites have been built on, there is little green belt land and there is pressure on school places and on the local roads. Will the Secretary of State or his Minister therefore meet me to discuss the specific problems that areas such as mine, particularly small urban areas, have in meeting housing demands?
Sajid Javid
I am sure the Minister for Housing and Planning would be happy to meet. The hon. Gentleman should know that we would not be able to discuss the specific planning issue, but more general discussions would be welcome.
James Cartlidge (South Suffolk) (Con)
The White Paper talks about sharpening the tools available to local authorities to deal with the massive gulf between the number of planning permissions given and the actual construction of homes. Are there any circumstances in which, if the local authority can provide evidence of land banking, my right hon. Friend would give it the power to levy council tax on unconstructed units if they were not delivered?
Sajid Javid
We have looked at this issue carefully, and we have to try to get the right balance. We need to respect the fact that there are legitimate reasons why the supply of any product would need to have a pipeline of inputs, including land, in the case of a house builder, but there is evidence of some firms taking advantage of that, as my hon. Friend mentions. There are many tools in this White Paper, and if after looking at them more carefully he thinks more needs to be done, I will be listening to him.
Mr David Nuttall (Bury North) (Con)
If we are going to stop building on the green belt, as is proposed in Bury as part of the Greater Manchester spatial framework, does my right hon. Friend agree that the only way to increase the number of new homes will be to insist on higher density development on brownfield sites?
Sajid Javid
One way to increase the number of homes in brownfield areas is through density. This White Paper contains a lot on density and I know that when my hon. Friend takes a close look he will welcome it.
Martin Vickers (Cleethorpes) (Con)
I welcome the Secretary of State’s determination to tackle the housing shortage, but he will be aware that housing need varies dramatically between provincial towns and rural areas, and London and the south-east. Can he assure my constituents that the policies and planning guidance will not be focused entirely on London and that there will be some allowance for local authorities to vary this in the more rural areas?
Sajid Javid
I can absolutely reassure my hon. Friend on that point. The White Paper contains a specific requirement on all local authorities to plan for the needs in their area, so if the demographics differ from area to area, as of course they will, that is exactly what will need to be catered for.
James Morris (Halesowen and Rowley Regis) (Con)
As a constituency neighbour of mine, the Secretary of State will know that people in Halesowen value the amenity of the green belt around it. Does he therefore agree that the approach to house building in the Black country should very much be brownfield first, focusing on the remediation of existing sites for house building?
Mr Stewart Jackson (Peterborough) (Con)
Land availability is, in a sense, a side issue, because one impediment to expeditious planning consents is the capacity of the planning department and the fact that there is no fiscal incentive for planners to grant permission, which is why these things take so long. Linked to that is the capacity issue and whether planners have the skills, knowledge and experience to deal with large-scale planning applications. On that point, is it not time we reviewed the capacity of local authorities to increase planning fees?
Sajid Javid
My hon. Friend has talked to me about this before and has helped, along with others, including many local leaders, to make a strong case about it. We have listened and local councils will be able to increase their planning fees by at least 20%.
Dr Andrew Murrison (South West Wiltshire) (Con)
Local communities are often keen to support housing on exception sites if they feel the housing is for local need. Does the Secretary of State share their frustration that too often under the Housing Act 1985 those homes can then be swapped to somebody who does not have that local connection? Does he also share their frustration at the apparent easy waiving of section 106 agreements, whereby housing for local need is determined after a very peremptory examination of the market by registered social landlords and others, who may turn down people with a local connection who are living in private rented accommodation, whether or not they can afford to live in that accommodation?
Sajid Javid
It is important that the local connection rules are appropriate and are working as we have set out. My hon. Friend also makes a link to section 106 agreements; as I referred to earlier, we have not yet made the final decisions, but that matter is subject to a separate consultation and we are looking at how we can improve it.
Nigel Mills (Amber Valley) (Con)
What action does the Secretary of State propose to take against councils that fail to put in place a local plan?
Sajid Javid
The good news is that the vast majority of councils do have in place a valid local plan, but, of course, some still have not met their requirement. The biggest incentive on councils to do so is that while they do not have a local plan, the presumption in favour of development applies, and that is not fair on the local people they represent. People want to see a plan so that they can control where development takes place.
John Howell (Henley) (Con)
I am pleased with what the Secretary of State said about neighbourhood plans. Will he confirm that he accepts they are an important part of the planning mix and are delivering more houses than expected?
Sajid Javid
Yes, I can confirm that. My hon. Friend speaks with some experience in this area, and the evidence is that the 200-odd neighbourhood plans that have been adopted so far are on average leading to 10% more development than was necessary.
Huw Merriman (Bexhill and Battle) (Con)
On page 25 of the excellent White Paper there is an expectation that local authorities will have to consider small windfall sites off-plan. I suggest that often it is medium sites that will deliver not only more housing but the community benefits that would encourage the community to welcome such sites. Could we increase their number?
Sajid Javid
I can highlight to my hon. Friend a requirement, which I think is on the same page in the plan, that would help on just that point. There is a new requirement that, from now on, when local authorities set out their plan they have to allow a minimum of 10% of the site for small and medium-sized builders. These have to be small sites and small plot sizes that will particularly appeal to small and medium-sized builders.
Andrew Stephenson (Pendle) (Con)
I was delighted to hear in January that Pendle Borough Council will be one of the first councils in the country to benefit from the Government’s £1.2 billion unlocking the land fund to bring forward brownfield land for starter homes. How will the White Paper further brownfield development in constituencies such as mine?
Sajid Javid
My hon. Friend will find in the White Paper a requirement on all local authorities that, before they can look at anything other than brownfield, they must show that they have fully exhausted the brownfield opportunities in their area. They must look at all the viable areas, but also at things such as density, to get the most out of brownfield.
Robert Courts (Witney) (Con)
Does the Secretary of State agree that when planning permission is given for homes in places such as west Oxfordshire, it is important that developers build them, and quickly?
Sajid Javid
I absolutely agree with my hon. Friend. He will find in the White Paper several measures to help to tackle just that problem—for example, the changes we have made to completion notices.
Julian Sturdy (York Outer) (Con)
Starter homes offer a realistic solution to difficult-to-deliver brownfield sites and low levels of home ownership among young people. Bearing in mind the possible change of focus for starter homes, is my right hon. Friend still committed to delivering on the requirement under the Housing and Planning Act 2016 to deliver 200,000 of them by 2020?
Sajid Javid
We are committed to delivering at least 200,000 homes for affordable ownership, and that 200,000 will include the starter homes with 20% discounts.
Chris Green (Bolton West) (Con)
Urban sprawl creates excessive pressure on local road infrastructure in my constituency, which means Daisy Hill and Atherton stations have to have increased capacity at their car parks. Will the Secretary of State do all he can to ensure that we build up, not out, especially within walking and cycling distance of established public transport routes?
Sajid Javid
There are specific measures in the White Paper to help to do just that, especially around urban transport hubs and other transport hubs, in order to get a greater density and make much better use of the land.
Richard Drax (South Dorset) (Con)
I welcome my right hon. Friend’s White Paper. Will he assure me that it will ensure that developers have to pay attention to the character of the area around which they are developing? So many developments are so ugly, but people have to live in them and others are less likely to object if the development is beautiful.
Sajid Javid
My hon. Friend is right to make that point. The change we have made to allow local authorities to increase their planning fees will help with that. Collectively, that 20% increase is worth £75 million. Many local authorities have told me that they would like to hire more resources in their planning departments to help with design, and this change will help to achieve just that.
Stuart Andrew (Pudsey) (Con)
Thousands of homes have been built on brownfield in my constituency, but thanks to Labour’s excessive 70,000 housing target, we are now seeing swathes of green belt coming under threat. Does the standardised methodology for housing need offer hope to my constituents that we can have a realistic housing target review to meet housing demand?
Sajid Javid
I assure my hon. Friend that at the heart of the new methodology is a requirement to be more realistic and honest about the actual housing need in the area. Perhaps he will also be reassured by the words in the White Paper about making sure that, before anyone even looks at green belt, they have exhausted all other reasonable options.
Tom Pursglove (Corby) (Con)
One market that never seems to be met is that for bungalows, which are perhaps the only truly lifetime property and which also free up properties for families. What role does the Secretary of State see bungalows playing in future supply?
Sajid Javid
My hon. Friend makes an important point. This comes back to the new requirement for local authorities to plan for every demographic in their area. I am sure that, like me, my hon. Friend has met constituents whose children have left and who live in a large home and would love to downsize, but there is not enough choice in their local area. There is now a specific requirement in the White Paper to make sure that local authorities are planning for everyone, including older people.
Mr Speaker
I am most grateful to the Secretary of State and colleagues, whose pithiness enabled every would-be contributor to take part in the exchange on the statement.
Points of Order
(7 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text
Sir Edward Leigh (Gainsborough) (Con)
On a point of order, Mr Speaker. As we are a democratic assembly, the only way we can work is to respect the authority of the Speaker; otherwise, there would be complete chaos. Personally, I think that the Queen has issued an invitation to Mr Trump under the advice of her Ministers. He is the leader of the free world, and if we have entertained the President of China, we can entertain him. That is my view but, at the end of the day, we have to respect and support the office of Speaker.
Paul Flynn (Newport West) (Lab)
Further to that point of order, Mr Speaker.
Mr Speaker
I am not sure that there is anything to add, but I shall take it and then come back to the hon. Member for Gainsborough (Sir Edward Leigh).
Paul Flynn
You may recall, Mr Speaker, that in business questions last week I raised the inability of ordinary Members of this House to express an opinion, through a vote, on what was an unprecedentedly quick invitation to a Head of State. We owe you a debt of gratitude for deciding that, in this case, such an invitation should not be supported by Members of this House. We know why this happened—it was done rapidly to avoid political embarrassment for the Prime Minister—but any invitation to this House should not be extended to such a person as Donald Trump.
Mr Speaker
First, in respect of the point of order raised by the hon. Member for Newport West (Paul Flynn), I thank him for what he said and add merely that I responded to a substantive point of order on this matter yesterday. I think it only fair to say that there is no need for me to provide a running commentary today.
In respect of the point of order raised by the hon. Member for Gainsborough, I also thank him for what he said. He does not mince his words. He says what he thinks, and always has done, and he is respected for that across the House. Sometimes he agrees with me and sometimes he does not, but his respect for and loyalty to the institutions of the country, including those within Parliament, is universally acknowledged. I thank him for that, and I think that others will, too.
Mr Peter Bone (Wellingborough) (Con)
On a point of order, Mr Speaker. First, I agree entirely with what my hon. Friend the Member for Gainsborough (Sir Edward Leigh) says. Of course we respect the Speaker. I have not always agreed with the Speaker either.
Secondly, a worrying breach of etiquette has broken out over the past few months with Members clapping in this Chamber. Is there anything in your power, Mr Speaker, to do something about that?
Mr Speaker
Members should not do so, and the answer is that perhaps I should be even more robust—I usually am pretty robust. The point was made yesterday about clapping; it should not happen. All I say is that one has to deal with every situation as it arises, and sometimes it is better just to let a thing pass than to make a song and dance about it. I respect the hon. Gentleman’s commitment to tradition. Of course if people want to change those traditions, they should argue the case for such change. I am no stranger to that phenomenon myself.
Alex Salmond (Gordon) (SNP)
On a point of order, Mr Speaker. Just on that previous point, if ever a statement deserved clapping, yours did yesterday, in my opinion.
I want to raise the question of irrevocability. We are about to go into Committee of the whole House, and just about every amendment that we will discuss hangs on the question of whether article 50 is irrevocable. The Supreme Court was silent on that matter. The Brexit Secretary told a Committee:
“It may be revocable—I don’t know.”
There is not much guidance from the Government on the matter. Given the importance of the amendments that we are about to discuss, and given that they hang on the question of whether article 50 is irrevocable once invoked, can we get some guidance from the Chair or the Government—or anybody—before we move into a debate without that basic piece of information, which would be important for hon. Members?
Mr Speaker
The right hon. Gentleman raises an important point, but I am not convinced—I will explain why—that it is a point of order for the Chair. Moreover, I might be wrong about this, but I have a sense that, on this occasion, he is perhaps more interested in what he has to say to me than in anything that I might have to say to him. He has got his point on the record. The reason why I am not convinced that it is a matter for me—I am looking round for inspiration to people with legal expertise—is that, frankly, it is not for the Speaker to seek to interpret treaties. That does not fall within my auspices. My best advice to the right hon. Gentleman is that he should follow his own instincts and counsel. He has been doing so for some decades. Knowing what a persistent fellow he is, if he is dissatisfied with my answer, I rather imagine that he will be pestering the Government Front-Bench team about that matter in the upcoming debates.
Sir Gerald Howarth (Aldershot) (Con)
On a point of order, Mr Speaker. Further to what my hon. Friend the Member for Gainsborough (Sir Edward Leigh) said—of course I entirely support him, and I have enjoyed a very good relationship with the Chair—yesterday did cause a number of us some concern. It was noticeable that there was great enthusiasm on the Opposition Benches and a rather subdued aspect on the Government Benches. We want to support you in the Chair, Mr Speaker. The relationship between the United Kingdom and the United States is an extremely important one, and the Prime Minister, in the view of many of us, managed to secure a very favourable outcome of what was undoubtedly a tricky visit. Although I was keen yesterday not to accuse you, Mr Speaker, of making an executive order in respect of another matter, I do hope that you will help us to ensure that we can have full confidence in your impartiality, because that is the way that this House has to proceed.
Mr Speaker
The hon. Gentleman is quite right in what he says about the required impartiality of the Chair. I do not want to rerun the debate. The only thing I will say to him—I say it in a very understated way—is this: I referred in the course of my response to the hon. Member for Cardiff South and Penarth (Stephen Doughty) to the locus and the responsibility of the Speaker in respect of the matter that he was raising with me. Therefore, although I completely understand that there can be different views on this matter—we have heard some of them—which should always and all be treated with respect, I was commentating on a matter that does fall within the remit of the Chair. The House has always understood that the Chair has a role in these matters. If the hon. Gentleman disagrees with the means of my exercising it, that is one point. If he does not always approve of my manner—I cannot think that he imagines me too robust for his liking as he is no stranger to blunt speaking himself—so be it. I was honestly and honourably seeking to discharge my responsibilities to the House. In the interests of the House, we should move on to other matters, but I thank him for what he says.
Crime (Assaults on Emergency Services Staff)
Tuesday 7th February 2017
(7 years, 9 months ago)
Commons ChamberRead Full debate Crime (Assaults on Emergency Services Staff) Bill 2016-17 View all Crime (Assaults on Emergency Services Staff) 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
Holly Lynch (Halifax) (Lab)
I beg to move,
That leave be given to bring in a Bill to make certain offences including malicious wounding, grievous or actual bodily harm and common assault aggravated when perpetrated against a constable, firefighter, doctor, paramedic or nurse in the execution of his or her duty or against a person assisting these persons in the execution of their duty; to make provision to require those suspected of certain assaults that may pose a health risk, including spitting, to be required to undergo blood tests and to make it an offence, without reasonable excuse, to refuse to undergo such tests; to make provision about the sentences for those convicted of the offences; and for connected purposes.
I come to the Chamber once again to raise the profile of the risks facing those working on the frontline in our emergency services. I seek approval for a Bill that would offer our police officers, firefighters, doctors, nurses and paramedics greater protection from harm than that allowed under existing legislation.
Having been out with all the emergency services in my constituency, may I start by paying tribute to the work that they do? Behind the uniforms are incredibly brave and dedicated individuals who, regrettably, face risks that they simply should not have to face on an almost daily basis. They routinely go above and beyond their duties to keep the public safe, yet when someone sets out deliberately to injure or assault an emergency responder, the laws in place must convey how unacceptable that is in the strongest possible terms. This Bill sets out to do just that.
I want to take this opportunity to thank the many Members who, on a cross-party basis, have lent their support to my “Protect the Protectors” campaign. I launched the campaign after spending a Friday evening in August out on patrol with West Yorkshire police in my constituency. I joined PC Craig Gallant, who was single crewed and responding to 999 calls. When a routine stop very quickly turned nasty, I was so concerned for his safety that I rang 999 myself to stress just how urgently he needed back-up. Thankfully, other officers arrived at the scene shortly afterwards to help to manage the situation. Although, amazingly, no injuries were sustained on that occasion, I saw the dangers for myself and understood just how vulnerable officers are when they are out on their own.
Following that incident, and having secured an Adjournment debate on this very issue, police officers from all over the country started to contact me with their harrowing stories of being attacked while on duty. What has shocked me, and what thoroughly depresses police officers, is that sentences handed down to offenders for assaulting the police often fail to reflect the seriousness of the crime or, more crucially, to serve as a deterrent.
To assault a police officer is to show a complete disregard for law and order, our shared values and democracy itself, and that must be reflected in sentencing, particularly for those who are repeat offenders. Many officers described feeling like they had suffered an injustice twice—first at the hands of the offender; and then again in court when sentences were unduly lenient. Within two weeks of the incident involving PC Gallant, PC Dan McLaughlin from Halifax was assaulted when, during an arrest, an angry male grabbed his radio and used it to strike him repeatedly on the head. I am pleased that PC McLaughlin is able to join us today in support of this legislative change, which would help to keep him and his colleagues safe.
During my Adjournment debate in October, I outlined the flaws in the Home Office’s then system for collecting data on just how many assaults there were on police officers. I welcome the fact that the Minister listened and that changes were made, which we all hope will give us a much more accurate picture.
Official Home Office statistics suggest that there were just over 23,000 assaults on police officers last year. That is 450 a week, and it equates to an officer being assaulted every 22 minutes. However, just this week the Police Federation published the results of its welfare survey, which was undertaken by 17,000 serving police officers. The survey revealed that there are actually closer to 6,000 assaults every day—an assault every 13 seconds—with the average police officer being assaulted 19 times a year.
In our Opposition day debate on police officer safety at the end of last year, my hon. Friend the Member for Newport East (Jessica Morden) told the Chamber about the mum she had met who told her children that their dad was the clumsiest man in the world to explain away his bruises when he came home from work as a police officer. Although the figures sound incredibly high, they sound worryingly in line with the experiences of that family.
My Bill would protect not just police officers, but all blue-light emergency responders. A report published just before Christmas by Yorkshire ambulance service revealed that staff faced “violence and aggression” on a weekly basis. There was a 50% increase in reported incidents of verbal and physical attacks on staff, with 606 incidents reported in 2015-16. Richard Bentley, a paramedic in Leeds, told the BBC that he had faced three serious assaults in five years. He had been bitten, head-butted and threatened with a knife.
Members of West Yorkshire fire and rescue service have also reported being subject to assaults. On bonfire night, the service received 1,043 calls, with crews attending 265 incidents. It was disgraceful that, faced with such pressures on the busiest night of the year, firefighters in West Yorkshire were also subject to 19 attacks overnight. The Bill would ensure that anyone who assaults an emergency service responder, doctor or nurse, and is charged with malicious wounding, grievous bodily harm, actual bodily harm or common assault, would be eligible for a tougher sentence because an assault on an emergency service worker is an assault on society. It is totally unacceptable that public servants who are working in their communities, protecting people and helping the vulnerable are subject to assaults as they go about their jobs. These changes would go some way towards reflecting that.
The second aspect of the Bill aims to deal with the hideous act of spitting at emergency service workers. As well as being horrible, spitting blood and saliva at another human being can pose a very real risk of transmitting a range of infectious diseases, some with life-changing or even lethal consequences. At an event organised by my hon. Friend the Member for Wolverhampton South West (Rob Marris), I met PC Mike Bruce and PC Alan O’Shea of West Midlands police. Both officers had blood spat in their faces while trying to arrest a violent offender. They both had to undergo antiviral treatments to reduce their risk of contracting communicable diseases, and they faced a six-month wait to find out whether the treatment had been successful. During that time, PC O’Shea was advised that he could not see his brother, who was undergoing cancer treatment, because the risk of passing on an infection was too high. He was also advised not to see his parents because they were in such regular contact with his brother.
PC Bruce had a false positive result for hepatitis B, and for six months until conclusive test results came through, he was understandably reluctant to be close to his wife or children, fearing for their wellbeing. I am pleased that PC Bruce and PC O’Shea are here today to lend their support to these changes which, had they been in place at the time, might have saved them such an agonising wait.
In previous speeches I have made on the issue, I shared with Members the story of Arina Koltsova, a police officer in Ukraine who died after contracting tuberculosis from an offender who spat at her while she was trying to arrest him. At the moment, if an emergency service worker is spat at, they can take a blood sample from an individual only if that person gives their permission. Needless to say that in the case of PC O’Shea and PC Bruce, the offender was not in a helpful mood, so they were subjected to antiviral treatments and a six-month wait.
Laws in Australia provide that refusal to give a blood sample can result in a $12,000 fine and a custodial sentence. My Bill would mean that refusing to provide a blood sample will, in itself, be a crime punishable by fine or custodial sentence. If an emergency service worker, doctor or nurse has already had to endure being spat at, this measure would hopefully save them having to endure a six-month ordeal of waiting to see if the consequences are much more serious.
It has been made very clear to me that the experience I had out on the streets of my constituency last summer was not an isolated incident. It reflected the daily challenge that our police officers face. Paramedics, firefighters, doctors and nurses are sadly also in need of these protections, yet it is worth remembering that when they find themselves under attack, it is the police who are called. I hope that this change in sentencing will go a small way towards giving these dedicated public servants the protections they should not require, but sadly do.
I am not naive to the nature of ten-minute rule Bills, and nor am I under any illusions about where we are in the parliamentary calendar, but I hope that the Policing Minister and the Home Office team have heard the details of my Bill and will reflect on its merits. I commend the Bill to the House.
Question put and agreed to.
Ordered,
That Holly Lynch, Conor McGinn, Rob Marris, Liz Saville Roberts, Anna Turley, Michael Dugher, Scott Mann, Hannah Bardell, Tom Blenkinsop, Tracy Brabin, Jim Shannon and Philip Davies present the Bill.
Holly Lynch accordingly presented the Bill.
Bill read the First time; to be a read a Second time on Friday 24 March, and to be printed (Bill 136).
European Union (Notification of Withdrawal) Bill
Tuesday 7th February 2017
(7 years, 9 months ago)
Commons ChamberRead Full debate European Union (Notification of Withdrawal) Act 2017 View all European Union (Notification of Withdrawal) Act 2017 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Committee of the whole House Amendments as at 7 February 2017 - (7 Feb 2017)
18:14 - The Committee divided: - Ayes: 293 / Noes: 326 - Question accordingly negatived.
18:29 - The Committee divided: - Ayes: 88 / Noes: 336 - Question accordingly negatived.
21:13 - The Committee divided: - Ayes: 281 / Noes: 337 - Question accordingly negatived.
21:28 - The Committee divided: - Ayes: 79 / Noes: 333 - Question accordingly negatived.
Paul Farrelly (Newcastle-under-Lyme) (Lab)
On a point of order, Ms Engel, I would be grateful if you explained not only to the Committee, but to the country that, of all the amendments grouped for debate, the Committee will only vote on new clause 1 today.
The Second Deputy Chairman of Ways and Means (Natascha Engel)
I think the hon. Gentleman knows the answer to his question. This is very early for points of order, as we have not even started. As he knows, the grouping of amendments was the subject of the programme motion that was voted on last week. As he says, there will be a Division on the lead amendment. As for subsequent amendments, it depends on what happens in the rest of the debate.
New Clause 1
Parliamentary approval for agreements with the Union
“(1) Where a Minister of the Crown proposes to conclude an agreement with the European Union setting out the arrangements for the withdrawal of the United Kingdom from the European Union—
(a) the Secretary of State must lay before Parliament a statement of the proposed terms of the agreement, and
(b) no Minister of the Crown may conclude any such agreement unless the proposed terms have been approved by resolution of both Houses.
(2) The requirements of subsection (1) also apply where a Minister of the Crown proposes to conclude an agreement with the European Union for the future relationship of the United Kingdom with the European Union.
(3) In the case of a proposed agreement setting out the arrangements for the withdrawal of the United Kingdom from the European Union, the statement under subsection (1)(a) must be laid before the proposed terms are agreed with the Commission with a view to their approval by the European Parliament or the Council.”—(Keir Starmer.)
This new clause requires Ministers to seek the approval of Parliament of any proposed Withdrawal Agreement before final terms are agreed with the Commission and prior to endorsement by the European Parliament and Council.
Brought up, and read the First time.
Keir Starmer (Holborn and St Pancras) (Lab)
I beg to move, That the clause be read a Second time.
The Second Deputy Chairman of Ways and Means (Natascha Engel)
With this it will be convenient to discuss the following:
New clause 18—New Treaties with the European Union—
“So far as any of the provisions of any new treaty with the European Union may depend for ratification solely upon the exercise of prerogative, they shall not be ratified except with the express approval of Parliament.”
This new clause would ensure that any future treaties made with the European Union must be ratified with the express approval of Parliament.
New clause 19—Future relationship with the European Union—
“(1) Following the exercise of the power in section 1, any new treaty or relationship with the European Union must be subject to the express approval of Parliament.
(2) It shall be the policy of Her Majesty’s Government that, in the event of Parliament declining to approve such a new treaty or relationship, further time to continue negotiations with the European Union shall be sought.”
This new clause seeks to ensure that, if Parliament declines to give approval to any new deal or treaty following the negotiations in respect of the triggering of Article 50(2), that Her Majesty’s Government shall endeavour to seek further time to continue negotiations for an alternative relationship with the European Union.
New clause 28—Parliamentary sovereignty—
“Before exercising the power under section 1, the Prime Minister must undertake that a vote on the proposed agreement setting out—
(a) the arrangements for withdrawal, and
(b) the future relationship with the European Union
will take place in the House of Commons before any vote in the European Parliament.”
This new clause puts a requirement on the Prime Minister to ensure a vote on final terms takes place in the House of Commons before the European Parliament votes on the deal.
New clause 54—Negotiating timeframe—
“Before exercising the power under section 1, the Prime Minister must undertake that if Parliament does not approve the terms for withdrawal and the future relationship within 24 months of notifying the United Kingdom’s intention to withdraw from the EU, she will request that the European Council extends the time period for negotiations.”
This new clause makes provision for a situation in which negotiations have not been concluded or in which Parliament has not approved the deal either because of time constraints or because it has declined to give approval. In any of these situations the Prime Minister would seek extra time to continue negotiations with the EU.
New clause 99—Parliamentary approval of the final terms of withdrawal from the EU—
“The United Kingdom shall withdraw from the EU once either—
(a) Royal Assent is granted to an Act of Parliament that approves—
(i) the arrangements for withdrawal, and
(ii) the future relationship between the United Kingdom and the EU
as agreed to between the United Kingdom and EU, or
(b) Royal Assent is granted to an Act of Parliament that approves the United Kingdom’s withdrawal without an agreement being reached between the United Kingdom and the EU.”
This new clause aims to embed parliamentary sovereignty throughout the process and requires primary legislation to give effect to any agreement on withdrawal or for withdrawal without such an agreement.
New clause 110—Future relationship with the European Union—
“(1) Following the exercise of the power in section 1, any new Treaty or relationship with the European Union must not be concluded unless the proposed terms have been subject to approval by resolution of each House of Parliament.
(2) In the case of any new Treaty or relationship with the European Union, the proposed terms must be approved by resolution of each House of Parliament before they are agreed with the European Commission, with a view to their approval by the European Parliament or the European Council.”
This new clause seeks to ensure that Parliament must give approval to any new deal or Treaty following the negotiations in respect of the triggering of Article 50(2), and that any new Treaty or relationship must be approved by Parliament in advance of final agreement with the European Commission, European Parliament or European Council.
New clause 137—Future relationship with the European Union—
“(1) Following the exercise of the power in Section 1, any new treaty or relationship with the European Union must be subject to the express approval of Parliament.
(2) In the event of Parliament declining to approve the new treaty or relationship set out in subsection (1), Her Majesty’s Government shall seek to negotiate an alternative new agreement with the European Union.”
The Prime Minister has guaranteed that Parliament will have a vote on the final deal between the UK and the EU. This new clause is intended to make that vote meaningful by ensuring that if Parliament votes against the terms of such a deal, the Government shall try to negotiate an alternative future trading agreement and shall not default without agreement to the World Trade Organisation rules.
New clause 175—Request for Suspension of Authorisation—
“If Parliament has not approved terms on which the UK will leave the European Union within the two years specified in Clause 3 of Article 50 of the Lisbon Treaty, or any extension of the negotiation period agreed in accordance with that clause, then the Government must request the European Council to consider the notification authorised by this Act as suspended.”
This new clause would require that Her Majesty’s Government request the European Council to suspend the notification of the United Kingdom’s intention to leave the European Union if Parliament does not approve the terms of departure.
New clause 180—UK—EU membership: reset (No.2)—
“The Prime Minister may not exercise the power under section 1(1) until she has sought an undertaking from the European Council that failure by the Parliament of the United Kingdom to approve the terms of exit for the UK will result in the maintenance of UK membership on existing terms.”
New clause 182—Parliamentary approval for agreements with the Union—
“(1) Where a Minister of the Crown proposes to conclude an agreement with the European Union setting out the arrangements for the withdrawal of the United Kingdom from the European Union—
(a) the Secretary of State must lay before Parliament a statement of the proposed terms of the agreement, and
(b) no Minister of the Crown may conclude any such agreement unless the proposed terms have been approved by resolution of both Houses.
(2) The requirements of subsection (1) also apply where a Minister of the Crown proposes to conclude an agreement with the European Union for the future relationship of the United Kingdom with the European Union.
(3) In the case of a proposed agreement setting out the arrangements for the withdrawal of the United Kingdom from the European Union, the statement under subsection (1)(a) must be laid before the proposed terms are agreed with the Commission with a view to their approval by the European Parliament or the Council.
(4) In laying a statement before Parliament under subsection (1)(a), Her Majesty’s Government shall have regard to the requirements of Parliament for adequate time to consider the statement before the proposed terms are put to each House for approval under subsection (1)(b).”
This new clause is an alternative version of NC1 which provides for additional time being allowed for consideration by Parliament of the proposed terms of the agreement before the vote.
Amendment 50, in clause 1, page 1, line 3, at end insert—
“(1A) The Prime Minister may not notify under subsection (1) until a Minister of the Crown has published an assessment on whether such a notification can later be revoked, and laid a copy of the assessment before Parliament.”
Amendment 20, page 1, line 5, at end insert—
“(3) If the power is exercised under subsection (1), the Prime Minister’s commitment to hold a vote in both Houses of Parliament on the outcome of the negotiations with the European Union shall include the option to retain membership of the EU.”
Recognising that the Government wishes to begin negotiations on a deal to leave the EU, and recognising the Supreme Court ruling on the sovereignty of Parliament, this amendment provides a safety net, ensuring that there is a real vote on the outcome deal that provides the option of the UK staying in a reformed EU should the final terms of the deal be detrimental to the UK’s national interest.
Amendment 43, page 1, line 5, at end insert—
“(3) Before exercising the power under section 1, the Prime Minister must prepare and publish a report on the process for ratifying the United Kingdom’s new relationship with the European Union through a public referendum.”
Keir Starmer
In speaking to new clause 1, I will touch on other new clauses in the bucket. As we go through the debate on these amendments, which is probably the most important debate that we have had thus far and are going to have, it is important that we remind ourselves of the context. The negotiations that will take place under article 50 will be the most difficult, complex and important for decades—arguably, since the second world war. Among other things, it is important that we ensure the best outcome for our economy and jobs, and the trading agreements. As I have said on a number of occasions, what that entails is very clear; we must have tariff-free and barrier-free access to the single market, regulatory alignment, and full access for services and goods. In the White Paper published last Thursday, the Government accept the strength of those arguments about the trading agreements.
It is important that we have the right ongoing future relationship with our EU partners. Labour has been forceful in arguing for maintaining close collaboration with our partners in the fields of medicine, science, research, education, culture, security, policing and counter-terrorism. Although the Prime Minister and the Secretary of State maintain the idea that all this can be agreed within two years, leaving just an implementation stage, the reality is that we will have two deals: the article 50 agreement and a new UK-EU treaty setting out the new arrangements, along with transitional arrangements.
To be clear, we all have a vested interest, on behalf of all our constituents, in getting the right outcome, and that raises the proper role of Parliament in this process. That is why I have consistently argued for three elements of scrutiny and accountability, and this is a debate that, in a sense, has been going on for the last three months. The first element, which I started the argument for last October, was that, at the start, we should have a plan or White Paper—a formal document setting out the negotiating objectives. We should then have a system for reporting back during the negotiations, and we should have a vote at the end of the exercise. Those are the three elements of scrutiny and accountability that I have argued for.
Pete Wishart (Perth and North Perthshire) (SNP)
Is it the case that if all the hon. and learned Gentleman’s proposals are rejected by the Government, the Labour party will simply endorse Third Reading and support the Government? What is the point, therefore, of making all this case for these proposals if he is just supinely going to cave in to what the Government want on article 50?
Keir Starmer
I am not sure how helpful interventions like that are to a debate, which is actually really important, about scrutiny and accountability. Just to be clear, nagging away, pushing votes and making the argument over three months, we have got a White Paper, and it is important. Nagging away and making the arguments, we have got commitments about reporting back. Nagging away and making the arguments, we have got a commitment to the vote at the end of the exercise. So when the charge is levelled at the Opposition that they have not made the case, and are not succeeding on the case, for scrutiny and accountability, that simply does not match what has happened over the last three months.
Ms Angela Eagle (Wallasey) (Lab)
My hon. and learned Friend is right to point out that progress has been made, but does he agree that to make a vote at the end of the process meaningful, we have to have meaningful scrutiny as the process goes on, and as a Parliament we have to have the chance to say to the Government, “You must go back and try to do better”? Having an all-or-nothing vote at the end, when all the discussions and negotiations are over, is not, in my definition, meaningful scrutiny. Does he agree?
Keir Starmer
I am grateful for that intervention, and I will come to that, but the central theme of the case I will seek to make this afternoon is that a vote in this House must be before the deal is concluded; that is the dividing line that makes the real difference here.
The Minister of State, Department for Exiting the European Union (Mr David Jones)
I am grateful to the Secretary of State, and I think that this may be helpful—[Interruption.] Forgive me, the shadow Secretary of State. I hope that this will be helpful to him. He has mentioned the fact that the Government have made a commitment to a vote at the end of the procedure. Later, when I address the House, I will be outlining what I intend that vote shall be, but it may be of assistance to him now to know what is proposed. First of all, we intend that the vote will cover not only the withdrawal arrangements but also the future relationship with the European Union. Furthermore, I can confirm that the Government will bring forward a motion on the final agreement, to be approved by both Houses of Parliament before it is concluded. We expect and intend that this will happen before the European Parliament debates and votes on the final agreement. I hope that is of assistance.
Keir Starmer
Minister, I am very grateful for that intervention. That is a huge and very important concession about the process that we are to embark on. The argument I have made about a vote over the last three months is that the vote must cover both the article 50 deal and any future relationship—I know that, for my colleagues, that is very important—and that that vote must take place before the deal is concluded, and I take that from what has just been said.
Anna Soubry (Broxtowe) (Con)
Would the hon. and learned Gentleman—I nearly said “Friend”; I will have to be careful—agree that it is really important that, as a nation and a House, we now come together, putting aside all the party political differences, to do the right thing by our country? But most importantly perhaps, on the very point he makes, does he share my concern that, in the event of no deal being reached, this House must also decide what happens next?
Keir Starmer
I am grateful for that intervention, and I do agree that we all have a responsibility to bring this country back together—we are deeply divided. [Interruption.] The United Kingdom.
Several hon. Members rose—
Keir Starmer
I am dealing with this intervention, if you don’t mind.
What is significant about what has just been said is that it covers the article 50 agreement and it covers any future relationship. That is the first time we have heard this. It is a very significant position by the Government, and I am grateful that it has been made. It is very important that it has been made, because, on both sides of the House, there has been real anxiety that it should cover both bases.
Whether it goes far enough for the fall-back position, I will reflect on. Ideally, of course, one would want that covered, but I do not want to underplay the significance of what has just been said about the two deals, because this is the first time that clarity has been given; it is the first time the point has been conceded. It is an argument I have been making for three months, and it is very important that it has now been conceded: it is important for my colleagues, and I am sure it is important for people across the House.
Equally important is the timing—that the vote should be before the deal is concluded. The great fear was that there would be a concluded deal, which would make any vote in this House meaningless.
What I hope can now happen on the back of that concession is what I anticipate will happen in the European Parliament: by regularly reporting, updating the House and setting out the direction of travel, there can be agreement about progress, and what happens at the end will not come as a surprise to any of us in this House. But what has been said by the Minister is a very significant statement of the position, which meets in large part everything I have been driving at in new clause 1.
Mr Ben Bradshaw (Exeter) (Lab)
I welcome, as my hon. and learned Friend does, the concession from the Government Benches, but does he agree that, as well as the timing, it is the scope of that vote that will be absolutely vital? As the right hon. Member for Broxtowe (Anna Soubry) says, if we are faced with a choice between a hard Brexit and World Trade Organisation rules, that is no choice—the Government will have to go back and renegotiate.
Keir Starmer
At the moment, I agree that we should have as big a say as possible on all of this, but I do not want to understate what has been conceded in the last 10 minutes. I do take the point, but where we have made significant progress on scrutiny and accountability, we should recognise where we have got to.
Mr Kenneth Clarke (Rushcliffe) (Con)
While I echo what the hon. and learned Gentleman has said, would he agree that instantly leaping on a concession may be a little unwise until we are quite clear what it amounts to? I recall that a concession on a plan led to a speech in Lancaster House, which did not take us very much further. I would like to be persuaded that a major concession has been made. Does he agree that it would be helpful, as we will not know quite what we are debating if we continue now, if the Minister tried to catch the Chairman’s eye after the hon. and learned Gentleman has sat down, so that he can explain in more detail what he is proposing? The substance of the debate on this group of proposals will then be altogether better informed.
Keir Starmer
I am grateful for the intervention, and I accept that point. Far be it from me to say what the procedure should be, but that would be helpful because some of what has been said has been heard for the first time today, and we need to reflect on it.
Alex Salmond (Gordon) (SNP)
If this is indeed a significant concession, should it not be added to the Bill so that it can be properly examined and analysed and so that by Report every Member has been able to look at it?
Keir Starmer
I recognise the strength of that point. There are of course other opportunities to examine what has been conceded, and to ensure that it might find its way into the Bill. I think it would be sensible to recognise the significance of what has been said, hear a little more detail if we can, and reflect on that during the course of the afternoon. Of course, the Bill does not complete its passage today, or in this House.
Robert Neill (Bromley and Chislehurst) (Con)
The hon. and learned Gentleman is making a fair point. I think he and I would accept, as advocates, that if somebody says something to us in good faith, we take it on board, bank it, and sometimes do not push too hard—we take a valuable concession and recognise it for what it is.
Keir Starmer
I am grateful for that intervention. When an assurance is given in a debate such as this, it is a significant assurance. That said, of course having something in statute at some later point would be even better.
Lyn Brown (West Ham) (Lab)
I came into the Chamber with the full intention of supporting new clause 1, and I still feel that we need to press it to a vote. I hear what my hon. and learned Friend is saying—that he wants to trust and believe the Government. However, if we saw a manuscript amendment before the end of the afternoon, I would find it much easier not to have a vote on new clause 1. Does he agree that a manuscript amendment would be helpful?
Keir Starmer
That is in the hands of the Minister, but I certainly take the point.
Let me make some progress, because we have not got very far. [Interruption.] Well, I have not got very far. Looking again at the big picture, there is a commitment in paragraph 7.1 of the White Paper—this is important for trade unions, for working people and for constituents who have repeatedly raised these points—to convert all EU-derived rights, including workers’ rights, into domestic law. I do not think that commitment has been heard loudly enough. We certainly intend to hold the Government to that at every step of the way, along with other EU rights such as environmental and consumer rights.
I have consistently argued that the Prime Minister cannot, in the article 50 negotiations, negotiate to change domestic law or policy—that will require primary legislation. Paragraph 1.8 of the White Paper makes it clear that the Government do not accept that the Prime Minister would have that authority, and expressly refers to separate Bills on immigration and on customs. I highlight that because there is huge concern among my colleagues about the threat made by the Prime Minister to alter our social and economic model and turn the UK into a tax haven. That cannot happen without primary legislation. It is important that we note that.
Paul Farrelly
I rather agree with the right hon. Member for Broxtowe (Anna Soubry) and my right hon. Friend the Member for Exeter (Mr Bradshaw). Given the Government’s position, which has just been outlined, does my hon. and learned Friend agree that the only substantive reason now for the Government not to agree to our new clause 1 is to deny the other House a vote on a resolution, and that the Minister should explain why that is the position?
Keir Starmer
I hear what my hon. Friend says. I think we will have to wait to hear from the Minister.
So far as the vote is concerned, there has been a change of position, and it is important that I set that out. Initially, the Secretary of State for Brexit said back in October that he would observe the requirements of treaty ratification. Then in December, at the Dispatch Box, he almost said that we would get a vote—he said that it was “inconceivable” that we would not. Then, just before Christmas at the Liaison Committee, the Prime Minister appeared to back away from that altogether under questioning from the Chairman of the Brexit Committee, and the fact of a vote was only conceded after Christmas. Then in paragraph 1.12 of the White Paper, there was a commitment to a vote on the final deal. Today has taken us a lot further forward. That demonstrates how, by chipping away and arguing away, we are making progress on accountability and scrutiny.
Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)
My hon. and learned Friend may have heard what the Minister said in more detail than I did. Was it clear whether we would get a vote in this House if there was no deal? If the Government failed to get a deal with the EU—none of us wants that to happen, but if it did—was it clear to him from what the Minister said whether we would still get a vote in Parliament?
Keir Starmer
No, and we need to press the Minister on that when he rises to speak.
Joanna Cherry (Edinburgh South West) (SNP)
The hon. and learned Gentleman has ably outlined the Government’s position to date. He has ably shown all of us that the Government have made quite a major change in their position today. That change in position appears to have taken place when we are debating many differently nuanced amendments about the circumstances surrounding a final vote, so does he agree that it is important for the Government to commit to exactly what their concession is in writing, and to do so in the appropriate way, which would be by way of a manuscript amendment?
The Second Deputy Chairman of Ways and Means (Natascha Engel)
Order. Could I ask that interventions be a bit more brief, because we have only four hours for this debate and a lot of people to get through?
Keir Starmer
I am grateful for the intervention by the hon. and learned Lady. It would be helpful if we had both clarification and, if possible, a written form of the concession that has been made so that we can all see what it is.
Vernon Coaker (Gedling) (Lab)
On a point of order, Ms Engel. Given that, as the hon. and learned Member for Edinburgh South West (Joanna Cherry) said, we require some sort of information as to what the Government are putting forward, is there any way in which you can require the Government to put before us a manuscript amendment so that we actually know what we are debating for the rest of the afternoon?
The Second Deputy Chairman
The Minister will be speaking later, and I am sure that he will explain then.
Keir Starmer
I am sure that the Minister hears what is being said. What has been said, today is significant—there has been a concession, and it now needs to be put in writing. A great deal of this debate should now be spent probing the concession that has been made.
Keir Starmer
I am going to make some progress, because I barely got through two or three sentences before taking interventions. I do not think anybody could accuse me of not giving way.
In the end, there is stark choice for the House. If we are to have a vote, it will be either before the deal is concluded, or afterwards, in which case it will be a fait accompli. This concession appears to suggest that it will be before it is concluded. I recognise that there are other issues that flow off the back of that timing, but that is critical, because the sequence of events at the end of the exercise is extremely important to what the House can meaningfully say or do about the agreement that is put to us for a vote.
Liz Kendall (Leicester West) (Lab)
Does my hon. and learned Friend agree that we must consider not just the timing of the vote but what happens if the House declines to accept the deal that the Government have put forward? The Prime Minister said on 25 January:
“If this Parliament is not willing to accept a deal that has been decided on…with the European Union, then, as I have said, we will have to fall back on other arrangements.”—[Official Report, 25 January 2017; Vol. 620, c. 295.]
That does not guarantee that this House will have the final decision on our future relationship with the EU.
Keir Starmer
I am grateful for that intervention. I think the exchange that my hon. Friend has referred to is the cause of the concern about the vote being held before the deal is concluded. We will need greater clarification about the extent of the vote.
Mr Jacob Rees-Mogg (North East Somerset) (Con)
Will the hon. and learned Gentleman give way?
Keir Starmer
I am going to press on, because I am not sure that my trying to explain what the Minister is going to tell us is working particularly well.
Mr David Jones
If it is of any assistance to the shadow Secretary of State and to the Committee, may I say that with your leave, Ms Engel, I hope to be able to speak immediately after him?
Keir Starmer
I have made the case for accountability and scrutiny, I have made the case for a White Paper, I have made the case for reporting back and I have made the case for a vote. We have got this concession, and I think the most helpful thing, in the circumstances, would be for hon. Members to be given the opportunity to test what the Minister has said.
Mr Jones
I had hoped to speak at the end of the debate, but it may be of assistance to the Committee if I deal with some of the matters that the shadow Secretary of State touched on. However, I do not want to go into the details of the various amendments that other hon. Members will no doubt wish to speak to. With your consent, Ms Engel, I will address them briefly at the end of the debate.
May I first repeat what I said to the shadow Secretary of State when I intervened on him a few moments ago? The Government have repeatedly committed from the Dispatch Box to a vote in both Houses on the final deal before it comes into force. That, I repeat and confirm, will cover not only the withdrawal agreement but the future arrangement that we propose with the European Union. I confirm again that the Government will bring forward a motion on the final agreement—
Mr Jones
I will just finish the sentence, because it is rather important. The Government will bring forward a motion on the final agreement to be approved by both Houses of Parliament before it is concluded, and we expect and intend that that will happen before the European Parliament debates and votes on the final agreement.
Mr Clegg
Will the Minister stress to the Committee again that that applies to both the withdrawal agreement and a final agreement on the future relationship between the UK and the EU? It is my view, which is shared by many others, that the former is feasible within two years but the latter is highly unlikely. What will happen if a withdrawal agreement is reached but not a new agreement between the UK and the EU?
Mr Jones
I must preface what I am about to say by saying that we do not expect that we will not achieve such an agreement, but my right hon. Friend the Prime Minister has already made it clear that if we cannot come to an agreement, we will have to fall back on other arrangements. The Government have consistently been clear about that.
Caroline Lucas (Brighton, Pavilion) (Green)
This point goes back to the conversation we had yesterday about the importance of transitional arrangements. The Minister cannot guarantee that the new trade agreement will be concluded within two years. If we do not have a transitional agreement, it will be like jumping out of an aeroplane without a parachute. Why will he not agree to negotiate that transitional arrangement now in case we need it?
Mr Jones
What the hon. Lady says is, of course, true. An agreement has to be negotiated by two sides, and it is always possible that we will not be able to achieve such an agreement, but I believe that we will. We have also made it clear that we see it as important that during the negotiations for the new arrangements, whatever they are, we consider what implementation period may be necessary following the agreements.
Mr Kenneth Clarke
I am grateful to the Minister for speaking at this stage and enabling us to have the process that he is talking about, and I congratulate him on that. He says that Parliament will have a vote before the agreement is concluded. Does that mean before agreement has been reached with the other 27 countries, or after agreement has been reached but before it has been put into effect?
I believe that parliamentary sovereignty requires that Parliament should have the ability to influence the Government’s position before they conclude the deal, so that those with whom the Government are dealing—the other parties to the negotiations—know that the British Government have to produce an agreement that will get the support of Parliament. If the Government wait until hands have been shaken with all the other Europeans before coming here, Parliament will be told, “If you reject the agreement, you will have nothing and it will be a WTO disaster.” That would give the Government a majority, but not a very satisfactory conclusion.
Several hon. Members rose—
Mr Jones
May I first deal with the point that my right hon. and learned Friend has made? After I have done so, I will come back to the hon. Member for Swansea West (Geraint Davies).
This will be a difficult and complex agreement, and the negotiation will, from time to time, be subject to reports to the House, to the Exiting the European Union Committee and so on. What we are proposing, and what I am committing to from the Dispatch Box, is that before the final agreement is concluded—the final draft agreement, if you like—it will be put to a vote of this House and a vote of the other place. That, we intend, will be before it is put to the European Parliament. That is as clear as I can make it.
Geraint Davies
After we trigger article 50, the EU27 will decide a deal in their interests. If that deal comes to this House and we vote it down, and subsequently the Commission and the European Parliament agree it and say, “Like it or lump it,” what will we do then?
Keir Starmer
Just for clarification, I think the Minister said that there would be a vote on, as it were, the final draft agreement. I just wanted to check that I had heard him correctly.
Mr Mark Harper (Forest of Dean) (Con)
I want to come back to the point made by the right hon. Member for Sheffield, Hallam (Mr Clegg) about the timing of the two deals that are being negotiated in parallel: the exit deal and the framework for our future relationship. I think we can be a little more optimistic than he is. In article 50, it is envisaged that the negotiation for the exit agreement can only be done taking into account the framework for the future relationship. Article 50 envisages those two agreements being negotiated in parallel, so I think that what the Minister has set out has every prospect of coming to fruition.
The Second Deputy Chairman of Ways and Means (Natascha Engel)
I implore Members to keep interventions shorter. They are very, very long—they are little speeches—and we have got very little time. I implore Members to keep them a bit briefer.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
The Minister raised our hopes for a second, and then I felt myself deflate as he said that if things did not work out, we would
“fall back on other arrangements.”—[Official Report, 25 January 2017; Vol. 620, c. 295.]
Can he be absolutely clear about what he meant by falling back on other arrangements?
Mr Jones
It would depend on precisely what was agreed, but if there were no agreement at all, which I think is an extremely unlikely scenario, ultimately we would be falling back on World Trade Organisation arrangements. That is nothing new. It has been made very clear previously, including by my right hon. Friend the Prime Minister.
Alistair Burt (North East Bedfordshire) (Con)
Can the Minister clarify a point that was raised by the shadow Secretary of State and that is important to us all? An agreement at the end of the process might be an agreement that there is no agreement at all, and that we will go to the default position. I believe that what the Minister has announced will give the House a vote if there is a deal, or indeed if there is no deal. Can he confirm that the House would get a vote in those circumstances, which is what I understand the assurance to be?
Alex Salmond
The Minister is inflating and deflating people as he goes along. May we get back to the manuscript amendment? If the concession is as significant as the Minister is leading us to believe, it is really important that it comes forward as an amendment. If the Government are not prepared to make that happen, surely the message to the other place is that what the Minister has said should be encapsulated in an amendment that can be properly re-debated here.
Mr Dominic Grieve (Beaconsfield) (Con)
Is not the problem that the Government and the House have the fact that we do not know at what stage the negotiations will be concluded? They could be concluded, with months to go, within the two-year timeframe. In those circumstances, I would expect the House to be able to consider the agreement—even, perhaps, before it was provisionally agreed with the Commission, because there would be no time pressure.
Equally, however, we could end up in a situation where the agreement is made at one minute to midnight at the end of the two-year period. If the Government do not then conclude an agreement to bring it to the House after that, but before it goes to the European Parliament, we could end up with no deal at all. The Minister may agree that the Government have a real dilemma. It is important that the House should understand those limitations, because they go fundamentally to the question of whether an amendment can be reasonably crafted to meet that situation.
Mr Jones
My right hon. and learned Friend makes a very fair point. As we proceed, we have to keep reminding ourselves that we are where we are because the United Kingdom has voted to leave the European Union. What we are seeking to achieve is a departure from the European Union on the best possible terms. I strongly believe that what the Government are proposing is as much as possible in terms of a meaningful vote at the end of the process.
Several hon. Members rose—
Mr Pat McFadden (Wolverhampton South East) (Lab)
Timing is significant only if it further empowers Parliament to have a meaningful say on the negotiations. Can I ask the Minister again: what will happen if the House declines to approve the draft agreement that he intends to bring before us?
Mr Jones
I think that I have already answered that extremely clearly. There will be a meaningful vote. The vote will be either to accept the deal that the Government will have achieved—I repeat that the process of negotiation will not be without frequent reports to the House—or for there to be no deal. Frankly, that is the choice that the House will have to make. That will be the most meaningful vote that one could imagine.
Several hon. Members rose—
Mr Chuka Umunna (Streatham) (Lab)
The point is that if this is to be a meaningful concession, the House needs the opportunity to send the Government back to our EU partners to negotiate a deal if one has not been reached. Going to World Trade Organisation rules will be deeply damaging for our economy and wholly unacceptable.
Mr Jones
I hear what the hon. Gentleman says, but frankly I cannot think of a greater signal of weakness than for the House to send the Government back to the European Union saying that we want to negotiate further. That would be seized on as a sign of weakness and therefore I cannot agree with it at all.
Several hon. Members rose—
Mr Jones
I would like to make further progress. I have taken a large number of interventions and I am sure that other hon. Members wish to speak.
Let me say this. It will be a meaningful vote. As I have said, it will be the choice between leaving the European Union with a negotiated deal or not. To send the Government back to the negotiating table would be the surest way of undermining our negotiating position and delivering a worse deal. In any case, we cannot unilaterally extend—
Several hon. Members rose—
Hilary Benn (Leeds Central) (Lab)
When the Minister first revealed his concession to the shadow Secretary of State, there was a bit, which he has not read out in the speech that he has just been giving, that referred to timing, intention and the position of the European Parliament. Will he please repeat what he said the first time round? I think it important that the House should be able to hear that.
Mr Jones
I will, if that will be of assistance to the right hon. Gentleman, although I did, in fact, read out the same words twice. I will read them again so that he fully understands the commitment that the Government have made. The Government have committed to a vote on the final deal in both Houses before it comes into force. This will cover both the withdrawal agreement and our future relationship with the European Union. I can confirm that the Government will bring forward a motion on the final agreement, to be approved by both Houses of Parliament before it is concluded. We expect and intend that that will happen before the European Parliament debates and votes on the final agreement.
Several hon. Members rose—
Mr Jones
I will not take any further interventions; I have already been more than generous.
I turn to the amendments. The shadow Secretary of State has referred to his new clauses 1, 18, 19, 28, 54, 110, 137, 175 and 182, which all seek, in one way or another, to ensure that Parliament will have a vote on the final deal that we agree with the European Union. Let me assure Members again, as I have said in answer to interventions, that the House will be involved throughout the entire process of withdrawal. Again, I remind the House of the extent of the Secretary of State’s engagement.
Edward Miliband (Doncaster North) (Lab)
I have a very brief question for the Minister. If the European Parliament votes down the deal, Europe will carry on negotiating. He is saying that if the British Parliament votes down the deal, that will be the end of the negotiations. We pride ourselves on our sovereignty in this House; the Minister’s position seems to be a denial of that sovereignty.
Mr Jones
With huge respect, I am not entirely sure that the right hon. Gentleman understands the process. At the end of the day, the role of the European Parliament will be to grant or withhold consent to the deal agreed by the European Council, and there can be no assurance that there would be further negotiations. May I say that we are some considerable way away from that position. As I have said, as the negotiations proceed, there will be very many more opportunities—many, many more—for this House and the other place to consider the negotiations.
Mr Jones
I am afraid not; I have already been very generous.
I was reminding the House of what the Secretary of State has already done in terms of engagement. He has made six oral statements and there have been more than 10 debates—four in Government time. More than 30 Select Committee inquiries are going on at the moment. Furthermore, there will be many more votes on primary legislation between now and departure from the European Union.
I suggest that the amendments that I have referred to are unnecessary. I reiterate that both Houses will get a vote on the final deal before it comes into force and I can confirm, once again, that it will cover both the withdrawal agreement and our future relationship. However, we are confident that we will bring back a deal that Parliament will want to support. The choice will be meaningful: whether to accept that deal or to move ahead without a deal.
Alex Salmond
I rise to speak to new clause 180 and amendment 50, in my name and those of my hon. Friends. I also want to speak very favourably about new clause 110, which is in the name of the hon. Member for Nottingham East (Chris Leslie). It is the strongest of the other amendments, although I should say that any amendments from this group that are put to the vote will have our support as they are all trying to increase parliamentary supervision of the process.
Before the Minister led us through the dance of the seven veils, I was going to question him on the irrevocability or revocability of article 50. I still think that that goes to the heart of what we are debating. However, I say directly to the Minister, with regard to what he described as a “serious announcement”, that if one makes a serious announcement in the course of the Committee stage of a Bill of this importance, it should be followed by an amendment. If we were here debating the Dangerous Dogs Bill, which I remember debating some time ago, and a serious announcement was made, that serious announcement would be followed by an amendment to the Bill. If that is good enough for a Bill of that description, how much more important is it to have such an amendment when we are debating the biggest constitutional change facing this country for half a century.
Alex Salmond
Not just now.
We thank the Minister for his announcement and the apparent concession. We do not doubt for a second the seriousness with which he makes his serious announcement, but I think that most of us—including the Minister himself—would think that such an announcement should be followed by an amendment to the Bill so that it could go through the proper processes, with hon. Members being able and willing properly to debate an announcement of such seriousness.
I give way to the former Chief Whip, who seems through these proceedings so anxious to regain his previous elevated position.
Mr Harper
I assure the right hon. Gentleman that I am very content being able to speak in the House on these important matters. The reason it might not be sensible to have a detailed amendment is that, as is clear from the range of interventions from colleagues, a large number of scenarios may arise, which will have to be dealt with politically. I do not want detailed legislation that means that this matter goes back to the courts. I want it to be debated in this House, not by a judge.
Alex Salmond
At least the right hon. Gentleman is consistent: when he was Chief Whip he did not want detailed amendments either, in case democracy prevailed in these matters. Most people, on hearing a serious announcement from the Front Bench, would expect it to be followed by an amendment, so that it could be properly debated and tested.
Ms Angela Eagle
I agree with the right hon. Gentleman about a manuscript amendment—it would make things a lot clearer for all of us. Does he agree that the announcement that we may have a Hobson’s choice at the end of the process means that there will not really be a proper choice?
Alex Salmond
I very much agree with the hon. Lady, and she conveniently leads me right on to my next point.
Alex Salmond
In a minute or two.
The hon. Lady’s point goes to the heart of the dilemma the House will find itself in, unless we take action to the contrary. It strikes at the question of whether article 50, once invoked, is irrevocable or not. In my point of order earlier, I tried to give a flavour of the Government’s confusion, but it was a brief point of order and I want to give the full flavour of the Government’s confusion.
The Brexit Secretary said in the Exiting the European Union Committee, when asked about this specific point, that
“one of the virtues of the article 50 process is that it sets you on way. It is very difficult to see it being revoked. We do not intend to revoke it. It may not be revocable—I don’t know.”
That is the basis on which we are being asked to take this fundamental decision that will affect the future of this country. We have to know these things, because they will determine the position the House finds itself in.
If article 50 is irrevocable—if after the two years, unless there is a unanimous agreement from the other 27 members of the European Union, the negotiations stop, the guillotine comes down and we are left with a bad deal or no deal—any vote in the House against that sword of Damocles hanging over the House will not be a proper, informed judgment.
Geraint Davies
Does the right hon. Gentleman agree that triggering article 50 on the basis of its possible revocability is like walking down the M4 in the middle of the night and hoping you will not get killed—you might not, but it is better not to walk down there in the first place?
Alex Salmond
The hon. Gentleman promised me that he would change the motorway when he next made that point, but the analogy is there.
Of course, the noble Lord Kerr of Kinlochard, who drafted article 50, believes it to be revocable. Presumably, he had that in mind when he drafted the article in the first place.
Alex Salmond
I promised the right hon. Member for Wokingham (John Redwood), who entered the House on the same day as I did, if I remember correctly, that I would give way to him.
John Redwood
I am very grateful. Perhaps I can clarify the matter by saying that the Attorney General was very clear in his submission to the Supreme Court, as was the lawyer on the other side of the case, that article 50 is irrevocable, and the judgment was based on that proposition. Does the right hon. Gentleman therefore agree that it is irrevocable?
Mr Grieve
The concession of the Government in the Supreme Court was merely for the purpose of those proceedings. I say to my right hon. Friend the Member for Wokingham (John Redwood) that we can derive nothing from that as to whether article 50 is revocable or not. Indeed, there is powerful legal argument that it is capable of being revoked.
Alex Salmond
The two Members should talk among themselves before they come to the House with an agreed position. However, both those amazingly talented people are on the Back Benches, so it does not really matter if they have an informed and learned debate after proceeding to agreement. What matters is the confusion on the Front Bench. Whatever they think, the Brexit Secretary did not know whether it was revocable or not.
Sir William Cash
The right hon. Gentleman is pursuing this matter relentlessly. Will he explain why he is doing so? I suggest that it is because he knows that the answer to the question he is putting depends on whether the European Court of Justice gets its hands on this matter. That is what it is about, as I am sure he will accept.
Alex Salmond
To be told I am pursuing something relentlessly by the hon. Gentleman is a compliment that I shall treasure. This is not about the European Court of Justice; it is about this House having a genuine choice at some stage. It must be able to look at what the Government have negotiated and say yes or no, without the sword of Damocles of a bad deal or no deal, which was the threat from the Prime Minister, hanging over it.
Angela Smith (Penistone and Stocksbridge) (Lab)
Is not one of the problems with the concession that has just been made that it tacks together in one votable motion the withdrawal agreement and the potential trade agreement? If Members do not like the trade agreement, they will face the unpalatable option of voting down the withdrawal agreement, thereby bringing us back to where we are now with the outcome of the referendum.
Alex Salmond
The hon. Lady makes a very astute point, but I think the issue is even more fundamental: we have to know what happens when we say no before we go ahead at the present moment.
Alex Salmond
Not just now.
We make an effort to solve the problem in new clause 180, which we call the reset amendment. It asks the Prime Minister to seek from the European Council an agreement that if this House and the other place refuse to agree the terms negotiated, we will reset to our existing membership of the European Union on the current terms and try again. We would then approve a deal only once we believed its terms were in the interests of this country. The Prime Minister should be prepared to present us not with a bad deal or no deal—not a bad deal or World Trade Organisation terms—but a deal that we know is in the interests of our constituents and the country. That is fundamental to this debate.
I know and understand the exigencies of political leadership, but the date of the end of March came about at the Tory conference because Brexiteers were beginning to get a bit flappy about whether the Prime Minister was a born-again Brexiteer or still a secret submarine remainer. I cannot understand why people think—even on the Brexiteer side, because presumably the Brexiteers want success for this country and its economy—that it is a good idea to invoke article 50 before we know what the destination will be. Similarly, I cannot believe that it is a good idea to leave the European economic area, which is governed by different agreements and instruments, until we know what the alternative is. Instead of giving these points away and putting all the negotiating power in the hands of those we are negotiating with—they are our partners now, but in any negotiation there is a tension between two parties—any negotiation depends on the cards in your hand. If the other side know that after two years the sword of Damocles comes down, it puts them in a much more powerful position in the negotiation.
Mr Jim Cunningham (Coventry South) (Lab)
I agree with most of what the right hon. Gentleman is saying. It is very important to have an amendment, so that the House and the Government know exactly where we are going. Why do we not put those on the Government Front Bench on a TUC course to learn how to negotiate?
Alex Salmond
The hon. Gentleman makes an astute point. There is a lot to be learned about a negotiating position. The prime point is not to put yourself in a position of weakness with the European Union. On the whole, they are honourable people who want what is in the interests of the continent of Europe. Certainly, it is not a good idea for the Government to put themselves in a position of weakness with the new President of the United States, who will take every possible advantage from an opponent he senses—as he will sense—is negotiating from a position of weakness.
I argue strongly for the new clause and the amendments we have tabled, which aim to secure the position at the end of the negotiations before we embark on something that will leave this House not just with a bad deal or no deal, but with a metaphorical gun pointed at our head when we address these serious questions. We have to know the end position before we embark on that fundamentally dangerous course.
John Redwood
I agree fully with the right hon. Member for Gordon (Alex Salmond) that we should not wish to do anything that weakens or undermines the British bargaining position. All the efforts of this House, as we try to knit together remain and leave voters, should be designed to maximise our leverage, as a newly independent nation, in securing the best possible future relationship with our partners in the European Union. That is why I find myself in disagreement with many of the well-intentioned amendments before us today. I think they are all, perhaps inadvertently, trying to undermine or damage the UK’s negotiation—[Interruption.] One of my hon. Friends says, “Nonsense,” but let me explain why it would be dangerous to adopt the amendments.
We are being invited to believe that if the House of Commons decided that it did not like the deal the Government negotiated for our future relationship with the EU and voted it down, the rest of the EU would immediately say sorry and offer us a better deal. I just do not think that that is practical politics. I do not understand how Members believe that that is going to happen. What could happen, however, is that those in the rest of the EU who want to keep the UK and our contributions in the EU might think that it would be a rather good idea to offer a very poor deal to try to tempt Parliament into voting the deal down, meaning that there would then be no deal at all. That might suit their particular agenda.
Robert Neill
Why is my right hon. Friend so worried about the House of Commons having a vote? His analysis might be right, but is it not right and proper that we have a choice, informed or otherwise? What is wrong with that? Why is he scared?
John Redwood
I support the Government offering this House a vote. They cannot deny the House a vote—if the House wants to vote, the House will vote—but it is very important that those who want to go further and press the Government even more should understand that this approach could be deeply damaging to the United Kingdom’s negotiating position. It is based on a completely unreal view of how multinational negotiations go when a country is leaving the European Union. I find it very disappointing that passionate advocates of the European Union in this House, who have many fine contacts and networks across our continent, as well as access to the counsel and the wisdom of our European partners, give no explanation in these debates of the attitudes of the other member states, the weaknesses of their negotiating position and what their aims might be. If they did so, they could better inform the Government’s position, meaning that we could do better for them and for us.
Mr Clegg
The right hon. Gentleman is, as ever, making an articulate case from his point of view about the dangers of a vote at the end of the process. Can he explain why, on 20 November 2012, in a very interesting blogpost entitled, “The double referendum on the EU”, he advocated a second referendum with the following question:
“Do you want to accept the new negotiated relationship with the EU or not?”?
How on earth and why on earth has he changed his mind since then?
John Redwood
I do not disagree with that at all. I am very happy for the House to have a vote on whether the new deal is worth accepting, but that would be in the context of leaving the EU. I agree with my right hon. Friend the Prime Minister that no deal is better than a bad deal. If the best the Government can do is a bad deal, I might well want to vote against that deal in favour of leaving without a deal. That is exactly the choice that Government Ministers are offering this House. It is a realistic choice and a democratic choice. It is no choice to pretend that the House can re-run the referendum in this cockpit and vote to stay in the EU. We will have sent the article 50 letter. The public have voted to leave. If this House then votes to stay in, what significance would that have and why should the other member states suddenly turn around and agree?
Geraint Davies
If the right hon. Gentleman wants to maximise negotiating leverage, would it not be better to delay article 50 until after the elections of the new German Government in October and the new French Government in May? We will have only two years, so that would give us the power of having more time to negotiate while we are member, instead of giving that up. If we were to offer a referendum to the people before we trigger article 50, European countries might think that we could stay in, so they might come to the table before article 50 was triggered.
John Redwood
I do not think we should have two referendums on whether or not we leave. The issue is our future relationship. The House is perfectly capable of dealing with whether we accept the future relationship that the Government negotiate.
The point that Opposition Members and their amendments miss is that once we send the article 50 letter, we have notified our intention to leave. If there is no agreement after two years, we are out of the European Union. The right hon. Member for Gordon (Alex Salmond) rightly asked whether the notification is irrevocable, but he did not give his own answer to that. I found it very disappointing that the SNP, which takes such a strong interest in these proceedings, has no party view on whether it is irrevocable. Personally, I accept the testimony of both the Attorney General and the noble Lord who was the advocate for the remain side in the Supreme Court case that it is irrevocable. The House has to make its decision in light of that.
As far as I am concerned, this is irrevocable for another democratic reason: the public were told they were making the decision about whether we stayed in or left the EU. Some 52% of the public, if not the others, expect this House to deliver their wishes. That was what the Minister told this House when we passed the European Referendum Act 2015. Every voter in the country was told by a leaflet sent at our expense by the Government: “You, the people, are making the decision”. Rightly, this House, when under the Supreme Court’s guidance it was given the opportunity to have a specific vote on whether to send the letter to leave the European Union, voted to do so by a majority of 384, with just the SNP and a few others in disagreement. It fully understood that the British people had taken the decision and fully understood that it has to do their bidding.
Paul Farrelly
Is the right hon. Gentleman not assuming that, as we walk into the room, all the people we are negotiating with are our adversaries? Is that perhaps not the wrong standpoint to take? Is it not the case that a meaningful vote on the substance of any deal might equally focus the Government’s mind on what they can sell to this House to unite it, as well as the people we represent, in a very divided country?
John Redwood
The hon. Gentleman has won that argument. We will have a vote in this House on whether we accept the deal and I hope that that works out well. My criticism is not of the Government’s decision to make that offer. I think it was a very good offer to make in the circumstances. My criticism was and is of those Members who do not understand that constantly seeking to undermine and expose alleged weaknesses damages the United Kingdom’s case. It is not at all helpful. As many of them have talent and expertise through their many links with the EU, it would be helpful if they did rather more talking about how we can meet the reasonable objectives of the EU and deal with the unreasonable objectives held by some in the Commission and a number of member states.
Alex Salmond
Despite the right hon. Gentleman’s certainty about irrevocability, the person who drafted the clause, Lord Kerr, thinks that notification is revocable. The right hon. and learned Member for Beaconsfield (Mr Grieve), the former Attorney General, who is sitting to the right hon. Gentleman’s right, is not absolutely sure but does not agree with him, and the Brexit Minister does not know. Does this not remind us of a certain question in European history, where of those who knew the answer one was mad, one was dead and the other had forgotten? Is this the basis on which he wants to take us over the cliff edge?
John Redwood
I have attempted to give the House a clear definition and to show that there is good legal precedent for my argument, based on senior lawyers and the Supreme Court. I note that the SNP does not have a clue and does not want to specify whether the notification is irrevocable.
Joanna Cherry
I remind the right hon. Gentleman that the Supreme Court did not rule on the matter.
John Redwood
It clearly did rule on the matter. It found against the Government because it deemed article 50 to be irrevocable. It would not have found against the Government if it had thought it revocable.
Mr Rees-Mogg
I am grateful to my right hon. Friend for giving way on this supreme red herring. It does not matter whether the ECJ thinks article 50 is irrevocable; the British people have determined that it is an irrevocable decision.
John Redwood
I thank my hon. Friend for that helpful intervention, although there is this legal wrangle. It is fascinating how those who wish to resist, delay or cancel our departure from the EU are now flipping their legal arguments from three or four weeks ago, when they were quite clear that this was irrevocable.
Anna Soubry
My right hon. Friend is a man of courage with a long, fine history of supporting the sovereignty of this place. He says that the Government will give us a vote in the event of a deal, but why does he not agree with those of us, on both sides of the House, who want the same vote, so that we ensure the sovereignty of this place, in the event that the Government cannot strike a deal, despite their finest efforts?
John Redwood
That is exactly the vote we had on Second Reading. If Members are at all worried about leaving the EU, they should clearly not have voted for the Bill on Second Reading. That is the point of the debate about irrevocability.
Tim Farron (Westmorland and Lonsdale) (LD)
May I take the right hon. Gentleman back to his comments on his blogpost in November 2012, when he argued in favour of a referendum at the beginning and at the end of the process? He has just said that he does not think that there should be a referendum on whether we leave the EU—we can disagree on that—but he did not exclude a referendum on the terms of the deal. Will he clarify whether he thinks that the people should have the final say on the terms of the deal?
John Redwood
No, not on this occasion, because 2012 was 2012, and we were trying all sorts of things to get us out of the EU—we found one that worked, and I am grateful for that. However, now is now, and we have to speak to the current conditions and the state of the argument.
Mr Harper
On a referendum, it depends what the options are. The hon. Member for Westmorland and Lonsdale (Tim Farron) is clear that his two choices are that we accept the deal or we stay in the EU. I was on the remain side of the argument, but the question on the ballot paper was unconditional: leave or remain. I accept that my side lost and we are leaving. He wants to rerun the referendum all over again, but that is not acceptable.
John Redwood
I agree with that.
People are trying to make these negotiations far more complicated and longwinded than they need be. Because of the Prime Minister’s admirable clarity in her 12 points, we do not need to negotiate borders, money, taking back control, sorting out our own laws, getting rid of ECJ jurisdiction and so on. Those are matters of Government policy mandated by the British people—they are things we will just do. We will be negotiating just two things. First, will we have a bill to pay when we leave? My answer is simply: no, of course not. There is no legal power in the treaties to charge Britain any bill, and there is no legal power for any Minister to make an ex gratia payment to the EU over and above the legal payments in our contributions up to the date of our exit.
Secondly, the Government need, primarily, to sort out our future trading relationship with the EU. We will make the generous offer of carrying on as we are at the moment and registering it as a free trade agreement. If the EU does not like that, “most favoured nation” terms under WTO rules will be fine. That is how we trade with the rest of the world—very successfully and at a profit.
Members should relax and understand that things can be much easier. There will be no economic damage. The Government have taken an admirable position and made wonderful concessions to the other side, so I hope that those on the other side will accept them gratefully and gracefully, in the knowledge that they have had an impact on this debate.
Helen Goodman (Bishop Auckland) (Lab)
I rise to speak to new clauses 28, 54 and 99, standing in my name and those of other right hon. and hon. Members. New clause 28 deals with the sequencing of votes on the final terms—the issue on which we have had a concession this afternoon from the Minister; new clause 54 is about how to secure extra time if we need it in our negotiations with the EU; and new clause 99 embeds parliamentary sovereignty in the process.
I am pleased to follow the right hon. Member for Wokingham (John Redwood), but I am disappointed that he has not come clean to the Committee on the fact that he has identified an alternative process he hopes to use to secure the kind of Brexit he wants. He did not refer to another blog he wrote recently, in which he said:
“Being in the EU is a bit like being a student in a College. All the time you belong to the College you have to pay fees... When you depart you have no further financial obligations”.
This is a somewhat outmoded view of the way student finances work, but putting that to one side, he evidently has not read the excellent paper by Alex Barker of the Financial Times pointing out that the obligations on us will fall into three categories: legally binding budget commitments; pension promises to EU officials; and contingent liabilities, which indeed are arguable.
Helen Goodman
I will make a little more progress, if the right hon. Gentleman does not mind.
The right hon. Member for Wokingham has also pointed out that Ministers can only authorise spending and sign cheques with parliamentary approval. He is right about that, and it is right that we have that say, but he is hoping to use that moment to veto the withdrawal arrangements and scupper the chances of a more constructive and productive future relationship. On Second Reading, the right hon. Member for Tatton (Mr Osborne) said—this was astute if somewhat tasteless—that it
“will be a trade-off, as all divorces are, between access and money.”—[Official Report, 1 February 2017; Vol. 620, c. 1035.]
For the right hon. Member for Wokingham and his friends, there is no trade-off—he does not want access or money.
New clause 54 calls for extra time. Hon. Members have already raised the need for extra time if Parliament declines to approve the final terms. The new clause adds a scenario in which the Government have not managed to complete the negotiations within the 24 months specified in article 50. This is more likely than not. Almost everyone who has looked at the matter in detail is incredulous that we can complete these negotiations in 24 months. The record on completing trade deals is not good, and there are many more strands to this negotiation. It would be patently absurd to flip to a damaging situation without an agreement, if we can see, once we are in the negotiations and have the detailed work schedule, that a further six or 12 months would bring us to a successful conclusion. Similarly, it is possible that the Minister’s optimism is well founded but that, while the negotiations have been completed, the parliamentary process has not. In that instance, too, we ought to have extra time.
New clause 99 addresses a different matter. It would embed parliamentary sovereignty in the process of approving the final terms of withdrawal and ensure that the UK withdrew on terms approved by Parliament. Bringing back control and restoring parliamentary sovereignty were a major plank of the Brexit campaign. The new clause is the fulfilment of that promise—the working out in practice of what was promised. The Prime Minister has already said that Parliament should have a vote at the end of the process, and new clause 99 strengthens that promise by requiring primary legislation to give effect to any agreement on arrangements for withdrawal and, even more importantly, on the future relationship. This is important, so that Parliament does not have to give only a metaphorical thumbs-up, which could, as my hon. and learned Friend the Member for Holborn and St Pancras (Keir Starmer) has said, be meaningless. Instead, Parliament can undertake line-by-line scrutiny. Brexit has major constitutional, political, economic and social consequences. It is right for Parliament to approve the way in which it is done. This new clause will improve the dynamic of the negotiations and strengthen the Prime Minister’s hands. She can say to the EU, “Parliament won’t agree to that.”
Mr Bradshaw
I am grateful to my hon. Friend for tabling and speaking to this new clause, which I think is important in view of the concerns expressed on all sides of the Committee about the so-called concession offered earlier by the Government Front-Bench team. Will my hon. Friend confirm that she will press her new clause to a vote?
Helen Goodman
I may wish to test the will of the Committee on this new clause when we reach the end of the debate.
I think most rational people would say that the new relationship is more important than the terms of withdrawal.
Sir Oliver Letwin
The hon. Lady said a moment ago that new clause 99 did not seek to delay or derail the leaving process. In the event of paragraph (b) of the new clause coming about—namely, no deal—if Parliament voted against it, would the effect not clearly be that we would stop the process of leaving, thereby denying the effect of the referendum?
Helen Goodman
I do not think it does mean that. It would depend on whether or not extra time had been agreed with the European Union. If the right hon. Gentleman referred back to article 50, he would see that we might get an extension if the other member states agree to provide us with it unanimously. They may; they may not. As we stand here today, it is quite difficult to project ourselves forward into the situation we will find in two years’ time.
Sir Oliver Letwin
I am doubly grateful to the hon. Lady. Does she not agree that in the event that we are not given extra time by mutual agreement, and in the event that Parliament has rejected withdrawal without an agreement, the effect of paragraph (b) of the new clause would clearly be the negation of the result of the referendum by Parliament? Does that not go against what she has voted for?
Helen Goodman
I do not think it does, because it leaves open the possibility of the Government’s going back to the drawing board and making a further new arrangement. As I say, for us now, when we have not yet embarked on the process and we do not know what the deals will be and what is going to be offered, it is extremely difficult for us to foresee.
Ms Angela Eagle
Does my hon. Friend agree that many of the other 27 countries will be going to their Parliaments for approval with respect to their approach to these negotiations, so that it would surely strengthen our Government’s hands if they involved themselves in a process that could through this Parliament maximise the support coming on all sides for our Government’s approach? Why is that not seen as a strength?
Helen Goodman
I could not agree more with my hon. Friend. We know that Angela Merkel has to get a parliamentary mandate for how she conducts herself in all her negotiations in the European Union. Some of us have tried over the years to improve the quality of our European scrutiny, but it seems that we are focusing it now only on the moment when we are about to leave.
Geraint Davies
Assuming that the Committee agrees to this amendment, that we trigger article 50 on 31 March and that we vote against the deal, what could we do about it if the Commission and the European Parliament said, “Sorry, but that’s the deal you’re going to get, like it or lump it”? They do not care; we do not have the sort of power necessary to stop them imposing the deal they want once article 50 has been triggered.
Helen Goodman
My hon. Friend is arguing along the same lines as the right hon. Member for Wokingham—that article 50 is irrevocable. It is the same point as was raised by the right hon. Member for Gordon (Alex Salmond) as well. As I have said, paragraph 3 of article 50 includes the words
“unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.”
That can happen, and it will depend on how the negotiations are undertaken, on where we have got to, and on their tone.
Tim Loughton (East Worthing and Shoreham) (Con)
The treaty of Lisbon clearly sets out the two-year term. Whether or not article 50 is irrevocable comes down to the weakness of the treaty of Lisbon itself, not the legal interpretation. Does the hon. Lady not agree that some of the best deals reached with the EU have been at the 11th hour, and that the one thing that will concentrate the minds of all involved in these negotiations is the fact that they have to happen by March 2019—otherwise, it will go on and on and on?
Helen Goodman
I do not think that the threat of the cliff edge is a positive in these negotiations. I note that the Chancellor of the Exchequer has described this as a second-best option and that the White Paper also says that crashing out is a second-best option. Actually, I think it is the worst option, and new clause 99 levels the playing field so that as well as having the vote on the terms of withdrawal and the money, this House will be able to have detailed scrutiny of the future relationship.
I have consulted my constituents on the kind of Brexit they want: they do not want the cliff-edge option, and there are all sorts of things about Europe that they like, even though the majority voted to leave. They like the customs union; they like the social chapter; they like co-operation and collaboration; and they particularly like the European arrest warrant.
John Redwood
The hon. Lady says that she would like collaboration to support the Government’s negotiations. Does she think that in a negotiating situation it is a good idea to say, “We think we owe you lot some money; tell us how much?”; or does she think it would be better to say, “I do not think that we owe you anything”?
Helen Goodman
In my experience of negotiation, one of the most important things is to understand what the people on the other side of the table think, and I believe that that is fundamental to our success in this negotiation. It is not to say that we are going to give the people on the other side of the table everything they want, but we need to be willing to listen to what they want as the negotiation proceeds.
Mr Harper
May I return the hon. Lady to what she said about the different approaches that European states adopt to negotiation? I am not a lawyer, and I hesitate to express an opinion in the face of such eminent legal presence in the Chamber, but my understanding is that treaties made in countries such as Germany, which has a monist legal culture, are directly applicable without further legislation, whereas because ours is a dualist system, we have to legislate to put them into effect. Do not those countries take a tougher approach to their negotiation before authorising it because once their Governments are signed up to a treaty, it becomes law automatically?
Helen Goodman
I do not see this as an opportunity for a seminar on the political institutions of the Federal Republic. New clause 99 is about embedding what is basic to the British constitution, as found by the Supreme Court, which is parliamentary sovereignty throughout the process. In the end, the referendum was about trust. It was about the kind of settlement that most voters wanted. I know what kind of Brexit deal my voters want, and I think that new clause 99 provides the best way of giving it to them.
Sir William Cash
I hope the Committee will allow me to mention that today, 7 February, is 25 years to the day since the signing of that fateful Maastricht treaty. I see that my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke) is looking at me with a wry smile on his face. I do not doubt for a minute that he will recall that he once said—I hope I am not mistaken—that he had not read the treaty. Perhaps he never said anything of the kind, and I should be more than happy to accept his assurance to that effect from a sedentary position.
At the time, I tabled some 150 amendments, and I voted against the treaty 47 or 50 times. I have to say that I will not vote against this Bill in any circumstances whatsoever. Indeed, this will be the first occasion on which I shall not have voted against European legislation since 1986. The legislation passed during that year included the Single European Act. When I tabled the sovereignty amendment to that legislation, I was not even allowed to speak to it because it was not selected for debate, which I found difficult to accept at the time. However, we have now moved well ahead. We have had a referendum, the proposal for which was accepted by six to one in the House. We have also had a vote on the principle of this very Bill, which was passed by 498— 500 if we include the tellers—to 114.
In deference to the other Members who wish to speak, I shall not go through the intricacies of this vast number of new clauses. I do not think that that would help us much, for a very simple reason—the bottom line is that they would effectively provide for a veto to override the result of the referendum. It is as simple as that.
Claire Perry (Devizes) (Con)
My hon. Friend said that he had tabled 150 amendments off his own bat. Surely he is contradicting his own argument. The whole point of this place is to challenge what we do not believe in, on the basis of principle. That is what we are trying to do, and my hon. Friend should be supporting us.
Sir William Cash
I am so glad that my hon. Friend has made that point. The difference between what I was doing in those days and what is happening now is that we were arguing against the Government’s policy of implementing European government, which is what the Maastricht treaty was about—incidentally, the electorate made it clear in the referendum that they now accept that. Moreover, we were arguing in favour of a referendum, which we have now had. My amendments were moving in the right direction, in line with what the Government have now agreed following the referendum and in line with what the people themselves agreed.
Paul Farrelly
The hon. Gentleman—my next-door neighbour from Stone—is clearly enjoying his days in the sun. Like the right hon. and learned Member for Rushcliffe (Mr Clarke), I did not vote for the referendum legislation. Will the hon. Gentleman tell us what regard he has had, over his 40 years of campaigning, for the two thirds of people who, at the time when he started his campaign, voted for the UK to remain in the European Union?
Sir William Cash
I can only say that, in our democratic system, six Members to one in the House of Commons, and indeed the House of Lords, voted in favour of a referendum, by means of a sovereign Act of Parliament, to give the people a say in the hon. Gentleman’s constituency as well as mine next door to it—not to mention in Stoke-on-Trent Central, where quite an interesting test will take place in a few days’ time. The fact is that the decision was given to the people by an Act of Parliament, and they made the decision to leave. That is definitive. I see no purpose in wasting time on the intricate arguments we have heard so far, many of which go around in circles. The real question is: do we implement the decision of the United Kingdom or not? The answer is that we do, and we must. That was conceded by this House, and by almost everybody—I say, with great respect, to my right hon. and learned Friend the Member for Rushcliffe that he did not, but the bottom line is that we are giving effect to the decision of the United Kingdom electorate.
Alex Salmond
Unless my memory betrays me, the hon. Gentleman himself was one of the two thirds back in 1975 when he voted for the European Community, so all these years he was campaigning against the sovereignty of that decision; indeed, he was campaigning against his own sovereignty and his own decision.
Sir William Cash
That is politics, as the right hon. Gentleman knows only too well, because he has a similar experience in his position with regard to Scotland.
The bottom line is that we are faced with a simple decision, which is going to be decided in a vote later today, I imagine—it might be in part tomorrow as well, and then there will be Third Reading. I hope that all these attempts to, in my judgment, produce different versions of delay will effectively be overridden by the vote taken by the House as a whole, in line with the decision taken by the British people. That is the right way to proceed.
I would like to add one further point, with respect to the Bill itself. I am in no way criticising the selection of amendments, because I think it is entirely right that we should have an opportunity to look at a variety of permutations before the main vote is cast. But I have to remind the Committee that the Bill, which was passed by 498 to 114, simply says that it will
“confer power on the Prime Minister to notify, under Article 50(2) of the Treaty on European Union, the United Kingdom’s intention”,
as expressed by the referendum itself,
“to withdraw from the EU.”
Clause 1 simply says this, and no more:
“The Prime Minister may notify, under Article 50(2) of the Treaty on European Union, the United Kingdom’s intention to withdraw from the EU.”
I am glad to see that it goes on to say—just to put this matter to bed, in case anybody tries to argue that, somehow or other, this could be overridden by some other European Union gambit— that “This section”, which we have already passed in principle,
“has effect despite any provision made by or under the European Communities Act 1972 or any other enactment.”
In other words, nothing that emanates from the European Union is to stand in its way. That is a very simple proposition. The Bill is short because it should be short.
I would just like to make one last point, looking back at what the Supreme Court said. The Supreme Court made a judgment on one simple question: should we express the intention to withdraw and notify under article 50 by prerogative or by Bill? There was a big battle, and many people took differing views. We respect the Supreme Court decision, and that is why we have this Bill. The fact is that that is final.
In paragraphs 2 and 3 of the judgment, the court itself made it clear what the judgment was meant to be about, which was whether this should be done by Bill or prerogative. The court said it should be done by Bill. It added—these are my last words on the subject for the moment—that it was about one particular issue, which was the one I have mentioned. The court then said the judgment had nothing to do with the terms of withdrawal, nothing to do with the method, nothing to do with the timing and nothing to do with the relationship between ourselves and the European Union. Yet new clause 1 spends its entire verbiage going into the very questions that the Supreme Court said the decision was not about. So that new clause and the others are all inconsistent both with the Supreme Court decision and with the decisions taken on Second Reading.
Ms Angela Eagle
On a point of order, Ms Engel. Surely new clause 1 is in order; otherwise, we would not be debating it.
The Second Deputy Chairman of Ways and Means (Natascha Engel)
I do not think that that is a point of order; it is not a matter for the Chair.
Sir William Cash
I am sure that it is in order. The problem is whether we vote for it, and there are extremely good reasons for not doing so. New clause 1 and the other amendments have been tabled by honourable people—hon. Members on both sides of the House, and some right hon. Members—but they know perfectly well what they are doing. They are trying to delay, to obstruct and to prevent the Bill from going through, and I say, “Shame on you!”
Tim Farron
It is an honour to follow the hon. Member for Stone (Sir William Cash), who has fought his corner for 40-odd years. I intend to fight mine, but hopefully not for as long as that. I rise to speak to amendment 43, which is in my name and those of my right hon. and hon. Friends. It concerns the issue of democracy at the end of this process as well as at the beginning, and it would require the Prime Minister to look at the overwhelming case for a people’s vote on the final exit package that the Government negotiate with Brussels after triggering article 50.
On 23 June last year, a narrow majority voted to leave the European Union. I deeply regret that outcome, but I am a democrat and I accept it. However, voting for departure is not the same as voting for the destination. The Government should now give the British people a decision referendum, to be held when the EU negotiations are concluded. I admit that “mandate referendum” and “decision referendum” are not terms that I have used before in this context. They are not really my words; they are the words that were used by the Secretary of State for Exiting the European Union when he eloquently made the case in 2012 for holding a referendum on the deal at the end of the process, which is Liberal Democrat policy today.
James Berry (Kingston and Surbiton) (Con)
When the hon. Gentleman said on 11 May last year that this was a “once-in-a-generation decision”, was he being straightforward with the voters?
Tim Farron
As it stands, the Government intend it to be a once-in-a-generation opportunity. As the hon. Member for Stone has proved, however, we sometimes have to fight for two generations for the thing that we believe in. If we have the courage of our convictions, we keep going.
I want to quote the Brexit Secretary directly. I do not want to paraphrase him or risk misquoting him in any way. Describing the strategy of having two referendums—a mandate referendum and a decision referendum—he said:
“The aim of this strategy is to give the British people the final say, but it is also to massively reinforce the legitimacy and negotiating power of the British negotiating team.”
I shall not say this often during this process, but I completely and utterly agree with the Brexit Secretary on that. As we have learned, his words were endorsed the following day by the right hon. Member for Wokingham (John Redwood) on his blog, although we have now discovered that he did not really mean it; he was just saying that as a ruse.
Richard Benyon (Newbury) (Con)
The hon. Gentleman and I were on the same side in the referendum, but I want to tell him why he is completely wrong on this matter. If we were to place a second referendum in the Bill at this stage, it would tie the hands of our negotiators. We could only be offered a bad deal, and it would be in the hands of the people we were negotiating with to drive the British people to reject it. It would be a failed policy from the start.
Tim Farron
If we follow the logic of the hon. Gentleman’s argument, the Minister should not have made his offer for the House to have a say at the end of the deal. If someone is about to go over a cliff, not giving themselves the opportunity to do otherwise is the ultimate negotiating weakness, as the Brexit Secretary rightly pointed out four and a bit years ago.
John Redwood
The hon. Gentleman really must correct the record. I did not make the offer in 2012 flippantly or without intending to see it through; it was a fair offer that was not taken up. My colleagues and I then made a different offer in 2015, which was accepted and we are pursuing it.
Tim Farron
In no way do I wish to impugn the right hon. Gentleman’s integrity—I am sure that he meant that offer. What I think he said earlier on when I intervened on him was that that was effectively a ruse, plot, method or attempt at that point to try to get a certain outcome. I suppose he is therefore the hard Brexit equivalent of Malcolm X—“by any means necessary.”
Several hon. Members rose—
Tim Farron
If I can make a little progress, I will be grateful.
It is true that this argument began with democracy, but it cannot now end with a stitch-up. That is especially true given that the leave campaign offered no plan, no instructions, no prospectus and no vision of what “out” would look like. At no point did it produce any credible or unified position on what the UK would look like outside the European Union.
Several hon. Members rose—
Alex Chalk (Cheltenham) (Con)
I was also a remainer and I regret the result, but does the hon. Gentleman agree with the view of Vince Cable, the former Business Secretary, that a second referendum raises “a lot of fundamental problems”?
Tim Farron
We are dealing with many fundamental problems in any event.
Forgive me if I am being pedantic, but the reality is that we are not talking about a second referendum. One could argue that the referendum on 23 June was the second referendum. We are arguing for a referendum on the terms of the deal, which has not been put to the British people.
Mr Kevan Jones (North Durham) (Lab)
The hon. Gentleman says that we would reach a cliff edge, but his offer of a referendum involves no choice. People would either have to vote for it or against it. If they vote against it, what would that leave? There would be that cliff edge that people are trying to avoid.
Tim Farron
We are offering the British people an opportunity not only to have the final say on the terms of the deal, but to say, having looked over the cliff edge, “No thanks,” and to remain in the European Union. That is a perfectly legitimate democratic offer for a party to make. While it is thoroughly legitimate to have an alternative point of view, that is fully democratic.
Several hon. Members rose—
Tim Farron
I want to make a clear point and a little progress.
A few of them are here now, so I want to give a little credit to our SNP colleagues. During the Scottish independence referendum, they were able to produce a 670-page White Paper on exactly what leaving the United Kingdom would look like. Of course, I did not agree with them, but at least the people of Scotland knew what they were voting for or what they would be rejecting. If that vote in 2014 had gone the other way, there would have been no need for a second vote on the independence deal.
This Government are going to take some monumental decisions over the next two years. I still believe that it will be impossible for them to negotiate a deal that is better than the one we currently have inside the European Union, but the negotiations will happen and a deal will be reached. When all is said and done, someone will have to decide whether the deal is good enough for the people of Britain. Surely the only right and logical step is to allow the people—not politicians in Whitehall, Brussels or even this House—to decide whether it is the right deal for them, their families, their jobs and our country. No one in this Government, House or country has any idea of what deal the Prime Minister will negotiate with Europe. It is completely unknown.
Caroline Lucas
Does the hon. Gentleman share my surprise at the resistance to his perfectly sensible suggestion of a ratification referendum? The hallmark of the leave campaign was “taking back control” but surely that means control for the British people, not just for the MPs in charge.
Tim Farron
Once again, the hon. Lady makes an excellent point. It seems utterly bizarre that having claimed that we were “taking back control”—that effective slogan—they now want to cede control to those occupying the smoke-filled rooms of Brussels and Whitehall in the 21st century and to have a stitch-up imposed upon the British people. The hon. Member for East Worthing and Shoreham (Tim Loughton) has been very persistent, so I will give way to him.
Tim Loughton
The hon. Gentleman will remember that his predecessor produced a leaflet that said only the Liberal Democrats would offer a “real referendum.” I presume that the Liberal Democrats had absolutely no idea of the implications if the people had actually voted to come out at that stage. The hon. Gentleman said that this is a once-in-a-generation vote, and he is now saying that we should have a mandate referendum and a terms referendum. If those two referendums go through, when will he be asking for an “Are you really sure about that?” referendum?
Tim Farron
The hon. Gentleman seems to be under the impression that democracy is a one-hit game and that, somehow, a person who believes passionately in what they believe in has to give in. He and I both sat on the Opposition Benches during the last five years of the Labour Administration. When the Labour party won its big majorities in 1997, 2001 and 2005, did he give in and say that, somehow, it would be frustrating the will of the people to carry on fighting the Conservative cause? No, he did not. The reality is simply this: it is right to respect the will of the people, but it is to disrespect democracy to cave in and give up when we passionately believe in something.
Charlie Elphicke (Dover) (Con)
I have said before that the hon. Gentleman’s approach is like Hotel California: you can check out but you can never leave. He is like the SNP, because he just wants people to vote, vote and vote again until he gets the result he agrees with. The British people have voted. We have to leave the European Union and implement the will of the British people.
Tim Farron
I will come on to that in a moment, but it is not in any way enacting the will of the British people consistently to refuse the British people the right to have a say on a deal that will affect generations to come and that none of us here knows what it will look like.
Owen Smith (Pontypridd) (Lab)
I support the position that the hon. Gentleman articulates with amendment 43 but, in light of the concession we heard from the Government today, does he share my concern that, at the end of the negotiation, the choice that this Parliament will have will be between accepting the deal that the Government offer—possibly a bad deal—or falling out of the European Union on WTO terms at a cost of £45 billion to our gross domestic product? Does he not think the British people might be worried about that and might want to have a say?
Tim Farron
The hon. Gentleman continues to make a strong case, and he is bold in putting it across, and not just today. There is no doubt that, whatever the British people voted for on 23 June, they certainly did not vote to make themselves poorer. It would be absolutely wrong for that game of poker to end with our dropping off a cliff edge without the British people having the right to have their say.
Mr Harper
The hon. Gentleman’s argument would have force if the question on 23 June had been to give the Government a mandate to negotiate and bring back a deal, but it was not a conditional question. The question asked, “Do you want to leave, or do you want to remain?” People listened to all the arguments about all the risks, and they decided to leave. He cannot accept that, and a democrat should be able to accept it.
Tim Farron
The right hon. Gentleman is quite wrong, because undoubtedly—I have said this very clearly—the majority of people voted on 23 June to leave the European Union. That is the direction of travel that the Government have a mandate to follow at this point. What the British people did not do, because they were not asked, is decide on the destination. As the Brexit Secretary rightly said in his speech just over four years ago, destination and departure are different things. It is right for democrats to make the case that the British people should not have their will taken from them and should not have a stitch-up imposed upon them.
Mr Kevan Jones
What would happen if we did have a second referendum and the British people rejected the offer? Where would that leave us?
Tim Farron
The wording on the ballot paper would be up for discussion, but our vision is that the United Kingdom would either accept the terms negotiated by the Government or remain in the European Union.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
Will the hon. Gentleman give way?
Jonathan Edwards
Plaid Cymru has no problem supporting the hon. Gentleman’s new clause. If the UK Government have 65 million people behind their negotiating position, as they state in their White Paper, what are they afraid of?
Tim Farron
The hon. Gentleman makes a strong point. It troubles me that those who argued for the sovereignty of Parliament, for the sovereignty of this country and for the enforcement of the will of the people, and all of that, are now so scared of the people. It makes me worry that they do not have the courage of their convictions.
Several hon. Members rose—
Tim Farron
I will make some progress because other Members need to get in. The deal must be put to the British people so that they can have their say, because that is the only way to hold the Government to account. We already know that, in all likelihood, 48% of the British people will not like the outcome of the deal. We now know the kind of Brexit that this Prime Minister intends to pursue, and we can pretty much bet that perhaps half of the 52% will not like it, either. They will feel betrayed and ignored, and the only way to achieve democracy and closure for both leave and remain voters is for there to be a vote at the end.
The Government claim to be enforcing the will of the people, but that is nonsense. If I was being very generous, the best I could say is that the Government are interpreting the will of the people; some would say they are taking the result and twisting it to mean something quite different. The Conservatives won a mandate in the May 2015 general election, having made two promises on this in their manifesto. The first was to hold a referendum on Britain’s membership of the European Union. The second was to keep Britain in the European single market. That second pledge was not caveated, time-limited or contingent on the outcome of any referendum. It was a clear pledge and the Government are now breaking it.
Several hon. Members rose—
Tim Farron
I have given way an awful lot.
The Government are making a choice, one that the British people have not given them permission to make. This choice is not just damaging to our country, but divisive. The Prime Minister had the opportunity to pursue a form of Brexit that united our country, achieved consensus, reflected the closeness of the vote, and sought to deal with and heal the divisions between leave and remain. Instead, she chose to pursue the hardest, and most divisive and destructive form of Brexit. She is tearing us out of the single market and leaving us isolated against the might of world superpowers.
I passionately believe that ending our membership of the world’s biggest free market will do untold damage to this country and to prospects and opportunities, especially for young people, who voted so heavily to remain. This market is vital for our economy, which is why my party refuses to stop making the case that this deal must include membership of the single market. Those who settle for access to the single market rather than membership are, I respectfully suggest, waving the white flag to this assault on British business and on the cost of living for every family in the country.
Given that the Government are making a set of extreme and arbitrary choices that were not on the ballot paper last June, the only thing a democrat can do is to give the people the final say. If the Prime Minister is so confident that what she is planning is what people voted for, why would she not give them a vote on the final deal?
Tim Farron
I am not going to give way, as I have given way many times and I want to bring my remarks to an end, for everybody else’s sake. [Hon. Members: “Hear, hear.”] I thought Members would like that.
The final deal will not be legitimate, it will not be consented to and our country will not achieve closure if it is imposed on the British people through a stitch-up in the corridors of power in Brussels and Whitehall. Democracy means accepting the will of the people at the beginning of the process and at the end of the process. Democracy means respecting the majority and it also means not giving up on one’s beliefs, rolling over and conceding when the going gets tough. You keep fighting for what you believe to be right and that is what Liberal Democrats will do. So we agree with the Brexit Secretary: let us let the people have their say. Let us let them take back control.
Sir Oliver Letwin
Let me start by correcting the record. I had something to do with the production of our manifesto, which clearly the hon. Member for Westmorland and Lonsdale (Tim Farron) was unable to read in the time available to him. It made no assertion such as he suggests. It was perfectly clear that what it said about the single market would be superseded were there a referendum with the unanticipated result of the British people taking us out of the EU as a whole. I regret that decision—I voted and campaigned to remain—but the British people voted to leave.
The interesting thing about this interesting debate is that it is one of those moments when the cloak of obscurity is lifted from an issue and the dynamic that is actually going on becomes clear. We have reached the crunch issue. We have reached the point at which we are discussing whether the effect of the Supreme Court judgment should be that Parliament has the option at some future date of overruling the British people and cancelling the leaving of the EU, or whether it should not have that ability.
My right hon. Friend the Minister made it perfectly clear that there will be a vote, but he also made it perfectly clear that that vote will be between the option of accepting a particular set of arrangements that have been negotiated by Her Majesty’s Government, and not accepting those arrangements and thereby leaving the EU without either a withdrawal agreement or an arrangement for the future. He is right to be optimistic that we can reach such agreements, but neither of us can possibly know whether we will. It is therefore right, if one is trying to follow the logic of the referendum decision, that the judgment of this House should simply be about whether the deal is good enough to warrant doing or, on the contrary, we should leave without a deal.
That is a completely different proposition from the one which, in various guises, some on the Opposition Benches—I exempt entirely from this the Opposition Front-Bench team—are putting, which is that Parliament should instead be given, by one means or another, the ability to countermand the British people’s decision to leave the EU by having a vote either on whether we should or should not leave or, in the proposition of the leader of the Liberal Democrats, on whether the people should have a second referendum on whether we should leave. In both of those propositions is a clear determination to undo the effect of the referendum, and we have now reached the point at which that has come out into the open.
Alex Salmond
The alternative is just to instruct the Government to negotiate a better deal. The phrase in the Conservative manifesto, which the right hon. Gentleman did not write, was:
“We say: yes to the Single Market.”
That sounds pretty unequivocal.
Sir Oliver Letwin
Not at all; at that moment we were a member of the EU and we said yes to the single market. I campaigned for the single market and I campaigned to remain part of the EU. That was the Government’s position in the referendum. But we also committed to a referendum, and the point of committing to a referendum, which we made perfectly clear not only in the manifesto but in a range of speeches around it, was that if the British people voted to leave, we would leave. It seems to me perfectly clear that the word leave means leave. It does not mean remain. The right hon. Gentleman is an expert parliamentarian, and he has been arguing in many ways, over a long time—the leader of the Liberal Democrats has been arguing it more explicitly—that leave ought to be translated as remain. I deny that that is a translation to which the English language is susceptible.
It seems to me to be perfectly clear that those of us who campaigned to leave and those of us who campaigned to remain have a choice: we can either accept the referendum result or reject it. I accept it, and some Opposition Members also take that view. It may be that some take the view that we should reject the referendum result, and that is a perfectly honourable view. The leader of the Liberal Democrats was effectively arguing, more openly, that we should reject the referendum result. I do not in any way decry his ability to argue that, but everybody who is arguing that should come out openly to that effect, as he did, and not pretend that they are trying to invent some method of parliamentary scrutiny. They are doing nothing of the kind; they are trying to invent a means of undoing the result of the referendum. This House has voted conclusively not to undo the result of the referendum. I think the House was right to do that, but whether it was right or not, it should do that with its eyes open and should not be gulled by anybody into passing amendments that have an effect that it has not signed up to openly.
Tim Farron
I want to clarify that from my point of view it is absolutely clear that this place, Parliament as a whole and, indeed, the courts have no right whatsoever to bar the will of the people. It would be absolutely wrong to overturn the outcome of the referendum last June. I am merely asking for the British people to have the final say on the deal, and that if they reject it, we should stay in the EU. I should also point out that voting to say we leave the EU means leaving the EU; it does not mean leaving the single market—it does not mean that for Norway and Switzerland.
Sir Oliver Letwin
There are two points at issue. First is the question of whether leaving the EU means leaving the single market. As I argued throughout the referendum to those I was seeking to persuade to remain, it does inevitably mean leaving the single market. I have always taken and continue to take the view that leaving the EU does entail leaving the single market. I regret that, but that is what it entails, in my view.
Leaving that aside, however, I accept that the Liberal Democrat proposition is that it should be not this House directly that countermands the referendum, but a second referendum. The proposition of the hon. Member for Westmorland and Lonsdale (Tim Farron), which is perfectly decent and honourable, is that however many times it takes, the British people should go on being asked to reverse their original decision, and that one should never give up trying to do so because the right answer is to remain. That is a perfectly respectable proposition, but it is not the proposition of a democrat. It is the proposition of a clerisy that knows the answer and believes that people who vote otherwise are misguided and need to be led, time after time, to revise their opinion by whatever means until at last they give the answer that is required.
Unfortunately, that is the very dynamic that has given rise to this whole problem. We are at this juncture today, because our Government passed the Maastricht treaty against the will of the British people and without consulting them, and took us into a form of the European Union to which the people had never consented. That eventually produced the democratic result that the hon. Gentleman and I both dislike. His answer to that is to go on with that logic until at last the British people totally lose faith in any semblance of democracy in this country. Personally, I cannot accept that proposition. In the end, much as I would have preferred to remain, I would rather be in a country that is run as a democracy and that has faith in its governance. We can only achieve that today by fulfilling the terms of the referendum.
I want to turn briefly to the new clauses; by comparison it is a minor point. New clause 1 is fairly innocuous. I am delighted that my right hon. Friend the Minister has indicated that we will not accept it, because there is a scintilla of doubt about whether it is itself justiciable. It says that the statement of the proposed terms of the agreement must be accepted. If that is written into the law, a very clever lawyer—Lord Pannick and others are very clever lawyers—might be able to mount some kind of judicial review of the question of whether the Government had in fact brought forward a statement of the proposed terms of the agreement that was adequate to the intent of the Bill, or the Act. I doubt that that would occur, so, personally, I do not have any very strong feelings about the new clause.
New clauses 99 and 110, about which some Opposition Members have spoken, are entirely different in character. Each of them makes it clear in two different ways that the House of Commons would be called on to make a set of decisions that are justiciable and potentially undermine the leaving of the EU.
In the case of new clause 99, notwithstanding my exchange with the hon. Member for Bishop Auckland (Helen Goodman), it is perfectly clear in paragraph (b) that if Parliament found itself in a position in which it had not approved the withdrawal without agreement then it would have created an appalling conflict of laws. Article 50 is very explicit. It says:
“The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification”.
If the EU had agreed unanimously not to extend the period, the treaties would cease to apply, but Parliament would have, prospectively, voted not to leave. If Parliament has voted not to leave and the treaties do not apply, who in this House could possibly say which of these two laws is superior to the other? We would be in a position of intolerable legal conflict. Clearly, new clause 99 is deficient as a piece of legislation. I hope therefore that those who propose it will take that point and not press it.
New clause 110 is not as bad as new clause 99, although it is very odd because it says:
“any new Treaty or relationship with the European Union must not be concluded unless the proposed terms have been subject to approval by resolution of each House of Parliament.”
Now, it is possible to be subject to approval without being approved, and it is entirely unclear whether new clause 110 refers to approval or to the process that might have led to approval. That, itself, would be justiciable.
Quite apart from that bad drafting, the new clause creates a legal minefield, because it makes it clear that
“any new Treaty or relationship with the European Union must not be concluded”.
Now, one possible relationship that “must not be concluded” without parliamentary approval would be the relationship of not being in the EU, so the new clause, arguably at least—this could be contested in court—would be an opportunity for Parliament to reverse the intent of the referendum and deny leaving.
New clauses 99 and 110 look as innocuous as new clause 1. In fact, they are neither innocuous nor well drafted, but poorly drafted and highly noxious. They fulfil the purposes to which I referred in the earlier part of my remarks: to gull Parliament, if it were to accept either new clause, into putting itself in the position of potentially reversing the decision of the British people. I very much hope that even if the Minister is at any time remotely tempted to accept new clause 1, he will never accept new clauses 99 or 110 at any rate, and that we will steadfastly resist such amendments should they appear here or in the other place.
Charlie Elphicke
I have two concerns about new clause 1. The first is that it is already clear that the Government mean to involve Parliament throughout the whole process, with frequent statements, updates and discussions. The second is that we cannot know all the permutations around which the agreement and exit may be affected. To legislate for that now, before we know how it will all end up, is premature and would risk us binding the hands of the Government and negotiators.
Sir Oliver Letwin
I share my hon. Friend’s preference for not legislating in that respect. In fact, one can go wider. There are good reasons why, over a very long historical evolution, the House of Commons has always resisted legislation that governs its own proceedings. A number of authorities on our constitution have written that the nearest approximation to the constitution of the United Kingdom are the Standing Orders of the House of Commons. That is not a frivolous remark by those authorities; it is true.
Such a situation has arisen because we have resisted having legislation that governs the House of Commons in order to avoid the judges becoming the judges of what should happen in the House of Commons. We have invented, over a very long period, the principle of comity—that the judges do not intervene in the legislature, and the legislature does not intervene in the decisions of the judiciary. To legislate for how the House of Commons proceeds would move over a dangerous line. I am therefore with my hon. Friend the Member for Dover (Charlie Elphicke) in hoping that we will not accept new clause 1. I am just saying that if we were tempted at all to introduce any piece of new legislation at any stage, it should certainly look like new clause 1, not new clauses 99 and 110. Those new clauses would subvert the referendum, and we cannot allow that.
Chris Leslie (Nottingham East) (Lab/Co-op)
I have some respect for the right hon. Member for West Dorset (Sir Oliver Letwin), but I have been in enough Bill Committees over my short time in Parliament to have heard some of those arguments. When I hear hon. Members resorting to mentioning the drafting of a particular phrase—particularly when the right hon. Gentleman came to the phrase “subject to approval” of both Houses, as if it were somehow an alien concept to be resisted in all circumstances—I hear the last refuge of the parliamentary barrel scraper. If he has substantive arguments against new clause 110, which I advocate as it is in my name, it is better to engage with those, rather than dancing around trying to find second or third order arguments against.
It has been an interesting debate so far. There was a moment of frisson and excitement—well, excitement in parliamentary terms—at the beginning when the Brexit Minister, the right hon. Member for Clwyd West (Mr Jones), who is still in his place, stood up and breathlessly said, “Let me give you a concession. I’ll indicate that something here is substantively different.” At the Dispatch Box, he clarified a little further—not much further—than the Prime Minister did in her speech at Lancaster House the timing of the vote that Parliament will have, but the right hon. and learned Member for Rushcliffe (Mr Clarke) quickly spotted that, in the definitions of when a negotiation is concluded and when it is signed off, there is still a grey area as to what the timing would be.
I suppose it is some small mercy that many hon. Members might say that this is some level of progress, but having been marched up to the top of the hill in the expectation that this was a great concession, I am afraid that, as the minutes have ticked by, we have marched back down the hill again. Through the probing of many hon. Members on both sides of the House, we have discovered a number of things about the vote, and we should not forget that we are trying in this section of the debate to secure a properly meaningful vote at the end so that parliamentary sovereignty can come first, as the Supreme Court emphasised in its judgment.
When pressed, the Minister had to admit that if we ended up with no deal, the House would not get a vote on that circumstance. That is deeply regrettable because new clause 110 deliberately talks about a “new Treaty or relationship”. A relationship, of course, involves the connection between two entities. That connection can be a positive new one, but it can also be one with a disjoint within it. We should have a vote if that relationship includes no deal.
The Minister said we would not be having a vote if there was no deal. That is extremely disappointing; it is not in the spirit of the concession being sought. We were looking for a concession on not just the timing of the parliamentary vote but the scope—in other words, the circumstances in which, having gone through the negotiations, we would be able to vote.
It is a little like travelling for two years down that road of negotiation, getting to the edge of the canyon and having a point of decision: are we going to have that bridge across the chasm—that might be the new treaty, which might take us to that new future—or are we going to decide to jump off into the unknown and into the abyss? Parliament should have the right to decide that. That is the concession I think many hon. Members were seeking, and it is not the concession we received.
Sir Oliver Letwin
The hon. Gentleman has given an extraordinarily important clarification of his new clause. As I suspected and speculated, “relationship” includes the potential for no relationship. Therefore, he is advancing the proposition that Parliament should be able to reverse the effect of the referendum and prevent the United Kingdom from being able to leave the EU.
Chris Leslie
No. As we saw on Second Reading, it is quite clear to all concerned that we will be leaving the European Union. That was the judgment in the referendum, that was the question on the ballot paper and the House came to that point of view. But it is important that Parliament reserves the right, as the Prime Minister has sort of indicated, to have a say on the final deal. This is our opportunity—potentially our final opportunity— to set out on the face of the Bill precisely what the circumstances would be.
Chris Leslie
No, I will not give way, because a lot of hon. Members want to get in.
What was particularly disappointing and deflating in the Minister’s so-called concession, which now feels quite hollow, was that he went on to say that if Parliament did decide to vote against a draft deal, he would not go back into negotiations—that the Government would feel that this was somehow “a sign of weakness”. I think that is entirely wrong; if Parliament says, “With respect to the Government, this is not quite good enough. Please go back and seek further points of clarification and further concessions in the negotiation,” that should be a source of strength for the Government. Quite frankly, I believe it strengthens the arm of the Government for them to be able to say, “You know, we would like to do this, but Parliament is really keen for a better deal.” It is quite useful for the Prime Minister to have that. New clause 110 is helpful to the Prime Minister. It is disappointing that the Minister did not just say this in response to pressure from hon. Members but had it in his script. He had pre-prepared the circumstances where he was going to say that he was not prepared to go back into negotiations if Parliament declined to give support to the new arrangements. We can see that the concession is not quite all that it was meant to be.
Claire Perry
One of the things that is troubling me is the principle of equivalence. As I understand it, the European Parliament has the opportunity to vote on the deal before it is presented to the European Council, and so, in effect, has a right of veto. I interpret that to mean that the deal is therefore then sent back to the negotiating team for further negotiation. Does the hon. Gentleman agree that one of the strong points that we have to ensure is that those who voted to leave the EU, whose decisions we respect, have at least equivalence in terms of what their Parliament can do as compared with the European Parliament?
Chris Leslie
I commend the hon. Lady for making an incredibly important point in defence of the sovereignty of our Parliament. This is about putting Britain first, making sure that we defend and safeguard the rights of our constituents, and ensuring that the European Parliament does not have an advantage that we would not. If the European Parliament has the opportunity to reject the new arrangements, then so should we: it is a very simple point.
The Minister could make that verbal concession. He is a very able Minister, but Ministers can be here today and gone tomorrow; they come and they go. Having such clarity enshrined in the Bill is really important for hon. Members. This is a question that transcends party political issues. The Minister should hear the voice of Members in all parts of the Committee. We recognise that we are going to be leaving the European Union, but we want the best possible deal for Britain, and Parliament is sovereign here. Yes, we have Ministers who lead on the negotiations, but they cannot cut Parliament out of this altogether. That should be a source of strength for them.
Mr Harper
There is something I do not understand— I have been thinking about it since it was raised by the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper). The hon. Gentleman asks whether we could have a vote in a situation of not having a deal. The leader of the Liberal Democrats has been clear in his view that if we said no to the deal, we would remain in the European Union. In a vote in a no deal situation, what are the two choices? Would one of them be remaining in the European Union?
Chris Leslie
My understanding is that we remain in the European Union until such time as the article 50 two-year period expires, after which, potentially, there is the famous cliff edge.
Now that we have had partial acceptance from the Government that the vote needs to take place in Parliament sufficiently early on the draft arrangements, I hope that Parliament would then have a sufficient period of time to say to Ministers, for example, “We like 90% of the deal that you’ve done, but we’d like you to go back again, within the time that remains, to get a slightly better deal.” This is simply the role that Parliament should have. Taking Parliament out of that process altogether would be a great shame.
Chris Leslie
I would like to move on because other hon. Members want to get into this discussion.
The wording of new clause 110 is very deliberate in talking about the new relationship as well as a new treaty. It is important that we take the opportunity that the Supreme Court has given us. Not only that, but we should listen to the entreaties of the Prime Minister herself in her own White Paper, where the 12th of her 12 points said that we would not aspire to a cliff edge—that we would try to get a deal. This new clause simply seeks to facilitate, in many ways, the role that Parliament could have in achieving the very thing that the Prime Minister has said that she wants.
I am afraid to say to the Minister that Hobson’s choice, take-it-or-leave-it style votes are not acceptable and not good enough for Parliament. We must have a continued say in this. I urge members of the Committee, across the parties, to consider the role that new clause 110 could play in making the vote meaningful.
Mr Grieve
It is a pleasure to participate in the debate. I agree with one comment that the hon. Member for Nottingham East (Chris Leslie) made when he spoke to new clause 110: the problem that bedevils this debate is that we are in a grey and murky environment when it comes to ascertaining how the process will or should unfold. As somebody who campaigned to remain, that was one of the things that worried me at the time, but I have to accept that the electorate have spoken. For me, the key issue is how I can help the Government to navigate some of the reefs that seem to be present so that we can achieve a satisfactory outcome and try to give effect to the expressed will of the electorate.
Our problem is that we cannot predict what the situation will be in two years’ time. We have no idea what the political landscape will be in this country. We do not know what the economic conditions will be, and we do not know whether we will be doing very well in the run-up to Brexit or very badly. We cannot predict the political landscape on the European continent or the state of the European Union, and how that might affect the negotiations. Nor can we predict the wider security situation on our continent.
That is why the idea that the House in some way forgoes its responsibility to safeguard the electorate’s interests because a referendum has taken place is simply not a view to which I am prepared to subscribe. In such circumstances, we need to have regard to the situation and to the difficulties that the Government face because of its unpredictability, but we must rule nothing out.
To pick up a point that has been made—I repeat it, because it is my position and I shall hold to it until the end—public opinion on this matter may change radically, and the House would be entitled to take that into account. Equally, I accept that at the moment there is no such evidence, and it is our duty to get on with the business of trying to operate Brexit.
How do we introduce safeguards into the process? Of course there is an ultimate safeguard, as the House has the power to stop the Government in their tracks, but that tends to be a rather chaotic process that leads, usually, to Governments falling from office. It is an option that one can never entirely rule out in one’s career in politics, but it is not one that I particularly want to visit on my Front-Bench colleagues. However, this is an important matter, and one of the risks that they undoubtedly run in this process is that it could happen to them. We cannot exclude that possibility.
It is very much better that we should have some process by which Parliament can provide input and influence the matter in such a way as to facilitate debate and enable us collectively to reach outcomes that we can, at least, accept and that may be in the national interest.
Alex Chalk
On a point of clarification, will my right hon. and learned Friend indicate whether he perceives new clause 110 to be a potential vehicle for blocking Brexit and keeping us in the European Union? At the moment, that is not clear to me.
Mr Grieve
New clause 110 is certainly very well meaning, but I happen to think that there are some problems with it, and I will explain what they are in a moment.
One point that should be made is that it is usual for Government to bring important treaties to the House for approval before signing them. That is a common phenomenon; it is not unusual. There is a long history of doing that with important treaties, so we cannot simply say, “Normally, we ratify them after they are signed.” The obvious course of action, sequentially, is for the Government to publish the White Paper—I am delighted that we succeeded in securing one, because it sets out a plan—and then to get on with the treaty negotiations. In an ideal world, I would like the Government to come back before anything is concluded to ask the House for its approval and to indicate what they have succeeded in achieving. The House will have to make judgments at that time in relation to the overall situation.
Mr McFadden
I am grateful to the right hon. and learned Gentleman for giving way while he is taking us through this sequence. The Minister indicated at the beginning of the debate that the Government were bringing forward a concession that would make the process more meaningful. I do not expect him to comment, but it appears that No. 10 is now briefing that it is exactly the same as what the Prime Minister offered in her Lancaster House speech, meaning that nothing has changed.
Mr Grieve
I do not think I agree with that. I do not know what No. 10 may or may not be doing, but I had a role in trying to secure the concession read out by the Minister. It is by no means a perfect concession as far as I am concerned, and in a moment I shall come to some of the difficulties that I think the House has.
Angela Smith
The Daily Mirror is reporting that No. 10 has said that all the concession does is give clarity around the timing of the vote and nothing else.
Mr Grieve
It is absolutely right that the Government have indicated on a number of previous occasions that they would allow the House to have a say. Looking at the matter logically, I have to say that depriving us of a say would be a “light blue touchpaper and retire” moment, frankly. If a Government do not wish to bring themselves down, denying Parliament a say on a really important issue is just not feasible.
I had a role in trying to see how the Government could provide some assurance about the process. It is not perfect—the Minister has read out what he has—but I say to the hon. Member for Penistone and Stocksbridge (Angela Smith) that, as the shadow Secretary of State said, it is a very significant step forward from what had been said previously. To my mind, it has provided helpful clarification.
Angela Smith
The right hon. and learned Gentleman is being generous. No.10 is briefing that there is no real change and that the concession is not a concession. That is No.10 itself.
Alex Salmond
The House will have its say; the question is about the circumstances in which it has that say and the default position if it does not agree. May we adjudicate between the Daily Mirror, No.10, the Minister and the interpretation of the right hon. and learned Gentleman by having something on paper in the Bill? In that way, all our interpretations can be crystallised around an essential truth.
Mr Grieve
With characteristic sagacity, the right hon. Gentleman goes to the heart and nub of the problem. Is it readily possible to put into the Bill the intention read out at the Dispatch Box by the Minister? In fairness to the Minister and the Government, there are, I am afraid, some really good reasons why that presents difficulties.
The most obvious difficulty is the finite nature of the negotiating period under article 50. One of the things I was interested in was whether we could secure from the Government an undertaking that we would have a vote at the end of the process—before, in fact, the signing of the deal with the Commission. Contrary to what is set out in new clause 110, the Council of Ministers and the Commission are not two separate processes. The Commission will sign the initial agreement when the Council of Ministers gives it the authority to do so, and it then goes to the European Parliament for ratification or approval—call it what you will. Those are not two separate things.
Our problem is that if the negotiation follows the pattern that we have often come across in the course of EU negotiations—running to the 11th hour, 59th minute and 59th second—and we are about to drop off the edge, I confess that I do not particularly wish to fetter the Government’s discretion by insisting that at that precise moment they have to say, “We’re terribly sorry, but we can’t give you a decision until 48 hours after we have dropped off because we have to go back and get approval from both Houses of Parliament.” That is a real problem inherent in what to my point of view is the ghastly labyrinth into which, I am afraid, we have been plunged. We have to try to work our way through it with common sense.
Yvette Cooper
Was it the right hon. and learned Gentleman’s understanding that the Minister said that the deal would be presented to Parliament after it had been agreed by the Commission and the Council, but before it had been agreed by the European Parliament? If so, that sounds like a really late stage in the process. Does he think it is a problem if the European Parliament can send the deal back for negotiation, but the UK Parliament cannot?
Mr Grieve
There are bound to be difficulties because the whole process of negotiations under article 50, as the right hon. Lady will be aware, is rather one-sided. That is an inherent difficulty. Let us suppose for a moment that the negotiations are concluded in 18 months. I would rather hope in those circumstances that the Minister would say, “Thank you very much, but we will not even make the first agreement. We want to go back to the both Houses of Parliament even before we agree with the Commission because we have time to do so.” However, if it is the 11th hour, 59th minute and 59th second, I accept that the Government have a problem that is not taken into account by new clause 110.
Mr Kenneth Clarke
My right hon. and learned Friend’s preference is obviously for Parliament to be asked its opinion before any agreement has been signed with the Commission, on the authority of the Council. Does he accept that the 11th hour problem can easily be got around? In the tortuous process of European negotiations, stopping the clock is hardly unknown. If all the member states agreed that the British Government had to be given time to get the approval of Parliament, they would allow two or three weeks to elapse.
Does my right hon. and learned Friend also agree that we need something on paper to clarify these highly important points? Does he join me in inviting the Minister to table an amendment in the House of Lords to give precise effect to whatever the concession is meant to mean? If we pass either new clause 99 or new clause 110, it could be replaced by that Government amendment, if Ministers were to come up with a better clarification. What we cannot do is leave the debate to continue for the next two years on what the Minister did or did not mean when he made his statement to the Committee today.
The Temporary Chair (Mr George Howarth)
I say for the benefit of other Members that the right hon. and learned Gentleman has had a very long career—so long, in fact, that he is capable of recognising the difference between an intervention and a speech.
Mr Grieve
I am delighted to hear from my right hon. and learned Friend. I do not think it would necessarily be unhelpful—in fact, it would be very helpful—if the Government were in a position to amplify the Minister’s brief statement. However, I acknowledge—I think my right hon. and learned Friend knows this—that doing that by means of an amendment would be rather difficult. I know that Government draftsmen have extreme ingenuity and, indeed, that this issue might be taken up in the other place, but there are difficulties because there is a whole series of conditionalities. I certainly do not wish to fetter the Government in their ability to carry out the negotiation. It has always seemed to me that it would be a great error to do that, because we might undermine the ultimate outcome, to our own detriment. That has worried me throughout the process.
I do not want to take up more of the Committee’s time. Although I have had great difficulty over this matter today and in the days leading up to this debate, my inclination, for the reasons I have given, is to accept the assurance given by my right hon. Friend the Minister, which seems to me to be a constructive step forward. However, he has to face up to the fact that this issue will not go away. Even when we have enacted this Bill and triggered article 50, this will be a recurrent theme throughout the negotiating process that will come back much, much harder as we get closer to the outcome and as it becomes clearer, from all the leaks that will come from Brussels, what sort of deal or non-deal we will have, so the Government had better have a strategy. If their strategy is to avoid this House, I have to say to the Minister that they will fail miserably. I do not want that to happen. I want to guide this process as best I can, as a former Law Officer, towards a satisfactory conclusion.
Alistair Burt
My right hon. and learned Friend has played a considerable part in this process. Does he agree that the remarks of the Minister put the onus on the Government to ensure that the reporting process for the negotiations is meaningful? We cannot have a vote at the end of the process after 18 months of radio silence. The reporting process must be sensible and relevant. It must give the House a feel of what will happen because, if that is not the case, the vote at the end will mean very little.
Mr Grieve
I agree entirely with my right hon. Friend. I hope that the Government will listen because, as I say, this issue will not go away. It will keep coming back to dominate our politics until we have resolved it satisfactorily. That said, I would be being curmudgeonly towards the Minister if I did not thank him for having listened on this issue, for which I am grateful.
Sir Oliver Letwin
My right hon. and learned Friend has thanked the Minister, but I think that the Committee ought to thank my right hon. and learned Friend. He has set out the responsible version, which we did not hear from Opposition Members, of how to deal with this issue.
Geraint Davies
The right hon. and learned Gentleman’s whole speech seems to be predicated on the idea that the Government can go to and fro, and somehow finesse and negotiate something that Parliament might be happy with. Is it not the case, however, that it will be the EU27 that decide what we get? They will say, “You’ve triggered article 50, so here’s what you’re getting,” so is not this whole discussion cloud cuckoo land?
Mr Grieve
I have to say to the hon. Gentleman that I do not know. I actually think that none of us knows. We can make some broad assumptions that there appears to be some goodwill to try to reach a sensible agreement, and we can see how that could be easily derailed by political pressures and considerations within other EU states. We can also see that the United Kingdom is at a disadvantage in the negotiations for reasons that are plainly obvious. Having embarked on this course, however, we have to try collectively to apply common sense. I regret to say that I often do not hear common sense on this issue. Frequently, I do not hear it from some Conservative Members who seem fixated on ideological considerations that will reduce this country to beggary if we continue with them. We have to be rational in trying to respond to the clearly stated wishes of the electorate until such time as they show—they might, just as they showed between 1975 and last year—that they have changed their mind on the subject. Even then, the view might be of a completely different future and not a return to the past.
I will do my best to support the Government and I welcome the Minister’s comments. In the circumstances, having looked at the amendments, those comments are the best solution we have this evening. However, that does not mean that the Government will not have to continue thinking about how they involve the House. Otherwise, this House will simply involve itself.
Owen Smith
It is a genuine pleasure to follow the excellent and characteristically shrewd speech by the right hon. and learned Member for Beaconsfield (Mr Grieve). I agree wholeheartedly with one point he made towards the beginning of his speech: we cannot allow the fact that there has been a referendum to absolve this House of its duty to scrutinise the Government’s progress in the negotiations, and to act in the national interest. I wholeheartedly agree with him on that. That view is conditioning my entire approach to this debate.
I disagreed with the right hon. and learned Gentleman, however, on the substantive point he made in respect of the concession made by the Brexit Minister. I disagree that the Government have made a substantive concession today. I confess that I am far less sanguine than some of my right hon. and hon. Friends about that. It does not feel to me that we have moved much beyond where we were in the Lancaster House speech. What is being offered to the House is a debate right at the end of the process, at a point—we do not know when exactly—seemingly in the dog days of the process. A choice at that point will be between the deal on offer, which in my view is likely to be a bad deal—one predicated on our leaving the single market and the customs union; the rock hard Brexit we all feared—and no deal. If there is no deal, the Minister confirmed today that the country will face exiting the European Union on WTO terms. What does that mean for the country? According to the director general of the WTO, it would mean a reduction in trade of around £9 billion per annum to the UK. Before the referendum, the Treasury thought it would mean an annual reduction in receipts of £45 billion per year. That was the reduction in GDP it foresaw. It is an eye-watering sum, equivalent to putting 10p on the basic rate of income tax. That is why, above all else, we have to consider where we are going incredibly carefully. If we end up there, it will be a disaster for Britain.
I said earlier that I wanted to speak in favour of amendment 43, tabled in the name of the hon. Member for Westmorland and Lonsdale (Tim Farron), but I would have liked to speak to my new clause 52, or even new clause 131, tabled by the Liberal Democrats, which would both have gone further and insisted on there being a second referendum. Apparently we cannot consider those amendments, however, because they would require a money commitment that the Bill does not have. That is ironic, given that the potential cost of falling out of the EU is £45 billion. Spending £100 million to make sure we do not do that seems like a pretty good deal.
Geraint Davies
Amendment 44, to be voted on tomorrow, makes provision for a referendum and valuation that does not need to be costed and therefore is in order, so those who want a second referendum on the final deal can vote for that amendment.
Owen Smith
I am pleased with that, and I hope that we will vote on it tomorrow.
I am insisting that we consider a second referendum—a confirmatory or ratificatory referendum, or whatever we want to call it—because I sincerely believe that Brexit will be a disaster for our country, and one that will cost us and future generations in lost trade, revenues and opportunities. I equally believe that it is a disaster for us to be dividing the country on this issue, as we have been, in respect of our values and the other crucial things we hold in concert.
Owen Smith
I will not. The right hon. Gentleman has spoken a lot already.
It was deeply destructive for us to have engaged in Brexit and unleashed a catalytic force of destructive politics, not just in this country but across the west. It is to my eternal regret that Parliament launched down this route without being sufficiently vigilant or diligent with regard to the risks we faced in the referendum or the nature of the referendum we were offering to the country. It was a profoundly flawed referendum in many ways, and one that many across the House feel could have been dramatically improved with greater scrutiny and care. Why did we not offer that scrutiny? I do not think that many Members on either side of the debate seriously thought we would lose. There was a widespread view that the referendum was agreed for ideological reasons—to solve the culture wars that have raged in the Tory party for 30-odd years—and it was not considered carefully enough.
The House has an opportunity to make amends for the mistake that we—not the people—made. The people voted on the terms and the question we offered them, with the information we provided and on the basis of the 50%-plus-1 margin we put into statute. We have an opportunity to rectify some of those mistakes, and I feel that we should. We should follow the view of the Brexit Secretary when he was on the Back Benches, and, as the hon. Member for Westmorland and Lonsdale said, we should have a final confirmatory referendum.
We had a mandate referendum, the result of which was that we should leave the EU, but we do not know what the terms of that leaving will be. It is perfectly legitimate for us to consider what they might be. It would not be to deny democracy to do that; it would be to double down on it. The problem with simply pushing for a vote in this place on the terms of the deal is that we run the risk of leaving the people doubly dissatisfied. It is perfectly possible for this House to reject the prospect of our falling out of the European Union on WTO terms, because of the costs that will become apparent when we see the extra costs for our car production, for chemicals, for financial services and for all the other things that would see their tariff price rise for export out of this country. It is perfectly possible, as the right hon. and learned Member for Beaconsfield said, that we start to see a change in the country’s views in respect of Brexit when those things happen.
Anna Soubry
Let me say from the outset that it is really important that we all step back from the way we have done politics arguably for too long and to the detriment of British politics. I mean the idea that there are “concessions” to be made, that the people have bottled things, that briefings from No. 10 say that no concessions have been made, that concessions have been given and that they are this or that, that it is wonderful that one viewpoint has been triumphant over another or that the hard-line Brexiteers or the remoaners have been seen off. I find that not only tedious and inaccurate but something that does none of us any favours. Most of all, it does not do our constituents any favours, either. I, for one, am sick and tired of it.
I think it was back in September or October when a number of people on these Benches said that what now happens, as we leave the EU—for the referendum result has been accepted—transcends normal party political divides because it is so important. It is important, frankly, not for my generation but for my children and the grandchildren to come. As others have said—possibly on the Opposition side; I do not care, and I will give credit to whoever said it—this is the most important set of negotiations that we have entered for decades, and it is critical that we get them right because of the consequences for generations to come.
Can we, in effect, stop the sort of—I nearly said willy-waving, Mr Howarth, but that might not be a parliamentary term. However, that is actually what it is, and it is not acceptable any more. Let us try to come together to heal the divide. This needs to be said. Let me extrapolate from the vote, not just in my constituency but in Nottingham and with a look to Ashfield. The borough is bigger than my constituency and excludes Eastwood and Brinsley—wonderful places well worth a visit, but I will not go into the demography. In short, I think that the vote for leave in my constituency was about the national average—perhaps 51%, possibly as much as 52%. Some of my constituents voted to leave the European Union, as indeed did people across the country, because they wanted, and were adamant about this place having true sovereignty, or true parliamentary sovereignty.
The awful irony is that, since the vote—I am going to be very honest about this—many people feel that Parliament has been completely excluded. The Government had to be brought here. This Bill is before us because some brave citizens—and they were brave—went to court to say that parliamentary sovereignty must mean that: it must be sovereign and it must exceed the powers of the Government and the Executive. It has felt, as I say, as though this place has been excluded at all stages. And so it has come about that we are leaving the single market, and we have abandoned free movement. We have abandoned long-held beliefs in all parts of the House, with no cross-party divide. In some instances, we have voted against everything that we have believed in for decades.
Last week, when we voted to translate the result of the referendum into action, we did not vote according to our consciences or our long-held beliefs. I did not vote with my conscience, and if I am truthful about it, I am not sure that I voted in the best interests of my constituents. That upsets me, because I did not come here for the sake of a career; I came here because I wanted to represent my constituents and do the very best for them. I genuinely do not know whether I did that last week. However, I was true to the promise that I had made to my constituents. I had promised them that if they voted leave, they would get leave, and that is what drove me through the Lobbies last week with a heavy heart and against my conscience.
I do believe that I did the right thing, and I can look myself in the mirror every morning believing that I have been true to the promise that I made to my constituents; but I am jiggered if I am not now going to be true to my belief in parliamentary sovereignty. I do not want to vote against my Government. I have never been disloyal to my Government, even though at times—well, we won’t go into that. I have always been true and loyal to them. In this instance, however, I think that new clause 110 embodies admirable objectives. Goodness me, anyone would think that the new clause was revolutionary. All it would do is ensure that whatever happens—be it a deal or something else—Parliament must approve it, and I certainly support my Government and my Prime Minister in all their efforts to secure that deal.
I thank the Minister for the concession that he has made. If Members do not like the word “concession”, I will abandon it, but what the Minister has said has been the right thing to say. I completely agreed with the excellent speech made by my right hon. and learned Friend the Member for Beaconsfield (Mr Grieve). This is progress, and it is the right thing to do. What concerns me is what will happen if, despite their best efforts, the Government fail, through no fault of their own, and we have no deal. How revolutionary is it to say, in the event of no deal, and at the right and meaningful time as we proceed to that new relationship, “Please could we have a say—not on behalf of Parliament, but on behalf of all our constituents?” That is why we come to this place.
Stephen Doughty
The right hon. Lady has got to the nub of the issue. I, too, would like new clause 110 to be pushed to a vote. Throughout this process, my constituents have seen Parliament sidelined and presented with a “deal or no deal” option. We face the horror of ending up on WTO terms, or, even worse, in some sort of limbo. Given the difficulties of negotiating even WTO terms, our country would be in a bigger mess than the one it is in already. That is what my constituents fear, and that is why they want Parliament to have a say.
Anna Soubry
I agree with much of what the hon. Gentleman says, but I am also reminded of what was said by my right hon. and learned Friend the Member for Beaconsfield. As he rightly asked, who knows where we may be in two years’ time? No one seems to have thought about the issue in those terms. God forbid, but we may not have our Prime Minister then: we may have another Prime Minister, for whatever reasons. We may not have the same Secretary of State, or, indeed, the same Minister of State. Those circumstances could change, and other circumstances could change, such as the economy or the mood in Europe.
There may indeed be circumstances—and the hardline Brexiteers have surely missed this point—from which they may want to protect themselves. They may then want that debate. It is also possible that WTO tariffs and the other developments that the hon. Gentleman and I fear would be in our best interests. That is the whole point: we do not know where we shall be in two years’ time. It is right for us to keep our options open, and it is right for us to have a debate and a vote.
Mr David Lammy (Tottenham) (Lab)
The right hon. Lady is making her points with her usual eloquence. Does she agree that another context that has clearly changed since 23 June is the geopolitics of the world? We have a new leader in the United States, and some very serious concerns have been raised about Putin in Russia. We certainly do not know where we might be in two years’ time.
Anna Soubry
I absolutely agree, and that is exactly the point that many Members across this House are now making.
Mrs Madeleine Moon (Bridgend) (Lab)
The right hon. Lady is making a very honest speech, and I commend her for her honesty and decency.
We have just heard three excellent, calm, rational speeches explaining the things that are tearing this country apart. Is it not now time for us all to understand that not only are we talking to our own constituents, but that this House is being listened to across the world, that the people who will be deciding on Brexit are also listening, and that those who are ever more triumphalist, aggressive and bellicose will be the worst enemies when it comes to our getting to where we will need to be?
Anna Soubry
I completely agree with the hon. Lady, and this is part of the bringing together, the forming and building of a consensus not just in this place—I do not know why we should be so frightened of that here—but across the country at large. Families, friends and communities remain divided and we must now come together.
People have put their trust, as I have, in my Prime Minister and my Government. I have said to them, as somebody who has always believed in our continuing membership of the EU, that we lost that debate, and I now trust the Prime Minister and the Government when it comes to the abandoning of the single market and freedom of movement, and even, goodness forbid that this happens, leaving the customs union. I will continue to fight for all those things, because I believe in them, but I trust my Prime Minister and Government to get the best deal for our country. I think this Bill is a good vehicle to deliver the result and in many ways should not be amended, but all we are asking is that this place, in the event of no deal, actually has a voice and a vote.
If the Government cannot see the profound logic and sense of that, it will leave people like me with no alternative but to make my voice clear and heard on behalf of all my constituents and to support the hon. Member for Nottingham East (Chris Leslie) in this amendment. It is reasonable and fair, and it encompasses, in what it seeks to achieve, the right thing.
Mr Harper
In the case of there being a deal, the Minister has given a clear commitment that the House will vote on it. In the case of there not being a deal, I do not know whether my right hon. Friend can answer the question as to what exactly the House will be voting on any better than the hon. Member for Nottingham East (Chris Leslie) did, but my reading of new clause 110 is that it only deals with cases where a new treaty or relationship is being proposed; it does not deal with the case of there not being a deal.
Anna Soubry
I am grateful for that intervention as it gives me the opportunity to make it clear—I am sure the hon. Member for Nottingham East could explain this if it needs any further clarity—that I take the term “relationship” to be describing exactly that. If we do not have a deal, we then accordingly have a new deal— a new relationship, in other words—with the EU. I congratulate the hon. Gentleman on putting the word “relationship” into that new clause, because it perfectly encompasses the eventuality of there being no deal—it encompasses all eventualities. It is not rocket science; it is not revolutionary; it is the right thing to do.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
I want to take the right hon. Lady back to her earlier remarks about a bad deal, no deal or failure. She said several things about the WTO. Just for clarity, how does she see the WTO? If the UK does not get a deal and ends up on WTO terms, will she see that as a failure by the UK Government?
Anna Soubry
I want to abandon this language of failure and success, and I say, with great respect to the hon. Gentleman, that I am not going to be playing that game.
I want us to come together and to get the best deal, and in the even that we do not get a deal, I want to make sure that this place absolutely gets that say and that vote. On that basis, I will continue to listen to the debate, but I have to say that I am minded to vote in favour of this amendment and make that clear not for any design to cause trouble or anything else, but to stand up for what is right for all my constituents.
Yvette Cooper
I commend the right hon. Member for Broxtowe (Anna Soubry) for her speech, much of which I agreed with. Like her, I voted to trigger article 50 on Second Reading because I think we should respect the referendum result, but like her, I campaigned for us to remain. I also agree that we have a responsibility across Parliament to get the best possible Brexit deal, and that we should all be involved in the process because so much has yet to be decided about the kind of deal we will get and the terms on which we will leave the EU. That is why I support new clauses 1, 99 and 110.
Mr Harper
To be fair to the right hon. Lady, I think she has gone some way towards answering this question. I think she said that if the Government judged that the best available terms were not good—if it was, by the Government’s definition, a “bad deal”—she would like them to put that in front of Parliament and ask us to decide whether it was indeed a bad deal. Can she confirm that that is what she is saying?
Yvette Cooper
That would indeed be one way of doing it, with the Government giving Parliament a substantive vote rather than simply heading directly for the WTO alternative without giving us an option.
The second challenge in the Government’s approach is that, if there were a deal, the timing of any vote would still make it difficult for Parliament. A vote would take place after the deal had been agreed with the 27 countries and with the Commission, but before it went to the European Parliament. Again, this Parliament would only get a choice between the Executive’s deal and the WTO terms, even if we knew that a better or fairer deal was on offer.
I hope that there will be agreement across the House on this point. I hope that the Government will come up with the best possible Brexit deal and that such a deal will have Parliament’s strong support and endorsement. If that does not happen, however, and if things unravel along the way, what opportunity will there be for Parliament to have its say and to try to bring things back together? That brings me back to the timing of the vote. Leaving it to the very end of the process would make that very hard to do.
Stephen Kinnock (Aberavon) (Lab)
Does my right hon. Friend agree that the Government could request an extension to the article 50 process if we have not been able to conclude a positive deal? Does she also agree that a request for such an extension would be greatly enhanced and strengthened if it had a mandate from Parliament behind it? That should involve a partnership, with the legislature and the Executive working together to strengthen the national interest vis-à-vis our European partners.
Yvette Cooper
Again, that would certainly be one option. My understanding is that if the European Parliament voted down the deal, it would get the opportunity to say that the negotiations should be extended, but the UK Parliament would currently not get that opportunity. The purpose of the new clause is not to extend the negotiations—we should be trying implement the referendum decision—but if Parliament judges that there is a better offer on the table that would give us a better Brexit deal, we need safeguards to prevent the Government from running hell for leather towards an option that is bad for Britain.
Charlie Elphicke
The right hon. Lady is passionate on this subject. If at the end of the article 50 process—the two-year, winding-down clock—Parliament rejected the deal and nothing happened, we would leave. That would be an undesirable result, so my concern is that binding the Government’s hands with these new clauses is not in the country’s interests.
Yvette Cooper
I do not think that the new clauses would bind the Government’s hands. I agree that there is a concern that we could end up toppling off the edge of the negotiations without having a deal in place, which means that there is an incentive for all of us in Parliament to want a deal to be in place for Brexit, for future trade arrangements and for the transitional arrangements. Given how the Government have set out the arrangements, however, my concern is that there is no incentive for the Executive to try to get a deal that Parliament can support. If the Executive can simply go down the WTO route and reject alternatives without Parliament having any say, they will not have the right incentives to get the best possible deal.
John Redwood
Does the right hon. Lady agree that practically everyone in the House and in the Government would like tariff-free trade on the same basis as we have today? We entirely agree on that. The only issue is with what we can do individually and together to make it more likely that the other 27 member states will agree, because they will make that decision.
Yvette Cooper
I actually do agree with the right hon. Gentleman. We do want tariff-free trade, but he and I will probably differ on the customs union, for example. There would be huge advantages in staying in the customs union, but that does not affect the decisions that we might make on free movement or other aspects of the single market. I know that he would like us to be outside the customs union, but that may be a crunch question for the deal. The Executive might reject alternative options or better deals on matters such as the customs union on their own rather than give Parliament the opportunity to have its say.
Some of this comes down to timing. I accept that there is an article 50 timescale of two years and that it will be for the EU to decide what happens at the end if no deal is in place, but that also matters for the timing of the vote. At the moment, based on what the Minister said earlier, the vote will come at the very end of the process and could end up being at the end of the two years. The strength of new clause 110 is that it would require the vote to be held before the deal went to the European Commission, the European Council or the European Parliament. The advantage of that is that we would have a parliamentary debate and a vote earlier in the process, and that if there were no agreement, there would still be the opportunity for further negotiations and debates before we reached the article 50 cliff edge.
Mr Grieve
I hesitate to say this, but the House sometimes fails to realise its own powers. If it becomes clear during the course of the two years of negotiations that the Government are rejecting a negotiating opportunity that the House thinks is better than the one they are pursuing, there is nothing to prevent the House from asserting its authority in order to make the Government change direction; it is a question of whether we have the will to do it. The problem with the right hon. Lady’s point is that if we were right up against the wire, it could tip the Government into losing an agreement and there would be nothing to replace it.
Yvette Cooper
Were that the case, it would be Parliament’s responsibility to behave with the common sense that the right hon. and learned Gentleman advocated earlier. I would trust Parliament to have common sense and not push Britain towards an unnecessary cliff edge in those circumstances. That is not what Parliament wants to do. It has already shown that it wants to respect the decision that was made in the referendum, which is important, but it also wants to get the best deal for Britain and will be pragmatic about the options at that time.
The right hon. and learned Gentleman suggests that there might be an alternative way for Parliament to exercise its sovereignty, but what might that be in practice? We could have a Backbench Business Committee motion or an Opposition day motion that the Government could then ignore. We could have a no confidence motion, but that would not be the appropriate response when we should be considering the alternatives in order to get a better deal out of the negotiations.
If the right hon. and learned Gentleman were to come up with an alternative way for Parliament to exercise its sovereignty that I have not thought of, there might be an alternative to a vote today. If we want legislation that ensures that there is recourse to Parliament on these important issues, which will affect us for so many years to come, the right thing to do is to get something in the Bill.
Yvette Cooper
I will make some progress, because other Members want to speak.
There are many ways in which the Government could provide recourse to Parliament. They could table a manuscript amendment that simply puts into practice what they have said today, which would be immensely helpful and might provide the reassurance that many hon. Members need.
New clause 99 would mean that withdrawal would have to be through an Act of Parliament. On such a serious matter, there is a strong case for decisions to be made through Acts of Parliament—that would happen on other similarly weighty matters. To be honest, much of what new clause 110 would do would simply be to include in the Bill what the Minister has already said he will do. However, it would provide reassurance, with the added benefit of clarity that there will be a vote if there is no deal and we go down the WTO route. Also, the vote would be earlier in the process, which would give Parliament the opportunity to have a say before we get to the final crunch at the end of the negotiations.
The honest truth is that new clause 110 is not that radical. It would simply put into practice and embed in legislation the things that some Government Members have said they would like to achieve, so why do we not simply include it in the Bill so that we have that reassurance? Ultimately, there is a reason why all of this is important. Both sides in the referendum debate talked about parliamentary sovereignty, and with that comes parliamentary responsibility. We have already shown that responsibility by deciding to respect the result of the referendum on Second Reading, but with that comes the responsibility to recognise that we have to get the best possible Brexit deal for our whole country, rather than just walking away from the process of debating the deal. If we end up walking away, power will be concentrated in the hands of the Executive. I have never supported such concentrations of power, and every one of us should be part of making sure that we get the best possible Brexit deal.
Mr Dominic Raab (Esher and Walton) (Con)
It is a pleasure to follow the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper) and my right hon. and learned Friend the Member for Beaconsfield (Mr Grieve).
I agree with the principle that Parliament should vote on the final deal. I argued for that during the referendum, and I certainly have not changed my mind. On top of that, as people talk about Parliament being stripped of its role, it is worth pointing out that any domestic implementing legislation as a result of any deals reached at international level will, of course, require parliamentary approval in the usual way. The legal effects of Brexit at home will be dealt with through enactment of legislation in advance of the ratification of the international treaties.
On the international element, it is useful to distinguish between two key components of the diplomacy: the terms of exit and the terms of any new relationship agreement on trade, security and the other areas of co-operation that we all agree we want to preserve. With that in mind, I welcome again the White Paper and the Lancaster House speech that, as we talk about all the process and procedure, set out a positive vision for Britain, post-Brexit, as a self-governing democracy, a strong European neighbour and a global leader on free trade.
Mr Raab
I will make a little progress because other Members want to speak and we are quite far advanced in this debate.
I confess that, as a former Foreign Office lawyer who spent six years advising on both EU law and treaty interpretation, I find article 50 palpably clear on the surface. It disapplies the EU treaties two years after article 50 is triggered. The language is mandatory as a matter of treaty law, so if Parliament refuses to approve the terms of any exit agreement, the UK drops out without one.
Before there is general hysteria across the House, including among Government Members, let me say that there is a general principle of customary international law, which is also true of common law, that where there is a general rule, there can be exceptions, but those must be interpreted narrowly. There are exceptions on this. There is an exception if the EU unanimously agrees to extend the period under article 50(3). If we look at the clear language used, we can see that it is conceivable to imagine that happening only in very exceptional circumstances—if at all—for a limited period and in relation to the exit terms. That is what the provision says. The agreement on our post-Brexit relationship with the EU could be prolonged as long as both sides wish, but that will not delay the exit, and it is extremely doubtful that article 50(3) could be used to delay departure on those grounds. That means many of the amendments we are considering are, in practice, unlawful, as well as unwise.
Robert Neill
My hon. Friend is providing a careful and interesting analysis, but is not the crux of the matter this: if at the end of the day there is no deal and we are forced to leave, perhaps on WTO terms, which many of us believe will be deeply damaging, it will be a scandal if this House does not have the chance to have a say on it? It will be a betrayal. Those who might not support new clause 110 today hope that perhaps the Lords will look more carefully at this, as, for many of us, the Government are on very borrowed time.
Mr Raab
I pay tribute to my hon. Friend the Chair of the Justice Committee and I agree that there should be a vote. The challenge is that I have not really heard anyone explain an alternative negotiation strategy to the one advanced by the Government, other than staying indefinitely in some limbo within the EU. That would create more uncertainty for business and greater frustration for the public, and it would devastate, paralyse and eviscerate our negotiating hand.
Mr Raab
I am going to make a little progress, to be fair to other hon. Members.
There is a second exception, and it is not true to say that triggering article 50 is irreversible. It can be reversed but, as I explained earlier, we would have to follow the specific exception envisaged in article 50(5), which offers a means to reverse the process of departure: we leave and then apply to rejoin. That is the clear language in article 50, which of course is binding as a matter of UK law. It was a previous Labour Government, with Liberal Democrat support, who signed us up not only to the Lisbon treaty, but explicitly to the fetters we now face. That is why I suffer a little when I hear some of the railing against the difficult legal confines the Government find themselves in not just as a matter of their own policy, but as a matter of law.
Mr Raab
I will not give way, as I am going to make some progress.
The choice on the final deal is clear: the British Parliament can veto the exit agreement and/or the terms of the new relationship agreement, but in that case Britain would leave the EU without agreeing terms. On the new relationship agreement, the UK Government would of course be free to revert for further negotiations, but that could not delay or stop Brexit from happening under the terms of article 50. Those facts will rightly and understandably focus our minds, as they are doing here today, and with a sense of trepidation. They will also focus minds—this is why it was crafted in the way it was—on the other side of the channel, among our European friends. So, on the assumption that it would take at least 18 months to agree all the terms of any new relationship agreement, the idea that Parliament voting down any deal would send the UK back to a further round of meaningful negotiations, before Britain formally leaves, is at odds with the procedure in the Lisbon treaty, and I find it neither feasible nor credible.
Mr Andrew Tyrie (Chichester) (Con)
My hon. Friend mentioned article 50(3), which does provide for transitional arrangements. It provides for a country to negotiate for the same arrangements to continue indefinitely until a subsequent date is provided at the end of the negotiating process for their implementation. Does he not agree that that should create a window for exactly the circumstances that he is so concerned about?
Mr Raab
My right hon. Friend is right in what he says, but if he reads article 50(3), he will see that it is explicitly referring to the withdrawal component of the diplomacy. But he is also right to say that there is scope for transitional arrangements or phased implementation to deal with some of the so-called “cliff edge” concerns that hon. Members are rightly worried about.
Mr Raab
I am going to make a bit of progress, to be fair to other Members.
In fairness to the previous Government, the ostensible aim of article 50 was to facilitate certainty, to focus the minds of the negotiating parties and to avoid withdrawal leaving a lingering shadow over not only the EU—although that was probably foremost in its consideration—but the departing nation. Many of the amendments and new clauses we are considering are counterproductive precisely because in seeking to fetter the Government in the negotiations they would weaken our flexibility and negotiating position and, critically, make the risk of no deal more likely. Members who support the amendments and new clauses must face up to the fact that they are courting the very scenario that they and we say we so dearly seek to avoid.
For my part, I could not countenance voting for attempts to put the negotiating aims in binding legislation and give them statutory force, because that would set the Government up to face a blizzard of legal challenges on the final deal. That would be deeply irresponsible because, whether unintentionally or otherwise, it would seem to me to amount to poison-pill tactics.
Paul Farrelly
Does the hon. Gentleman agree that the Prime Minister’s approach so far, in pandering not to those who want immigration reduced to the tens of thousands but to the nones-of-thousands lobby, risks our approaching the scenario he just outlined? That approach is nonsensical, because we need immigration, whether the people are crop-pickers or gene splicers. There are deals to be done and the Prime Minister needs to admit it.
Mr Raab
I thank the hon. Gentleman for his intervention, but say gently to him that between open-door immigration and closed-door immigration there seems to me to be quite wide scope for sensible reciprocal arrangements that allow us to retain control over the volume of immigration and things such as residency and welfare requirements, and to make sure that the people who come here are self-sufficient and that we have the security checks and deportation powers we need. I am not sure that he and I disagree on that. Between cutting off all immigration and having open-door immigration, there is enormous scope for some sensible diplomacy.
I turn specifically to the amendments and new clauses. The Government’s assurances ought to be enough to satisfy those who might be tempted by new clauses 1, 18 or 99. The Government have rightly promised to give Parliament a vote on the final deal, and I pay tribute to the shadow Minister, the hon. and learned Member for Holborn and St Pancras (Keir Starmer), who approached that matter in a sensible, sober and responsible way.
The other cluster of new clauses that have attracted attention are new clauses 19, 54 and 137, which would require that a parliamentary vote against the deal would send the UK Government back to renegotiate with the EU. As someone who has negotiated treaties—mainly bilateral treaties, but some multilateral—I can entirely understand why that is attractive. The truth is that if Parliament does not agree the exit terms, it is theoretically possible that the UK Government could revert to meaningful negotiations with the EU, if the draft agreement is concluded within around a year or, exceptionally, if the EU agreed a short extension. In practice, that is utterly inconceivable. It is total fantasy. Why would the EU give us better divorce terms just because Parliament did not like them? In reality, we would not even get the extension or better terms, and would leave without an agreement.
If Parliament does not approve the agreement on the new relationship, there is no express provision for the extension of negotiations and no clear basis for withdrawal to be delayed. We would exit on two years, but could revert back to revived negotiations on the future relationship. As my right hon. Friend the Member for Chichester (Mr Tyrie) pointed out, the question of whether implementation would be phased and of transitional arrangements would become far more salient. Besides those legal considerations, any delay to the timetable would inject an additional dose of uncertainty into the entire process, which would be bad for business and frustrating for the public, and which would harm rather than reinforce our negotiating position.
New clause 28, which deals with parliamentary approval before the European Parliament has its say, has been dealt with by the reassurances given by the Minister, which I certainly welcome. I am not convinced by new clauses 110 or 182, on parliamentary approval happening before the Commission concludes the new relationship agreement, because we would not know the date on which it would approve such an agreement and could not know the terms of the deal until it had done so. That reinforces in my mind the concern that exists about Members who, in good faith, are trying to dictate what will inevitably be a fluid diplomatic process through the entirely inappropriate vehicle of binding legislation. That cannot hope to cater for all the potential eventualities that we need to be ready to adapt to as a matter of multilateral diplomacy.
Finally, let me turn to amendment 43, which has been tabled by the Liberal Democrats and the hon. Member for Westmorland and Lonsdale (Tim Farron) in particular. In a competitive field, this is certainly the clear winner for the worst amendment that has been tabled. It is probably illegal because there is no scope for a departing member, which has triggered article 50, to reverse its decision. That is clear from article 50(5).
The amendment is clearly designed to reverse Brexit, despite Members passing the 2015 referendum legislation by six to one on the very clear understanding that we would respect the result. The amendment is probably beyond undemocratic and illegal; it is just plain tricksy. It was open to any Member to table amendments and then to stipulate that there would be a second referendum —why not have the best of three?—to give the British people a chance to do the hokey cokey. However, there is a very clear reason why no one tabled such an amendment: the public would have shuddered at the prospect. No one proposed such an amendment and we did not hold the referendum on that basis.
I support a final vote on the deal, and welcome the fact that the Government are striving to reassure all Members about the Bill, but this House should be under no illusion that such a vote cannot and would not frustrate the verdict of the people. In fairness, I think that most Members from all parts of the House recognise that. Many amendments on which we are deliberating in this group are legally flawed. Above all, these new clauses would attempt to tie up the Government in procedural knots at the crucial moment in the two years of Brexit negotiations. The public expect all of us to be focused on securing the very best deal for the whole country and not, either intentionally or inadvertently, to be laying elephant traps that can only make striving for that deal harder. For that reason, I hope that the Committee will vote down all the amendments and new clauses this evening.
Several hon. Members rose—
The Temporary Chair (Mr George Howarth)
Order. There are four hon. Members who still want to contribute and who have given their names to amendments. However, the Government are likely to come back at 6 o’clock. If everyone takes less than five minutes, I might be able to squeeze in at least four more speakers. It is a gentle reminder; there is no time limit. I call David Lammy.
Mr Lammy
I will try to be brief.
I am now entering my 17th year in the House. In that time, it is usual to strike up relationships across the House. I want to make a confession: I have a relationship with the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith)—I am sorry that he is not in his place—who has the unusual honour of also being a fan of Tottenham Hotspur. There have been occasions when we have been at White Hart Lane together, talking about his favourite subject: the sovereignty of this Parliament and the European Union. There have been occasions when my eyes have glazed over, because I do not see the issue in the same way.
In the past few months, as I have grown increasingly depressed about the direction of travel on which we are now set, I have looked for a silver lining. The silver lining is, of course that, in the 17 years that I have been an MP, we have been in the European Union—effectively, we had decided to pool some of our sovereignty with Europe, which meant that I had less power. Well, the power is now coming back, and, as a result of all the work of the right hon. Gentleman, the hon. Member for Stone (Sir William Cash) and others, I will be a powerful Member of Parliament. Yet we are now in a situation, in this important time, in which we need that sovereignty, and the very same people who were asking for it now stand up to argue that we should put that power somewhere else.
Many hon. Members who have been Back Benchers for some years argue that we should put the power with the Executive, and that the Prime Minister and her Cabinet should make all the huge decisions about our economy and direction of travel. They argue, perversely, that the power should solely be with the 27 other countries of the European Union, and that they should determine our direction alongside the European Commission, the Council and, ultimately, the European Parliament—power everywhere else except here. And who will suffer as a consequence of this Parliament not acting? Our constituents. That is why this is not the time to play party politics and why I was happy to vote against my party last week. This is absolutely the time to stand up for our constituents.
Claire Perry
I find myself in rather a strange place because it is very difficult for somebody in my position to countenance voting for an Opposition amendment. I have always respected the pragmatism and politics behind most decisions, but I have always had a sneaking admiration for colleagues who flouted the Government Whip with impunity, which was not, of course, what I told them when I was in the Whips Office. I heard in so many cases that their decision was a point of principle. Indeed, the Secretary of State for Brexit was among the most principled politicians in the last Parliament, rebelling dozens of times.
To me, this is very much a point of principle, and three principles have exercised me and many colleagues. The first is the thorny question of what parliamentary sovereignty means. Far be it from me to take exception with that very learned gentleman, my hon. Friend the Member for Esher and Walton (Mr Raab), but my understanding is that article 50 was effectively drafted on the back of a fag packet by negotiators, specifically at the request of UK participants in the treaty, on the expectation that it would never be triggered; such a situation was inconceivable. Therefore, it seems not inconceivable to set out what we believe our sovereign parliamentary process should be against that rather poorly drafted aspect of the treaty.
So many leave campaigners told me that they were campaigning to restore our sovereignty. That sovereignty has now been confirmed by the Supreme Court. It is absolutely right that we have had confirmation today that Parliament will have a vote on the terms of the deal. The timing of that vote is crucial. It will not be a done deal that is then brought back to us. There will be an opportunity to influence, shape, negotiate and do what we have done so well over the past four days—days, by the way, that we were not intended to have. We have had the opportunity to get into the nitty-gritty of what it means to trigger article 50, and what a vote would look like. I, for one, feel far better informed than I did at the start of the process. This is exactly what we are sent here to do.
Heidi Allen (South Cambridgeshire) (Con)
I agree with my hon. Friend about Parliament’s vital role in scrutinising the Bill. For me, it is about the only way that we will bring the 48% with us, because they are feeling very left behind at the moment. In practical terms, how can we achieve that scrutiny? If the deal is not good enough, what can we actually do to change it?
Claire Perry
We can probe, we can ask questions, and we can bring our collective knowledge and wisdom, of which there is an enormous amount on these Benches, and our understanding of what alternatives there might be. If there is no alternative, or there is no process, then at least we know that, but we have bought today, with the concession given by the Minister, an option that was not on the table at the start of this process and. when you are negotiating in an uncertain environment, optionality is hugely valuable.
My second point of principle, which I referenced earlier, relates to equivalence. If we look at the negotiation for exit, it is bizarre that while the European Parliament has a number of go/no-go decision points where it effectively has a right of veto, we have been scared to give the same to this Parliament. That does not sit well with me as somebody who wants to stand up for this sovereign Parliament; it is a very perverse thing, and I am glad we are trying to correct it.
The third point of principle relates to representation. I am still mystified that there are those who think they should be scared of Parliament. How many more votes do we need to have to demonstrate the overwhelming support in this place for executing the will of the British people? They gave us a mandate, and we are not going to replay the arguments. We have a mandate, and we know we need to get on with this. We have now had two votes suggesting that right hon. and hon. Members on both sides of the House—possibly with the exception of those from north of the border—accept the view of the Union. We should not be scared of bringing these things to Parliament.
Ultimately, are we not here to represent our constituents? We do not want a second referendum, and I completely agree with my neighbour, my hon. Friend the Member for Newbury (Richard Benyon), that it would be absurd to go back. However, we are the next best thing: we are the opportunity to bring up what our constituents are saying, and many of them still have lots of questions about what this process looks like. We can put those questions to each other and to Ministers, and we can represent our constituents. The principle of representation is absolutely vital.
I have to say that the tone of these debates—we have heard a little of this today, although things are starting to calm down—sometimes borders on the hysterical. I feel sometimes that I am sitting with colleagues who are like jihadis in their support for a hard Brexit. No Brexit is hard enough—“Begone you evil Europeans. We never want you to darken our doors again!”[Interruption.] People say, “Steady on, Claire,” but I am afraid I heard speeches last week making exactly that point. The point is that the more we get these things out in the open, the more we will not be led by some of the more hysterical tabloid newspapers out there, but actually have an open and frank conversation with each other about what we want to do better.
On the issues of scrutiny, representation and parliamentary sovereignty, I am very interested in the proposals made by the Opposition. I am pleased to say I have heard some very substantial concessions today on the timing and the detail, although there is an equivocality about the ending, which still does not sit well with me. While it might not be the Government’s and the Prime Minister’s intention to bring forward a bad deal, we still have not allowed ourselves to put that to the test. So before I decide which way to vote, I am going to listen very carefully to what the Minister has to say. I am hoping to get his assurance that, if there is no deal, that can be put within the bounds of what I think should happen, which is a parliamentary decision on this vital step for our country.
Mr McFadden
There are two issues at the heart of today’s debate, which is about the role of Parliament in judging the final deal. The first issue is the timing of any such vote, and the second is how to make that vote meaningful. I want to speak to new clause 137, which is in my name and those of my hon. and right hon. Friends.
A significant part of the argument for leaving the European Union was about restoring parliamentary sovereignty so that this House could take decisions about the country’s future, yet attempts to assert that sovereignty have been constantly dismissed as undermining the Government, if not the country. The cry over and over again has been, “Blank cheque, blank cheque, blank cheque.” We should not give a blank cheque; there is a legitimate role for us.
The new clause seeks to do two things: first, to enshrine in the legislation the Prime Minister’s promise of a parliamentary vote on a final deal; and, secondly, to assert what can happen if Parliament declines to approve the final deal.
The Government have set out their aims in the White Paper and in other statements. The White Paper defines the Government’s aim as
“the freest possible trade in goods and services between the UK and the EU.”
The Secretary of State for Brexit said that this would be
“a comprehensive free trade agreement and a comprehensive customs agreement that will deliver the exact same benefits as we have”.—[Official Report, 24 January 2017; Vol. 620, c. 169.]
That is the test the Government have set themselves. I wish them well in ensuring that we do get the exact same benefits as we have.
This new clause does not seek to tie the Government’s hands in the negotiations. It does not seek to influence the content; it focuses on what happens if Parliament declines to approve the final deal. The choice that we do not want to be presented with, I am afraid, is the one that the Minister set out at the beginning, which is defining as success whatever the Government negotiate or falling back on the WTO. I do not want to go through the WTO rules in detail, but let me give just one example: a 10% tariff on car exports. Take the Nissan Qashqai, proudly made in the north-east of England. That tariff would mean a surcharge of over £2,000 on each car made in the north-east, compared with a competitor vehicle made in a plant in the European Union, or even another Nissan model made in the EU. On food and drink, the tariffs are 20%, and on some agricultural products they are even higher. That is before one even gets to the weakness of enforcement mechanisms within the WTO, where businesses cannot even take enforcement cases and only Governments can do so.
The Government themselves say that they do not want this option. They set out 12 points in their White Paper, the 12th of which says that they want
“a smooth, mutually beneficial exit”.
Paragraph 12.2 says:
“It is…in no one’s interests for there to be a cliff-edge for business or a threat to stability…Instead, we want to have reached an agreement about our future partnership by the time the two year Article 50 process has concluded.”
This new clause empowers Parliament to avoid the very outcome that the Government themselves say in the White Paper that they want to avoid. For that reason, it is not, as too many Members have asserted, some attempt to undermine the Government. We should be using the power of Parliament to influence these negotiations.
Let me deal with the “five minutes to midnight” point made by the right hon. and learned Member for Beaconsfield (Mr Grieve). It is hardly unknown for the European Union to schedule another round of talks—it happens very frequently. In these circumstances, we would be entirely within our rights to strengthen our Government’s hand by saying, “Go back and renegotiate on this point or that point.”
Mr Grieve
I do not disagree with the right hon. Gentleman, but I want to emphasise this point. All sorts of things are possible—the Commission and the Council may decide to extend the period of negotiation—but we have to look at the legal implications of what we pass into law by amendments. If the new clause is prescriptive in a way that could allow the problem to occur that has been identified—dropping off because one has lost time and cannot come back to this House—we cannot just ignore that. We have to find a way round it or accept the assurances that the Government give.
Mr McFadden
The new clause is very simple on this point. It asks that in those circumstances the Government will seek to negotiate an alternative agreement. That is perfectly reasonable.
Mr McFadden
I do not have much time so I am going to conclude.
The point of all of this is to avoid the choice between being told that we have to define as success, on the first account of it, whatever the Government have managed to negotiate, or default to the WTO. To be honest, a concession on timing that does not allow us to ask the Government to go back and negotiate a better agreement is simply holding a gun to Parliament’s head a few months earlier than would otherwise have been the case. This new clause is about taking all the claims made for decades about parliamentary sovereignty and making them real, rather than giving us a choice between deal or no deal, take it or leave it, my way or the highway. Frankly, Parliament and the country deserve better than that.
The Second Deputy Chairman of Ways and Means (Natascha Engel)
Order. I am happy to call the right hon. Gentleman if he can speak for only two or three minutes.
Mr Tyrie
I will limit my contribution to a couple of minutes and confine it to a few questions for the Minister. The concession that he gave at the start is significant; the question is: how significant? What did he mean when he said that the Government “will bring forward a motion on the final agreement”? He must mean the proposed agreement. I noticed that he changed the wording to “final draft agreement”. Is he talking about the draft agreement, or a final agreement, at a point at which it is too late to change it?
Secondly, the Minister says that he expects and intends that this place will get a say before the European Parliament. In what circumstances is it practically possible for us not to have that if the Government want us to have it? Thirdly, will he answer the equivalence point that has been made by my hon. Friend the Member for Devizes (Claire Perry)? We must be able to have at least as much say as the European Parliament.
Fourthly, will the Minister clarify that the WTO cliff-edge issue needs to be subsumed into the issue of transitional arrangements? If the Government put the need to negotiate transitional arrangements as their No. 1 priority and they succeed at least in getting a deal on that, that deal can trigger article 50(3) to enable an extended period of further discussion, should all other aspects of the deal fail. Does he accept that that is a reasonable and sensible approach to take the debate forward? If he does, I might consider not voting against the Government, as I am minded, uncharacteristically, to do. I will listen carefully to what he has to say.
The Second Deputy Chairman of Ways and Means (Natascha Engel)
I call Mr David Jones.
Mr David Jones
Thank you very much indeed, Ms Engel, for giving me a second bite of the cherry.
May I deal first with the points made by my right hon. Friend the Member for Chichester (Mr Tyrie), the Chair of the Treasury Committee? He asked direct questions that had been raised during the debate. I thought that I had answered them with some clarity, but I am happy to clarify further. First, he asked what this honourable House would be asked to approve. It would be the final agreed draft of the agreement before it was submitted to the European Parliament. He mentioned that we had indicated that we expected and intended that that would happen before the European Parliament debated the agreement. The reason why that formulation is used is that what the Commission does with the information it sends to the European Parliament is out of our hands. Although we would do our very best to ensure that the House voted first, we cannot control what the Commission does.
My right hon. Friend raised the issue of equivalence. Of course, the difference is that the European Parliament has a role prescribed for it in article 50, but this House does not. In practical terms, I suggest that a vote of this House would be a matter of significance. Finally, he raised transitional arrangements, which have been mentioned by a number of hon. Members. As the Prime Minister has already made clear, it is our intention, if necessary, to look to a period of implementation for whatever arrangement we arrive at with the European Union.
Mr Clarke
I will be brief, for a change. My right hon. Friend has confirmed that the vote will be put to Parliament after the deal has been done with the Commission and the Council. It is therefore a done deal, and the European Parliament and this House can either take it or leave it. The alternative is the WTO. Will he confirm that that is exactly what was offered in the White Paper a few days ago?
Mr Jones
What we have sought to do today is to provide clarity, and I hope that, through my previous contribution and now, I am providing that clarity. It would indeed be the final draft agreement that we would contemplate being put before the House.
As I was saying, this has been an important debate and the quality of the contributions has been extremely high. As my right hon. Friend the Member for Broxtowe (Anna Soubry) said, we have to remember that this will be the most important negotiation that this country has entered into for at least half a century. It is therefore entirely right that the House should play an important part in the process of the negotiation of the agreement.
I have heard the words “rubber stamp” being used, but that is far from what the Government have in mind. We have every intention that, throughout the process of negotiation, the House will be kept fully informed, consistent with the need to ensure that confidentiality is maintained. I do not think that anyone would regard that as an unreasonable way forward. My right hon. and learned Friend the Member for Beaconsfield (Mr Grieve) highlighted the need for reporting, and the Government intend to do that.
I should like to speak about a number of other measures that I have not dealt with previously, but which have attracted attention in the debate. New clause 18 would specify that any new treaty with the EU should not be ratified except with the express approval of Parliament. I can only repeat the commitment that I have made several times this afternoon at the Dispatch Box: there will be a vote on the final deal.
John Redwood
Many of us welcome the progress that has been made and my right hon. Friend’s assurances. It is clear from what he has said that there will be every opportunity for debate, discussion, questions and votes, as is proper in this House.
Mr Jones
That is absolutely right. The suggestion that the Government would not keep the House informed is really unworthy, given that we have been scrupulous in doing so thus far.
New clause 110 is similar to new clause 18, but it also specifies that any new relationship would be subject to approval by a resolution of Parliament. I believe that the measure is unnecessary. It asks for a vote of each House on a new treaty or any new agreement reached with the EU, but I repeat again that there will be a vote on the final draft treaty and any other agreement. In any event, as my hon. Friend the Member for Esher and Walton (Mr Raab) pointed out, it calls for a vote before terms are agreed, leaving it open to the Commission to change its mind or position without any apparent recourse for this place.
Mr Jones
I will not give way as I have very little time.
New clause 137 would require the Government to seek to negotiate a new agreement with the EU if Parliament rejects a deal. Again, I reject the measure. Although we are confident that we will achieve a deal acceptable to Parliament, if Parliament were to reject that deal, it would be a sure sign of weakness, as I have said, to return to the EU and ask for other terms. We would be likely to achieve only a worse deal. Furthermore, there is no obligation on the EU to continue negotiating with us beyond the two-year period specified in article 50.
New clause 175 would effectively require the Government to request that we remain a member of the EU if the terms were not approved by Parliament. Frankly, to do so would be to betray the outcome of the referendum, and the Government are not prepared to accept that. I must make it absolutely clear that the Government want Parliament to be engaged throughout this process.
Clive Efford (Eltham) (Lab)
Will the Minister confirm that the Government’s position is to diminish the status of this House compared with that of the European Parliament in respect of having oversight of this process?
Mr Jones
That is absolutely ludicrous. The European Parliament’s role comes at the end of the process; it has oversight to the extent that it rubber-stamps the agreement or not.
New clauses 18 and 19 would require any new treaties agreed with the EU to be subject to the ratification of Parliament. We have always said that we will observe the constitutional and legal obligations that apply to the final deal, and that remains the case. As we have confirmed, the final agreement will be subject to a vote of this House before it is concluded.
Seema Malhotra
Will the Minister abide by the recommendation in the report of the Exiting the European Union Committee that when the Government bring the deal to Parliament, they should have regard to the requirement that Parliament has adequate time to consider any statement before the proposed terms are put to each House for approval?
Mr Jones
We will, of course, consider all the recommendations of the Select Committee and respond formally to its report in due course.
We approach the negotiations not expecting failure, but anticipating success. Let me remind Members that we are seeking in the Bill to do one simple, straightforward thing: to follow the instructions we received from the British people in the referendum. Remaining a member of the European Union is not an option. The process for leaving the EU is set out in article 50, and it is not within our power unilaterally to extend the negotiations.
New clause 99 envisages yet another Act of Parliament to approve the arrangements for our withdrawal and our future relationship with the EU. It would require yet another Act of Parliament for us to withdraw from the EU in the absence of a negotiated deal. The new clause is wholly otiose. While we are ready for any outcome, an exit without a trade agreement is emphatically not what we seek. However, let me be clear that keeping open the prospect of staying in the EU, as is envisaged by new clause 99, would only encourage the EU to give us the worst possible deal in the hope that we would change our mind.
Amendment 43 calls for a referendum on our membership of the European Union after we have negotiated a final deal. That was tabled by the Liberal Democrats.
This has been an important debate. We have considered the new clauses and amendments very carefully but, for all the reasons I have given, we reject them and invite Members not to press them to a Division.
Keir Starmer
I have listened carefully to the debate. There are inevitable problems with an 11th-hour concession, and there have been claims and counter-claims about the nature of the concession made. Whatever No. 10 may or may not be briefing, until today there was never a commitment to a vote on both the article 50 deal and the future agreement with the EU; there was never a commitment to a vote, before the agreement was concluded, on a final agreed draft—it is simply rewriting history to suggest that there was—and there was never a commitment to a vote in this House that is intended and expected to take place before the vote of the European Parliament. Those three things have never been said before, and I have gone through all the records before making that assertion. For anybody to suggest that this is not a significant concession is to be blind to these developments.
I recognise that that leaves a number of unanswered questions, most importantly about the consequences and precise timing of the vote. As the right hon. and learned Member for Beaconsfield (Mr Grieve) says, to some extent we just do not know. From the various work I have done in Brussels, it is quite clear that the plan there is to have a deal that is capable of being put to the European Parliament in October 2018. That should be the ambition, because if a deal were put to this House in October 2018, there would be a number of consequences for the House to consider. I accept that there are questions. It is important that others reflect on the concessions that have been made and consider what kind of amendment might capture them.
In the circumstances, I will not press new clause 1 to a Division in the hope—although this is not my decision—that it will allow space for other new clauses to be put to the vote. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 110
Future relationship with the European Union
“(1) Following the exercise of the power in section 1, any new Treaty or relationship with the European Union must not be concluded unless the proposed terms have been subject to approval by resolution of each House of Parliament.
(2) In the case of any new Treaty or relationship with the European Union, the proposed terms must be approved by resolution of each House of Parliament before they are agreed with the European Commission, with a view to their approval by the European Parliament or the European Council.”—(Chris Leslie.)
This new clause seeks to ensure that Parliament must give approval to any new deal or Treaty following the negotiations in respect of the triggering of Article 50(2), and that any new Treaty or relationship must be approved by Parliament in advance of final agreement with the European Commission, European Parliament or European Council.
Brought up, and read the First time.
Question put, That the clause be read a Second time.
Matthew Pennycook (Greenwich and Woolwich) (Lab)
I beg to move, That the clause be read a Second time.
The Temporary Chair (Sir Roger Gale)
With this it will be convenient to discuss the following:
New clause 42—Equality—impact assessment—
Before exercising the power under section 1, the Prime Minister must undertake that she will publish an equality impact assessment, 18 months after this Act receives Royal Assent or prior to a vote on the negotiations in the European Parliament, whichever is sooner.”
This new clause requires the Prime Minister to publish an equality impact assessment in good time before Parliament votes on the final agreement.
New clause 43—Customs Union—impact assessment—
‘(1) Before exercising the power under section 1, the Prime Minister must undertake that she will publish an impact assessment of the effect of leaving the Customs Union on the United Kingdom.
(2) The impact assessment in subsection (1) shall be laid before Parliament 18 months after this Act receives Royal Assent or prior to a vote on the negotiations in the European Parliament, whichever is sooner.”
This new clause requires the Prime Minister to publish an impact assessment of leaving the Customs Union (independently of decisions on the Single Market) in good time before Parliament votes on the final agreement.
New clause 44—Supply Chains—impact assessment—
Before exercising the power under section 1, the Prime Minister must undertake that she will publish an impact assessment of the risks to supply chains presented by the introduction of non-tariff custom barriers, 18 months after this Act receives Royal Assent or prior to a vote on the negotiations in the European Parliament, whichever is the sooner.”
This new clause requires the Prime Minister to publish an impact assessment on the risk to supply chains from any new non-tariff barriers in good time before Parliament votes on the final agreement.
New clause 45—Environmental protection—impact assessment—
Before exercising the power under section 1, the Prime Minister must undertake that she will publish an impact assessment of the effect on—
(a) environmental protection standards,
(b) farm business viability,
(c) animal welfare standards,
(d) food security, and
(e) food safety
18 months after this Act receives Royal Assent or prior to a vote on the negotiations in the European Parliament, whichever is the sooner.”
This new clause requires the Prime Minister to publish an impact assessment on environmental standards, farm viability and food safety in good time before Parliament votes on the final agreement.
New clause 46—Climate change—impact assessment—
Before exercising the power under section 1, the Prime Minister must undertake that she will publish an impact assessment of the value of participation in the EU Emissions Trading Scheme and the Single Energy Market in achieving our climate change commitments, 18 months after this Act receives Royal Assent or prior to a vote on the negotiations in the European Parliament, whichever is the sooner.”
This new clause requires the Prime Minister to publish an impact assessment on climate change objectives and the contribution of the Emissions Trading System and the energy market to meeting these in good time before Parliament votes on the final agreement.
New clause 47—Research and Development collaboration —impact assessment—
Before exercising the power under section 1, the Prime Minister must undertake that she will publish an impact assessment of the effect of—
(a) leaving Horizon 2020, and
(b) setting up alternative arrangements for international collaboration on research and development by universities and other institutions
18 months after this Act receives Royal Assent or prior to a vote on the negotiations in the European Parliament, whichever is the sooner.”
This new clause requires the Prime Minister to publish an impact assessment on leaving Horizon 2020 and alternative Research and Development collaborations in good time before Parliament votes on the final agreement.
New clause 48—Agencies—impact assessment—
‘(1) Before exercising the power under section 1, the Prime Minister must undertake that she will publish impact assessments of—
(a) rescinding membership of the agencies listed in subsection (2), and
(b) setting up national arrangements in place of the agencies listed in subsection (2).
(2) Subsection (1) applies to the—
(a) Agency for the Cooperation of Energy Regulators (ACER),
(b) Office of the Body of European Regulators for Electronic Communications (BEREC Office),
(c) Community Plant Variety Office (CPVO),
(d) European Border and Coast Guard Agency (Frontex),
(e) European Agency for the operational management of large-scale IT systems in the area of freedom, security and justice (eu-LISA),
(f) European Asylum Support Office (EASO),
(g) European Aviation Safety Agency (EASA),
(h) European Banking Authority (EBA),
(i) European Centre for Disease Prevention and Control (ECDC),
(j) European Chemicals Agency (ECHA),
(k) European Environment Agency (EEA),
(l) European Fisheries Control Agency (EFCA),
(m) European Insurance and Occupational Pensions Authority (EIOPA),
(n) European Maritime Safety Agency (EMSA),
(o) European Medicines Agency (EMA),
(p) European Monitoring Centre for Drugs and Drug Addiction (EMCDDA),
(q) European Union Agency for Network and Information Security (ENISA),
(r) European Police Office (Europol),
(s) European Union Agency for Railways (ERA),
(t) European Securities and Markets Authority (ESMA), and
(u) European Union Intellectual Property Office (EUIPO).
(3) The impact assessments in subsection (1) shall be laid before Parliament 18 months after this Act receives Royal Assent or prior to a vote on the negotiations in the European Parliament, whichever is the sooner.”
The effect of this would be to require the Government to publish impact assessments for each agency to determine whether value for money for consumers, businesses and taxpayers would be achieved by leaving each one and setting up national arrangements.
New clause 49—Impact assessment: withdrawal from single market and Customs Union—
Before giving notice under section 1(1), of her intention to notify under Article 50(2) of the Treaty on European Union, the United Kingdom’s intention to withdraw from the EU, the Prime Minster shall lay before both Houses of Parliament a detailed assessment of the anticipated impact of the decision to withdraw from the Single Market and Customs Union of the EU on—
(a) the nature and extent of any tariffs that will or may be imposed on goods and services from the UK entering the EU and goods and services from the EU entering the UK;
(b) the terms of proposed trade agreements with the EU or EU Member states and the expected timeframe for the negotiation and ratification of said trade agreements;
(c) the proposed status of rights guaranteed by the law of the European Union, including—
(i) labour rights,
(ii) health and safety at work,
(iii) the Working Time Directive,
(iv) consumer rights, and
(v) environmental standards;
(d) the proposed status of—
(i) EU citizens living in the UK and,
(ii) UK citizens living in the EU, after the EU has exited the EU;
(e) estimates as to the impact of the UK leaving the EU on—
(i) the balance of trade,
(ii) GDP, and
(iii) unemployment.”
New clause 98—Protected characteristics—Equality Impact Assessments—
‘(1) In negotiating and concluding an agreement in accordance with Article 50(2) of the Treaty on European Union, Ministers of the Crown must have regard to the impact of any new relationship with the European Union on protected characteristics, as set out in the Equality Act 2010.
(2) Any report the Government lays before Parliament on the progress of the withdrawal negotiation must be accompanied by an Equality Impact Assessment.
(3) Neither House of Parliament may approve by resolution any new relationship with the European Union unless an Equality Impact Assessment has been laid before both Houses of Parliament.”
This new clause would place specific duties on the Government to demonstrate compliance with the 2010 Equality Act, ensuring that the impact of decisions on women and those with protected characteristics are considered and debated at every stage of the process.
New clause 101—Environment—Environmental Impact Assessment—
Before issuing any notification under Article 50(2) of the Treaty on European Union, the Prime Minister shall give an undertaking to lay before each House of Parliament a full Environmental Impact Statement on the terms of the agreement reached with the European Union on the UK’s withdrawal from the EU.”
New clause 102—Economic Divergence—Impact Assessment—
Before issuing any notification under Article 50(2) of the Treaty on European Union, the Prime Minister shall give an undertaking to lay before each House of Parliament an impact assessment of the costs to businesses and the environment as a result of divergence in regulations between the UK and countries in the EU single market, once the UK has withdrawn from the EU.”
New clause 103—EU Customs Union and the European single market—Impact Assessment—
‘(1) Before issuing any notification under Article 50(2) of the Treaty on European Union, the Prime Minister shall give an undertaking to lay before each House of Parliament an impact assessment on the UK of leaving the EU Customs Union and the European single market.
(2) The impact assessment shall include the following information for each sector of the economy—
(a) the nature and extent of any tariffs that will or may be imposed on goods and services from the UK entering the EU and goods and services from the EU entering the UK;
(b) the effect of non-tariff custom barriers that will or may be imposed on goods and services from the UK entering the EU and goods and services from the EU entering the UK;
(c) changes in the rules of origin regulations and the administrative burdens for business.”
New clause 106—Withdrawal from Free Movement of persons—Impact Assessment—
‘(1) Before issuing any notification under Article 50(2) of the Treaty on European Union, the Prime Minister shall give an undertaking to lay before each House of Parliament an impact assessment of withdrawal from Directive 2004/38/EC (free movement of persons).
(2) The impact assessment shall include the impact on withdrawal for each sector of the economy and include effects of—
(a) labour shortages,
(b) changes in costs of labour,
(c) administrative burdens for employers,
(d) effects on the cost base for companies; and
(e) effect on consumers.”
New clause 107—Employment Training needs—Impact Assessment—
‘(1) Before issuing any notification under Article 50(2) of the Treaty on European Union, the Prime Minister shall give an undertaking to lay before each House of Parliament an impact assessment of the skills training needed to supply the necessary skills needed for the UK economy after the UK leaves the European Union.
(2) The impact assessment should detail—
(a) the resources needed to meet the needs of training needs of the UK post commencement of leaving the European Union; and
(b) how government will work with UK companies to train future employees and upskill employees post commencement of leaving the European Union in the context of changes in UK immigration policy.”
New clause 143—Financial liability of the UK towards the EU—
The Prime Minister may not exercise the power under section 1 until the Chancellor of the Exchequer has—
(a) published an assessment of the financial liability of the UK towards the EU following the United Kingdom’s withdrawal from the European Union, and
(b) made a statement to the House of Commons on the economic impact of the United Kingdom leaving the single market.”
New clause 152—Natural Environment—impact assessment—
Before exercising the power under section 1, the Prime Minister must lay before both Houses of Parliament an impact assessment covering the impact of leaving—
(a) the European Union, and
(b) the Single Market
on the natural environment, including the marine environment, until 2042.”
This new clause would require the Government to set out the impact on the natural environment of leaving the European Union and leaving the Single Market on the natural environment covering the expected duration of the Government’s 25-year plan for the environment.
New clause 153—Chemicals Regulation—impact assessment—
Before exercising the power under section 1, the Prime Minister must lay before both Houses of Parliament an impact assessment covering the impact of leaving—
(a) the European Union, and
(b) the Single Market
on the assessment and regulation of chemicals for safety and environmental protection.”
New clause 154—Rural Economy and Environment—impact assessment—
‘(1) Before exercising the power under section 1, the Prime Minister must lay before both Houses of Parliament an impact assessment covering the impact of leaving—
(a) the European Union,
(b) the Single Market, and
(c) the Customs Union
on the rural economy and environment.
(2) An impact assessment laid under subsection (1) shall in particular cover the impact on—
(a) tariff and non-tariff barriers to export,
(b) farm incomes and viability,
(c) environmental, food safety and animal welfare standards, and
(d) international competitiveness of UK farms.”
New clause 155—Land Management Payments—impact assessment—
‘(1) Before exercising the power under section 1, the Prime Minister must lay before both Houses of Parliament an impact assessment covering the impact of leaving—
(a) the European Union,
(b) the Common Agricultural Policy, and
(c) the Single Market
on land management and rural development payments.
(2) An impact assessment laid under subsection (1) shall in particular cover the impact on—
(a) funding for environmental protection,
(b) funding for rural development, and
(c) farm incomes and viability.”
New clause 167—Rights and opportunities of young people—impact assessment—
‘(1) Before exercising the power under section 1, the Prime Minister must undertake to publish an assessment of the effect of leaving the European Union on the rights and opportunities of people aged under 25 in the United Kingdom, including—
(a) the effect on the ability to work and travel visa-free in the EU,
(b) the effect on the ability to study in other EU member states on the same terms as on the day on which Royal Assent is given to this Act, and
(c) the effect on the ability to participate in EU programmes designed to provide opportunities to young people, including programmes to facilitate studying in other EU member states.
(2) The impact assessment in subsection (1) shall be laid before Parliament before—
(a) 12 months have elapsed after this Act receives Royal Assent, or
(b) the day on which Her Majesty’s Government declares that agreement has been reached on the terms of the UK’s withdrawal from the EU, whichever is the sooner.”
This new clause would require the Government to undertake an impact assessment of the effect of leaving the EU on the rights and opportunities of young UK nationals and how they will differ from their European counterparts.
New clause 187—Euratom—impact assessment—
‘(1) Before exercising the power under section 1, the Prime Minister must commit to publish an impact assessment of the United Kingdom withdrawing from the European Atomic Energy Community (Euratom) on the nuclear industry within the United Kingdom.
(2) The impact assessment should include, but not be limited to, the impact on—
(a) nuclear research;
(b) health and safety in the nuclear industry; and
(c) employment in the nuclear industry.
(3) The impact assessment shall be published either 18 months after this Act receives Royal Assent or before a vote in the European Parliament on the withdrawal deal agreed between the European Union and the United Kingdom, whichever is the sooner.”
This new clause requires the Prime Minister to publish an impact assessment on the effect on the UK’s nuclear industry should the UK withdraw from Euratom.
Amendment 3, in clause 1, page 1, line 2, at beginning insert—
“If a report has been laid before both Houses of Parliament setting out the estimated impact on the public finances of the UK withdrawing from the European Single Market,”
This amendment ensures that prior to any notification of the Prime Minister‘s intention to notify the United Kingdom‘s withdrawal from the EU, a report shall be published setting out the anticipated implications of exiting from the Single Market
Amendment 24, page 1, line 3, at end insert—
“after Her Majesty’s Government has published a report on the implications, costs and benefits for Gibraltar.”
Amendment 25, page 1, line 3, at end insert—
“after Her Majesty’s Government has published a report on the implications of and costs and benefits for the British Overseas Territories.”
Amendment 26, page 1, line 3, at end insert—
“after Her Majesty’s Government has published a report on the implications of and costs and benefits for the Crown Dependencies.”
Amendment 27, page 1, line 3, at end insert—
“after Her Majesty’s Government has published a report on the implications of and costs and benefits for the Commonwealth.”
Amendment 28, page 1, line 3, at end insert—
“after Her Majesty’s Government has published a report on the implications of and costs and benefits for European Foreign and Defence Policy Co-operation.”
Amendment 47, page 1, line 3, at end insert—
‘(1A) The Prime Minister may not notify under subsection (1) until the Chancellor of the Exchequer has published an assessment on the financial liability of the United Kingdom towards the EU on completion of the Article 50 withdrawal process, and laid a copy of the assessment before Parliament.”
Amendment 48, page 1, line 3, at end insert—
‘(1A) The Prime Minister may not notify under subsection (1) until the Chancellor of Exchequer has published a revised Treasury forecast on the state of the economy, and laid a copy of the report before Parliament.”
Amendment 49, page 1, line 3, at end insert—
‘(1A) The Prime Minister may not notify under subsection (1) until the Secretary of State for Environment, Food and Rural Affairs has published an assessment of the level of agricultural maintenance support grants beyond 2020, and laid a copy of the assessment before Parliament.”
Amendment 51, page 1, line 3, at end insert—
‘(1A) The Prime Minister may not notify under subsection (1) unless a Minister of the Crown has published an assessment on the impact of the United Kingdom’s withdrawal from the EU on Scottish sea ports, and laid a copy of the assessment before Parliament.”
Amendment 52, page 1, line 3, at end insert—
‘(1A) The Prime Minister may not notify under subsection (1) until the Chancellor of the Exchequer has published an assessment of the financial implications of leaving the European Union for charities, and laid a copy of the assessment before Parliament.”
Amendment 53, page 1, line 3, at end insert—
‘(1A) The Prime Minister may not notify under subsection (1) until a Minister of the Crown has published a report on the relationship between the Channel Islands and the European Union with regard to the 1972 Act of Accession Protocol No 3, and laid a copy of the report before Parliament.”
Amendment 57, page 1, line 3, at end insert—
‘(1A) The Prime Minister may not notify under subsection (1) until a Minister of the Crown has published a revised Strategic Defence and Security Review, and laid a copy of the review before Parliament.”
Amendment 58, page 1, line 3, at end insert—
‘(1A) The Prime Minister may not notify under subsection (1) until a Minister of the Crown has published an assessment on the impact of the United Kingdom’s withdrawal from the European Development Fund, and laid a copy of the assessment before Parliament.”
Amendment 59, page 1, line 3, at end insert—
‘(1A) The Prime Minister may not notify under subsection (1) until the Chancellor of the Exchequer has published a report giving a medium-term economic forecast in the event of the United Kingdom leaving the single market, and laid a copy of the report before Parliament.”
Amendment 61, page 1, line 3, at end insert—
‘(1A) The Prime Minister may not notify under subsection (1) until a Minister of the Crown has published a revised National Security Strategy, and laid a copy of the review before Parliament.”
Amendment 62, page 1, line 3, at end insert—
‘(1A) The Prime Minister may not notify under subsection (1) until the Chancellor of the Exchequer has published an assessment of future payments to the EU after the Prime Minister makes the notification.”
Amendment 64, page 1, line 3, at end insert—
‘(1A) The Prime Minister may not notify under subsection (1) until the Secretary of State for Education has published an assessment on the impact of the United Kingdom’s withdrawal from the EU on the department’s responsibilities, and laid a copy of the assessment before Parliament.”
Amendment 65, page 1, line 3, at end insert—
‘(1A) The Prime Minister may not notify under subsection (1) until the Secretary of State for Health has published an assessment on the impact of the United Kingdom’s withdrawal from the EU on the department’s responsibilities, and laid a copy of the assessment before Parliament.”
Amendment 66, page 1, line 3, at end insert—
‘(1A) The Prime Minister may not notify under subsection (1) until the Secretary of State for Environment, Food and Rural Affairs has published an assessment on the impact of the United Kingdom’s withdrawal from the EU on the department’s responsibilities, and laid a copy of the assessment before Parliament.”
Amendment 67, page 1, line 3, at end insert—
‘(1A) The Prime Minister may not notify under subsection (1) until the Secretary of State for Justice has published an assessment on the impact of the United Kingdom’s withdrawal from the EU on the department’s responsibilities, and laid a copy of the assessment before Parliament.”
Amendment 68, page 1, line 3, at end insert—
‘(1A) The Prime Minister may not notify under subsection (1) until the Home Secretary has published an assessment on the impact of the United Kingdom’s withdrawal from the EU on the department’s responsibilities, and laid a copy of the assessment before Parliament.”
Amendment 69, page 1, line 3, at end insert—
‘(1A) The Prime Minister may not notify under subsection (1) until the Secretary of State for Defence has published an assessment on the impact of the United Kingdom’s withdrawal from the EU on the department’s responsibilities, and laid a copy of the assessment before Parliament.”
Amendment 70, page 1, line 3, at end insert—
‘(1A) The Prime Minister may not notify under subsection (1) until the Chancellor of the Exchequer has published an assessment on the impact of the United Kingdom’s withdrawal from the EU on the responsibilities of Her Majesty’s Treasury, and laid a copy of the assessment before Parliament.”
Amendment 71, page 1, line 3, at end insert—
‘(1A) The Prime Minister may not notify under subsection (1) until the Foreign Secretary has published an assessment on the impact of the UK withdrawing from the EU on the responsibilities of the Foreign and Commonwealth Office, and laid a copy of the assessment before Parliament.”
Amendment 72, page 1, line 3, at end insert—
‘(1A) The Prime Minister may not notify under subsection (1) until the Secretary of State for Work and Pensions has published an assessment on the impact of the United Kingdom’s withdrawal from the EU on the department’s responsibilities, and laid a copy of the assessment before Parliament.”
Amendment 73, page 1, line 3, at end insert—
‘(1A) The Prime Minister may not notify under subsection (1) until the Secretary of State for International Trade has published an assessment on the impact of the United Kingdom’s withdrawal from the EU on the department’s responsibilities, and laid a copy of the assessment before Parliament.”
Amendment 74, page 1, line 3, at end insert—
‘(1A) The Prime Minister may not notify under subsection (1) until the Secretary of State for Business, Energy and Industrial Strategy has published an assessment on the impact of the United Kingdom’s withdrawal from the EU on the department’s responsibilities, and laid a copy of the assessment before Parliament.”
Amendment 75, page 1, line 3, at end insert—
‘(1A) The Prime Minister may not notify under subsection (1) until the Secretary of State for Communities and Local Government has published an assessment on the impact of the United Kingdom’s withdrawal from the EU on the department’s responsibilities, and laid a copy of the assessment before Parliament.”
Amendment 76, page 1, line 3, at end insert—
‘(1A) The Prime Minister may not notify under subsection (1) until the Secretary of State for International Development has published an assessment on the impact of the United Kingdom’s withdrawal from the EU on the department’s responsibilities, and laid a copy of the assessment before Parliament.”
Amendment 77, page 1, line 3, at end insert—
‘(1A) The Prime Minister may not notify under subsection (1) until the Secretary of State for Culture, Media and Sport has published an assessment on the impact of the United Kingdom’s withdrawal from the EU on the department’s responsibilities, and laid a copy of the assessment before Parliament.”
Amendment 79, page 1, line 3, at end insert—
‘(1A) The Prime Minister may not notify under subsection (1) until the Chancellor of the Exchequer has published a report on matters relating to the pensions of UK nationals living and working in the European Union on the date that the United Kingdom withdraws from the EU.”
Amendment 80, page 1, line 3, at end insert—
‘(1A) The Prime Minister may not notify under subsection (1) until a Minister of the Crown has published an equality impact assessment on the United Kingdom’s withdrawal from the EU, and laid a copy of the report before Parliament.”
Amendment 82, page 1, line 3, at end insert—
‘(1A) The Prime Minister may not notify under subsection (1) until a Minister of the Crown has published regional and national economic impact assessments on the impact of the United Kingdom’s withdrawal from the EU.”
Amendment 11, page 1, line 5, at end insert—
‘(3) Before exercising the power under subsection (1), the Prime Minister must prepare and publish a report on the effect of the United Kingdom’s withdrawal from the EU on national finances, including the impact on health spending.
This amendment calls for the Government to publish a report on the effect of EU withdrawal on the national finances, particularly health spending following claims in the referendum campaign that EU withdrawal would allow an additional £350 million per week to be spent on the National Health Service.
Amendment 39, page 1, line 5, at end insert—
‘(3) Before the Prime Minister issues a notification under this section, Her Majesty’s Government has a duty to lay before both Houses of Parliament a review of the independence and effectiveness of the current environmental regulators, including a detailed assessment of their capacity to effectively implement and enforce EU-derived environmental legislation upon withdrawal from the European Union.”
This amendment would ensure that UK environmental regulators and enforcement agencies —namely the Environment Agency, Natural England and the Department for Environment, Food and Rural Affairs — are adequately funded and authorised to effectively perform the regulatory functions currently undertaken by institutions of the European Union.
New clause 17—EU Assets and Liabilities—
Within 30 days of the coming into force of this Act the Secretary of State shall publish a full account of the assets and liabilities held by Her Majesty’s Government in respect of the UK’s relationship with the European Union.”
This new clause would ensure that the Government publishes an account of the assets and liabilities held by Her Majesty’s Government in respect of our relationship with the European Union.
New clause 31—Regions of England—draft framework—
Before exercising the power under section 1, the Prime Minister must set out a draft framework for the future relationship with the European Union which includes particular reference to the impacts on the regions of England.”
New clause 41—Public spending implications—
Before exercising the power under section 1, the Prime Minister must set out a draft framework for the future relationship with the European Union which includes reference to the impact on public spending.”
New clause 138—Trade Agreements—
The Prime Minister may not exercise the power under section 1 until a Minister of the Crown has published a report on the number and terms of trade agreements outlined with countries outside of the European Union, and laid a copy of the report before Parliament.”
Matthew Pennycook
In addition to speaking to new clause 5, I intend to speak briefly to amendment 11 and new clause 98. The Bill is straightforward, but, as many hon. Members have said, it will set in train a process that will have profound implications for our country and for each of our constituents. Despite the Government’s resisting new clause 3 yesterday and, in so doing, setting their face against giving Parliament an active role in scrutinising and influencing the negotiation process, the House will still need to hold the Government to account in the months and years ahead. If we are to discharge that duty effectively, we will require adequate information and robust analysis. As things stand, we do not have that.
When it comes to the crucial issue of the impact of different trading models on our economy, the Government’s White Paper falls far short of what is required to ensure that we are able to have informed discussions and debates in this place. Indeed, it offers little beyond assurances that the Government will prioritise securing the freest and most frictionless trade possible in goods and services. The House and, more importantly, businesses across the country that stand to be affected deserve to be made aware of the Government’s evaluation of the likely impact of different future trading relations. The Government can provide them with that evaluation without revealing their negotiating hand by publishing any impact assessments that have been undertaken by Her Majesty’s Treasury. That is the purpose of new clause 5.
Jonathan Edwards
Does the hon. Gentleman expect any Treasury modelling to concur with that of the Institute for Fiscal Studies, which says that EEA membership is far preferable for the economic growth of the British state than a free trade agreement?
Matthew Pennycook
The honest answer is that we do not know. As I will come on to mention, other organisations are doing this analysis. There is not a vacuum out there, and the Government could quite easily publish their analysis to help inform the debate.
I hope that the Minister does not simply echo those who have argued and will argue that publishing any information would undermine the Government’s negotiating strategy. We heard that argument prior to the Government conceding a speech and a White Paper, and we will no doubt hear it in the months ahead. I say to hon. Members who take that view, whether out of genuine concern or simply because they in effect want the legislature to shut up shop for the next 18 months, that the detailed analysis of the kind that we are asking to be published is out there. Other organisations are doing it—not just the Government.
Charlie Elphicke
I am listening to the hon. Gentleman with care. As I understand it, new clause 5 seeks to make the triggering of article 50 conditional on an impact assessment being laid before the House. However, the triggering of article 50 should be conditional on a vote of the British people, which took place last year. This is simply an attempt to delay.
Matthew Pennycook
To be fair, I dealt with that earlier in my remarks when I said that the new clause is not an attempt to delay because we know that the Government have already carried out impact assessments. The idea that no impact assessments will be published throughout the course of the negotiations is farcical. We could have them up front, which would help to inform debate.
Ms Angela Eagle
Does my hon. Friend agree that if we had official Treasury impact assessments, rather than those done by people who are guessing, we would be able to have a proper debate about the kind of Brexit that is best for our country in difficult and rapidly changing times?
Matthew Pennycook
My hon. Friend expresses the new clause’s intent perfectly, and I agree with her 100%.
Reputable and well-regarded organisations such as the National Institute of Economic and Social Research and the IFS have published detailed analysis of the cost and benefits of future trading relations with the EU, as have other less reputable organisations. The quality of analysis that the Government and the Treasury are able to produce will match, if not surpass, that analysis, and hon. Members should be able to access it. More importantly, businesses across the country need to be able to see it, so that they can adequately plan for their futures.
Dr Andrew Murrison (South West Wiltshire) (Con)
The hon. Gentleman has just asserted that the analysis he wants to see will be superior in quality to some of the others that may be available. On what does he base that assertion, given that the people he wants to report on the situation have given us the most extraordinary information? Before the referendum they told us that we were going to be attended by plagues of frogs and locusts and that the sky was going to fall in.
Matthew Pennycook
If the hon. Gentleman is right, I would not like to be one of the Ministers negotiating the agreement with the EU. They will be relying on this information when they come to decide their negotiating priorities.
Matthew Pennycook
I will make a little progress.
Labour Members look forward to hearing the Minister’s thoughts. The purpose of new clause 98, in the name of my hon. Friends, is simple. It would ensure that the impact of decisions on women and those with protected characteristics was considered and debated at every stage of the negotiation process. It may have escaped the attention of some hon. Members, but the word “equality” does not appear once in the White Paper. Indeed, the White Paper contains no mention of race, disability, sexuality or gender identity, which is astonishing. How can we secure a Brexit that works for everyone, as hon. Members on both sides of the Committee have repeated ad nauseam, if black, Asian and minority ethnic people, disabled people and lesbian, gay, bisexual and transgender communities are not given due consideration when the different negotiating positions are being weighed up?
The process and the final deal must have regard to equalities and the protection and extension of rights for those with protected characteristics. New clause 98 would ensure that equalities considerations were at the forefront of Government thinking throughout the withdrawal process and inform the final deal. Doing so would help to ensure that we got the best deal for everyone, wherever they were and, crucially, whoever they were. It would ensure that any negative impact on women or those with protected characteristics must be transparently presented and considered, and that if there was a risk of a disproportionate impact, the Government took steps to mitigate it.
New clause 98 is in line with recommendations from the cross-party Women and Equalities Committee, which has called for greater transparency on the impact of Government decisions on women and those with protected characteristics. It would help to improve scrutiny and accountability, and I look forward to the Minister giving it due consideration in his response.
Mr Iain Duncan Smith (Chingford and Woodford Green) (Con)
I do not intend to delay the Committee, as most of these amendments are narrow and address the very specific point that the hon. Member for Greenwich and Woolwich (Matthew Pennycook) raised.
I have a simple concern as to why there is such a peculiar sense of the vital importance of these particular forecasts, which give huge credit to the Treasury’s ability to forecast where we may be going in almost every sector. As my hon. Friend the Member for South West Wiltshire (Dr Murrison) said, many of the forecasts have been fundamentally wrong in the past, so I asked the Library how accurate the Treasury forecast of May 2016 turned out to be. It is worth relating exactly how accurate it turned out to be, even when the Treasury had such a huge array of figures and possibilities before it:
“In May 2016, the Treasury published forecasts for the immediate economic impact of voting to leave the EU. It forecast for a recession to occur in the second half of 2016, with quarterly GDP growth of -0.1% in both Q3 2016 and Q4 2016 forecast (a second ‘severe shock’ scenario was also shown with a deep recession occurring; under this scenario growth of -1.0% in Q3 2016 and -0.4% in Q4 2016 was forecast). In reality, the economy continued to grow at its pre-referendum pace, with quarterly growth of +0.6%”.
Now the figure has been adjusted again by the Governor of the Bank of England to close to 2%, with the prospect of further adjustments.
Julian Knight (Solihull) (Con)
On the quarterly growth statistics, I understand that even knowing what is happening right now is often very difficult for the predicting entities. In fact, I believe they have had the correct numbers four times in 270 quarters.
Mr Duncan Smith
The range of prediction from the Office for Budget Responsibility had nearly a £90 billion margin for error over the previous seven years; that £90 billion went from £50 billion on the plus side to £40 billion on the minus side. The problem we face is the sense that these forecasts give us any strong, real indication of what may happen in the economy. I raise this issue because the new clause and other amendments relevant to it make triggering article 50 contingent; it cannot be done officially until these forecasts are laid. This is not about consulting on them or their being made as a matter of the Government providing information. In other words, the article 50 letter cannot go until these are laid. All they do is inform the debate depending on what the forecasts are. From talking to economists, I am of the general opinion that we have had seven years of growth, and normally within the cycle we would expect to have a flattening at some point after this long period of growth. That would be the normal prospect, but economists will tell us that we are defying the normal prospects. Whether or not we have a natural process of slightly lower growth directly as a result of this longer period of growth, and what happens to the world economy and what is happening in the EU, is almost impossible to forecast with any great accuracy.
My point is that new clause 5 states:
“The Prime Minister may not give notice under section 1 until either HM Treasury has published any impact assessment…HM Treasury has laid a statement before both Houses of Parliament”.
With respect, I say to the hon. Member for Greenwich and Woolwich that this is not just a helpful attempt to get information to the House; it is exactly what he said it was not. It is clearly a back-door attempt to make it almost impossible for the Government to get on and trigger article 50. As my hon. Friend the Member for Dover (Charlie Elphicke) said, the referendum verdict was to trigger article 50. The people were not asked, “Shall we trigger article 50 only after we have laid various reports of notables who believe the economy is good, bad or indifferent?” They were asked, “Do you want to leave or do you want to stay?” They chose to leave and we have to get on with it. The idea that the Government are going to go into a negotiation without any idea about what they favour and what they think will, by and large, on the margins, be better for us is ridiculous.
The House must recognise that it is going to be swamped with information of this sort; every forecasting agency is going to be in the game of telling us where we are, and none will be the wiser. Everybody in the House will take the worst or best one, depending on what they want. If the OBR has a margin for error of £90 billion, people can take whatever position they want. But it does not change anything, because we are leaving. The nature of the agreement that we get with the EU, if we get one, is not going to be based on a bunch of forecasts. It will be based on what those negotiating for the EU think is in their general best interest and what we from the UK manage to persuade them is in our mutual best interest. That is what a negotiation is about.
Anybody who has been engaged in negotiation in business will know that you start with your base, bottom line, worst case for you and try to improve upon that, and the other side does the same. This is not going to be about one side saying, “I tell you what my forecast comes to. It tells me we are going to be better off. What does your forecast tell?” and the other side saying, “Ours says we are going to be better off and you will be better off, so which forecast are we going to take?” The battle of forecasts is a ludicrous and pointless exercise.
Helen Goodman
Of course this is not, as the right hon. Gentleman characterises it, going to be a battle of forecasts. But the forecasts are based on the same thing as the assessments people make when they are judging what will or will not be in their interests. They have a mental model, and sometimes those models can be put into mathematical form, and sometimes that is useful. Surely that is precisely what the City of London is doing when it says to the French, Germans and Italians, “You need us more than we need you.”
Mr Duncan Smith
Yes, but the point is that we will be none the wiser. Members might think that a set of forecasts would somehow really inform their view, but after 25 years in the House, I would be astonished if they were right. Debates in this House are rarely really informed; they are mostly based on the judgment of individuals.
Michael Gove (Surrey Heath) (Con)
My right hon. Friend is making a very impressive case. [Interruption.] Given the reaction from the Opposition, I am tempted to quote from “Carry On Up the Khyber”—they don’t like it up ’em! I am sure that, like me, my right hon. Friend was impressed by the candour and honesty of the chief economist of the Bank of England, Mr Andy Haldane, when he pointed out that the economics had had its Michael Fish moment last year, when so many predictions about the dire consequences of Brexit were proven to be wrong within weeks and months. Given the candour of one of the most distinguished economists in this country, should not those who call for impact assessments, attributing certainty to them, show similar humility?
Mr Duncan Smith
I agree, and I am tempted to refer to my predecessor, Lord Tebbit, who said, “When they’re screaming, shouting and laughing, carry on, because you must be in the right place.”
The head of the Office for Budget Responsibility is on the record as saying that in the end, almost all forecasts are wrong—
Mr Duncan Smith
Exactly; he was wrong most of the time, so he has a little knowledge of being wrong, as do many in this House. The point is that the new clause is not really about being informed; it is about delay. It is an attempt to be able to say later, “We’re not satisfied with that. It doesn’t quite comply with what we passed in the new clause, so you’re not able to trigger article 50.” The honest truth is that the Government have to go away with their best will and best endeavour and try to arrange to get the best deal they can.
We should look around us and listen to what various politicians in Europe are saying. We keep forgetting that their position is really what will end up setting the kind of arrangement we get. I was interested to read 24 hours ago that the German Finance Minister has changed his position. He has now said that there is no way on earth that the Germans should have any concept of trying to punish the United Kingdom; quite the contrary, he said that they need the City of London to succeed and thrive, because without it they will be poorer. He went on to say that they will therefore absolutely have to come to an arrangement with the United Kingdom, because it is in all of our interests. That is the best forecast we can get, because it is about what people believe is in their mutual best interests.
Mr Mark Francois (Rayleigh and Wickford) (Con)
Further to that point, has my right hon. Friend seen the comments from the Bundesverband der Deutschen Industrie, which is the German equivalent of the CBI? It, too, makes the point that there should be no attempt whatsoever to punish the UK for Brexit, because it is aware of the adverse consequences that that would have for German industry.
Mr Duncan Smith
Exactly. It is interesting that it is only since my right hon. Friend the Prime Minister made her excellent speech in which she set out the 12 points that were subsequently fleshed out into a White Paper, and made it clear what the British Government were not going to be asking for—any special pleading about the single market and so on—that we have begun to see engagement from some of those throughout the European Union who have a vested interest in seeing the best deal.
The other day, I had the privilege of engaging with a company in the pre-packaged potato industry that turns over €400 million a year. Although it sells all over the world, 39% of its product is sold to the United Kingdom, and it does very well out of that. Even as we speak, it is grouping together to cajole the relevant Governments and persuade them that the very last thing it wants is to have its business wrecked by some artificial attempt to put up a block to the United Kingdom. These things are already in train, and they are nothing to do with forecasts and all to do with people caring about their futures and jobs.
Sir Desmond Swayne (New Forest West) (Con)
I agree entirely with my right hon. Friend, but these new clauses come before any such rational intervention by reasonable business people across Europe. They are based on the fact that Opposition Members genuinely believe in their doomsday forecast, and they are just waiting for it to play out. That is the whole point of delaying the process—it is in the hope that when the sky falls in, the British people will change their minds.
The Temporary Chair (Sir Roger Gale)
Order. I am the most mild-mannered and tolerant of men, but interventions are becoming slightly overlong. Interventions, even in Committee, are interventions, not speeches.
Mr Duncan Smith
Thank you, Sir Roger, for that explanatory intervention. May I say to my colleagues that I am still prepared to take interventions should they wish to keep them short?
Julian Knight
We have just spoken about the power and the necessity of the City of London. Does my right hon. Friend realise that the other major capitals, Paris and Frankfurt, do not have the same infrastructure? Frankfurt, for example, has only one foreign language school, and Paris has restricted labour laws.
Mr Duncan Smith
That is an important point, and it plays hugely into the Government’s hands. It was the head of financial services in Frankfurt who was over here just before Christmas. When he was interviewed by the BBC, he was asked whether he was over here trying to get people to take up jobs in Frankfurt’s financial sector. To the journalist’s utter horror, he said yes. The journalist then said, “Therefore that means, presumably, that you think that after Britain leaves the European Union, the City will be finished, and that Frankfurt is looking to take its business.” He almost laughed and said, “Oh, no, no, no. We absolutely need the City of London to thrive and prosper, because it is the way that we keep our capital cheap. We cannot replace it, as its business will go somewhere outside Europe.” He said that London is the only global city in Europe. The point that he was making was that, although we move around and trade jobs, the expertise and ability to make capital deals lies here in London, and Frankfurt wants to make sure that the United Kingdom Government, the European Commission and the European Council reach an agreement that is beneficial to both sides, with access to the marketplace.
I make no bones about this: I am an optimist. There is nothing in the new clause that would in any way help the Government. Even more importantly, it would not enable the House to reach any kind of measured conclusion, such as letting the Government trigger article 50. I will conclude now unless somebody wants to intervene.
Charlie Elphicke
My right hon. Friend is making a passionate speech. When it comes to forecasts, there is another real-life example that has not yet been mentioned, which is that the independence referendum in Scotland was predicated on the oil price remaining high. Shortly afterwards, the oil price dropped dramatically, which would have left Scotland in dire straits had it voted for independence.
Mr Duncan Smith
I agree. The head of the OBR has said that, in the end, most forecasts are wrong. On that basis, it would not really help the House in any way suddenly to have a Treasury forecast, any more than if we had a multitude of forecasters here saying where they think the economy will go. I do not blame them for being wrong, because there are far too many moveable parts in economies as complex as the United Kingdom or, for that matter, the European Union or even the global economy.
Ultimately, if the Opposition are really honest, these new clauses and amendments are really about making sure that the Government’s hands are tied, and slowing down the process in the vague hope that, somehow, people’s opinions will change and it will all look too difficult. These forecasts will then allow everyone to go out and say, “Oh my God, this is so terrible. Look what will happen if we do not get this arrangement or that arrangement.”
Julian Knight
My right hon. Friend is being generous in accepting interventions. He has just talked about a sort of buyer’s regret. As I understand it from my experience on the doorstep, most people just want us to get on with the job. In fact, polling shows that Brexit is slightly more popular now than it was at the time of the referendum.
Mr Duncan Smith
I will not carry on for much longer, but that is exactly the point. All that will happen if we amend the Bill and tie the Government’s hands so that they are slow in triggering article 50 is that the British people will get frustrated and angry.
Ms Angela Eagle
What if actually everyone in the House—whether they are Brexiteers or remainers—wants the best deal for the country, and in order to make good decisions and have a good debate, they want to know what analysis the Government are doing of the implications of making particular decisions? Surely that, and not delay, is what this is about.
Mr Duncan Smith
I say to the hon. Lady, for whom I have a huge degree of respect, that if that were the explicit purpose of new clause 5, I would agree with her. The difference is in the line that restricts the Government from invoking article 50 until the matter is laid before the House. That line alone makes it very clear that informing good decisions is not the full intention behind the new clause. If the new clause just said, “We will invoke article 50 and it would be good for the Government to put forward their various predictions and forecasts”, I would probably have said, “I don’t think the Government would have a problem with that.” But that is not what the new clause says. If the hon. Lady reads it, she will realise that it is about delay and prevarication.
Karl MᶜCartney (Lincoln) (Con)
I thank my right hon. Friend for giving way right at the end of his speech, to which I have listened intensely. Despite decrying some forecasters, would he like to make a forecast that, at the end of the process, the vast majority of the people in Scotland will welcome Brexit?
Mr Duncan Smith
As I have just condemned pretty much every forecast, I will not make that forecast. I will say that once Scotland gets back to domestic policy, it is almost certain that the Scottish nationalists will be seen for what they are doing: running down education, health and the economy. Let us get back to the real forecast.
I do not wish to sow the seeds of dissention, so I simply say that the new clause and the related amendments, which would put another set of shackles around the Government’s hands and stop them getting on with what the British people voted for on 23 June last year, must be rejected, because the Government must seek the best deal they can in line with what is good for the EU and for the United Kingdom.
Mr Umunna
I am pleased to follow the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith). Before I speak to the amendment in my name, which is on a subject that was totally absent from the right hon. Gentleman’s contribution, I have to say that I am bemused by what can only be described as a 15-minute diatribe against forecasters and economists—the experts. That is why I was not surprised to see the right hon. Member for Surrey Heath (Michael Gove) join in with the diatribe. The Opposition have spent the past five or six years listening to these two now former Cabinet Ministers telling us about the importance of listening to independent economic forecasters. They told us how important it was that they set up the Office for Budget Responsibility, which the right hon. Member for Chingford and Woodford Green has just spent the past 15 minutes slagging off.
Mr Umunna
I will just make a bit of progress. I will come to the hon. Gentleman in a bit, but I do not want to speak for too long because I know a lot of people wish to speak.
I am bound to say that I wish we were not here. As the right hon. Members for Chingford and Woodford Green and for Surrey Heath know well, because I debated with them a lot during the campaign, I campaigned strongly for us to stay in the European Union. I led the Labour “In for Britain” campaign in Greater London, and played a role in the “Britain Stronger In Europe” campaign nationally. But we lost. As a democrat, I accept that result, which is why I supported the Bill’s Second Reading. Of course, I respect people who interpreted the referendum result differently. Although we all have different views on whether to trigger article 50, we can all agree that while various promises were made by both sides in the referendum campaign, the key pledge of the winning side was that if we leave the European Union, £350 million extra a week will go to the NHS, which is why I tabled amendment 11.
Dominic Cummings, who worked, of course, for the right hon. Member for Surrey Heath and who ran the Vote Leave campaign, said on his blog last month that the £350 million NHS argument was “necessary to win”. He said:
“Would we have won without £350m/NHS? All our research and the close result strongly suggests No.”
Hon. Members can go and read that on his blog. So the importance of that pledge cannot be overestimated. It cannot be detached from the triggering of article 50. It is inextricably linked to why millions of people voted to leave, to our withdrawal from the European Union and, therefore, to this Bill.
Helen Goodman
My hon. Friend is absolutely right. I was at a public meeting in one village where people said, “It’s fantastic that we are leaving the European Union, because we are going to get £350 million a week for the NHS, and the Government will be able to reopen the A&E in Bishop Auckland hospital.”
Mr Umunna
That is right, and there are lots of examples of that throughout the country. That is not surprising, because prominent members of this Government—the Foreign, Environment, International Development, International Trade and Transport Secretaries, who are all members of the current Cabinet—went around the country in that big red bus that said:
“We send the EU £350 million a week. Let’s fund our NHS instead.”
None of them disowned that pledge during the campaign. They also stood by a big sign saying:
“Let’s give our NHS the £350 million the EU takes every week.”
Ms Angela Eagle
Does my hon. Friend agree that that kind of cynical campaigning gives politics and politicians a really bad name? The people who saw the pledge on that big red bus now expect this Government to deliver on that pledge.
Mr Umunna
That is absolutely right. Those Members seek to hide behind the wording and to claim that it was conditional, but they knew exactly what they were doing when they stood in front of that big red bus and that sign: the clear message they intended to convey was that if we leave the European Union, £350 million a week will go to the NHS.
Mr Charles Walker (Broxbourne) (Con)
I have a huge amount of time for the hon. Gentleman, and I like him very much, but seeing as we are swapping stories about town hall meetings, I had a number of people come up to me in town hall meetings, saying, “Mr Walker, we’d love to vote to leave the EU, but the Chancellor has told us that if we do, we’ll lose £4,400, and there will be an emergency Budget.” I do not think it helps this country or this House to rehash the campaign from seven months ago.
Mr Umunna
I am glad the hon. Gentleman raised that point, and I also have a lot of respect for him. However, the point is that I am not trying to re-litigate the referendum campaign but to make sure that the promises these people made are delivered.
We know the NHS needs the extra cash, so it was not unreasonable for people to believe those promises. The Health Committee—people on both sides of the House sit on it—pointed out recently that the deficit in NHS trusts and foundation trusts in 2015-16 was £3.45 billion. We know that Ministers’ claimed increases in NHS funding are being funded by reductions in other areas of health spending that fall outside NHS England’s budgets. We know that reductions in spending on social care are having a serious impact, which is translating into increased A&E attendances, emergency admissions and delays in people leaving hospital. The NHS needs that extra cash, so it was not unreasonable for people who voted to leave the European Union to think that that pledge would be delivered on.
Mr Rees-Mogg
The hon. Gentleman is complaining about a slogan on the side of a bus about giving extra money to the NHS and implying that his amendment gives money to the NHS, but it does not—it merely suggests that there should be a report on the effect of the withdrawal from the EU on national finances, including health service expenditure. He therefore seems to be falling into exactly the same trap as he is accusing others of. Motes and beams come to mind.
Mary Creagh (Wakefield) (Lab)
Is my hon. Friend aware of Change Britain’s latest press release where the £350 million a week has gone up to £450 million a week through its exhortations to scrap such onerous regulations as the motor vehicles regulations, the greenhouse gas emissions reporting regulations, the welfare of animals in transport regulations, and the welfare of farmed animal regulations?
Mr Umunna
That is very interesting. I note that the right hon. Member for Surrey Heath is still in his place. I saw in The Sun, no less, in November that he was demanding—demanding!—that the Prime Minister spend a £32 billion Brexit dividend on the NHS, so I hope that he will be supporting our amendment as well.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
My hon. Friend is making some very important points. It is interesting to hear Conservative Members scoffing and laughing at this. This was not just one of many pledges—it was the key pledge. I am looking at a collection of photographs of all the key proponents of the Vote Leave campaign. It was their No. 1 commitment to this country if it voted to leave the European Union. On that basis, does not this Chamber have a responsibility to honour the pledge on which people voted to leave the EU?
Mr Umunna
I completely agree with my hon. Friend.
For all these reasons I have tabled amendment 11, which, as the hon. Member for North East Somerset (Mr Rees-Mogg) stated, is very reasonable. It requires the Prime Minister to set out how the UK’s withdrawal from the EU will impact on the national finances, particularly on health spending. In short, she needs to set out how she is going to make good on that Vote Leave pledge to spend £350 million extra per week on the NHS.
Seema Malhotra
I am very pleased to support my hon. Friend’s amendment. Does he agree that this will also be a vital part of the keeping the public’s confidence in the process as we go forward over the next two years, not least given the conversations in a focus group I held in my constituency on Sunday where people said that this issue remains topmost in their minds as the reason they voted to leave?
Mr Umunna
I will very shortly.
I hope that we will have the opportunity not only to debate this amendment but to vote on it too. It has been signed by more Members than any other amendment. It is supported across parties and of course has the support of the Opposition Front Bench. In the end, in our democracy, it is in this House that Members are held to account for the promises they make and the things they say to the people. What better way to test the resolve of people such as the right hon. Members for Chingford and Woodford Green and for Surrey Heath than for there to be a vote on this issue so that people can see whether they meant what they said?
Mr Jim Cunningham
Another commitment was that they wanted to make Parliament sovereign again, but Government Members are saying today that when we exercise that sovereignty we are being obstructive and using delaying tactics. They cannot have it both ways.
Mr Umunna
My hon. Friend is absolutely right.
These people will never be forgiven if they betray the trust of the people by breaking their promise to do all they can to ensure that the £350 million extra per week for the NHS is delivered. They all know that only too well. Mr Cummings, who, as I have said, worked for the right hon. Member for Surrey Heath, discloses in the blog I mentioned that the Foreign Secretary and the right hon. Member for Surrey Heath planned to deliver, in part, on that pledge as part of the Foreign Secretary’s leadership campaign. Mr Cummings writes that when he told the Foreign Secretary
“‘you should start off by being unusual, a politician who actually delivers what they promise’”,
the reply was
“‘Absolutely. ABSOLUTELY. We MUST do this, no question, we’ll park our tanks EVERYWHERE’”.
Apparently, the right hon. Member for Surrey Heath strongly agreed. Mr Cummings goes on to say:
“If they had not blown up this would have happened.”
No doubt the Minister will say to us that there are a number of reasons why the Government cannot support the amendment. I am going to pre-empt him and deal with each in turn. First, there are those who claim that it was not a pledge at all. The Transport Secretary has said:
“The specific proposal by the Vote Leave campaign was in fact to spend £100 million a week”—
of the £350 million—
“on the NHS. I hope that aspiration will be met.”
I say to the Transport Secretary, who of course is not here, that the poster, which the Vote Leave campaigners all stood by, did not indicate that that was an aspiration or use the £100 million figure. It was a pledge, pure and simple. The poster did not read, “Let’s aspire to spend £100 million extra.”
Mr Umunna
I will give way to the hon. Gentleman shortly. The poster gave the clear impression that the money would be spent. It is true that the Office for National Statistics said that the £350 million figure was misleading, but the Vote Leave campaign, which the right hon. Member for Surrey Heath chaired, kept on using that figure regardless. Now they will be held to account for it.
Karl MᶜCartney
I thank the hon. Gentleman for eventually giving way. He really should listen to the words of my right hon. Friend the Member for Chingford and Woodford Green (Mr Duncan Smith), who talked about forecasting. The hon. Gentleman has forecast—I think he will be wrong—that the £350 million will be an issue at the next general election. Does he agree that the Conservative party was not Vote Leave, and that the £350 million was the slogan of Vote Leave, not the Conservative party? As he is giving us a grand tour de force of the Brexit campaign, would he like to comment on “Project Fear”?
Mr Umunna
I think the hon. Gentleman was involved in Vote Leave—perhaps he was not—but I am not going to take any lectures about peddling fear and all the rest of it, in any campaign, from anyone associated with Vote Leave. I will come on to the point that he made about the Conservative party shortly.
Norman Lamb (North Norfolk) (LD)
I entirely agree with the points that the hon. Gentleman is making. Having made that complaint to the UK Statistics Authority, the response that I received was that the claim was potentially misleading. As he has said, Vote Leave campaigners kept using it. Surely, they kept using it because they knew they needed to do so in order to win the referendum. Now that they have done that, we need to hold them to account.
Mr Umunna
That is absolutely right, and I completely agree with the right hon. Gentleman. I come to the point that the hon. Member for Lincoln (Karl MᶜCartney) made about the Conservative party—[Interruption.] Admittedly, it could also apply to some people from the Labour party. Some say that the pledges were made primarily by people who may have been members of a Conservative Government, but who did not speak with the authority of that Government. Of the five Cabinet Members I have mentioned who took leading roles in the campaign, three were members of the Government at the time and one, the Foreign Secretary, attended the political Cabinet. Part of the reason why those key campaigners were put up to do media and to campaign for Vote Leave was that they carried the authority of being Ministers. We cannot detach one from the other.
The other, and connected, argument that is made is that the commitment was given by one side in a referendum campaign, not by a Government, so we should leave the matter alone and get on with things—we should all shut up. I am sorry, but I do not think that that will wash. Whether they were Ministers or not, all the key Vote Leave campaigners were Members of this House. As I have said, if our democracy is to mean anything, it is that Members of this House answer and are held to account in this House for the promises that they make to the people. After all, as has been said, they campaigned in the name of parliamentary sovereignty. If Parliament is sovereign, they should be held to account here.
Mr Umunna
I will not give way; I am going to finish.
Either those people made the pledge in the expectation of delivering on it, in which case they must now show us the money and vote for this very reasonable amendment, or they made it in the knowledge that it would never be met, in which case they will never be forgiven for their betrayal of those who, in good faith, relied on that promise.
Mr Duncan Smith
I am wholly in favour of spending £350 million or £375 million or whatever the figure is. But I want to ask the hon. Gentleman a specific question, as this is his amendment and he has stopped short of saying what he really thinks: the amendment says only that a report should be published. What is his and his party’s position on the spending on the NHS that will come only as and when we leave the European Union and get back the money that we give at the moment, which is £350 million or £375 million? Does he want to spend that all on the health service or does he not?
Mr Umunna
The right hon. Gentleman seems to have accepted—I hear the word “melting” behind me—the premise behind the amendment. I very much look forward to his joining us in the Division Lobby.
My party established the national health service in the face of opposition from the right hon. Gentleman’s party. We have a far better record of providing the funding and support to our NHS. We need no lectures or demands from his party, which is in government and throwing it all into chaos.
I finish by saying this to the right hon. Gentleman. His Prime Minister goes around saying, “Brexit means Brexit”. If Brexit means anything, it is that he and all his colleagues who campaigned for Vote Leave need to deliver on their promise to put £350 million extra per week into the NHS. I look forward to seeing the right hon. Gentleman in the Division Lobby tomorrow.
Several hon. Members rose—
The Temporary Chair (Sir Roger Gale)
Order. If we are not careful, we will face the situation we faced last night. There are a large number of amendments and a large number of Members wish to speak. I understand entirely why Members are being generous in taking interventions; of course, that eats up time. I urge colleagues to shorten their speeches, if possible, to enable the maximum number of Members to take part in what is, after all, a very important debate.
Michael Gove
It is a pleasure to serve under your chairmanship, Sir Roger, and to follow the hon. Member for Streatham (Mr Umunna), who made a characteristically authoritative and penetrating speech. I also congratulate him on his leadership of the Labour In campaign in London. The whole United Kingdom, of course, voted to leave, but some of the strongest resistance to the arguments was in London and I am sure that that was in no small part due to the hon. Gentleman’s eloquence and organisational ability.
Mr MacNeil
The right hon. Gentleman has just mentioned the whole of the United Kingdom. The UK is a union, so I hope he will acknowledge that not all the United Kingdom voted to leave. He will remember that we were told in 2014 that the constituent parts were equal partners in the United Kingdom. The whole may have voted leave, but not all of it did.
Michael Gove
I entirely accept the hon. Gentleman’s point, but it is striking that the northernmost part of his constituency voted to leave—BBC research, I may say. We heard at length last night from the Scottish National party about how Scotland voted; all I would say is that a million people in Scotland voted to leave the European Union, and overall within the United Kingdom so many people voted to leave. As my right hon. Friend the Member for Chingford and Woodford Green (Mr Duncan Smith) admirably pointed out, people want that vote to be expedited. I am speaking tonight because I oppose every single one of the new clauses and amendments in front of us because they seek to frustrate the democratic will of the people.
The hon. Member for Streatham is right: people do want us to take back control of the money currently spent on our behalf by the European Union. But if we accept his amendment and the other amendments and new clauses before us, we will be seeking only to delay and, as my right hon. Friend pointed out, to procrastinate, to put off the day when we eventually leave the European Union and can then spend that additional money on our NHS or, indeed, any other priority. If any Member of this House wants to see taxpayers’ money that is currently controlled by the European Union spent on our NHS, on reducing VAT on fuel or, say, on improving infrastructure in the Western Isles, they have a duty to vote down these new clauses and amendments, which seek to frustrate the honouring of the sovereign will of the British people.
Michael Gove
I give way to the hon. Gentleman on the Front Bench, who was first.
Stephen Gethins
The right hon. Gentleman is very kind. He bears some responsibility for the mess that we are in, in not knowing what leaving the European Union means. One area that he was clear on was that Scotland should have more control over immigration. Will he join us in campaigning for that?
Michael Gove
It is striking that the hon. Gentleman talks about the mess that we are in. Of course, the “we” refers to the Scottish National party, because it is in a significant mess at the moment. It has found that support for independence has fallen as a result of leaving the European Union and that support for a second referendum is falling. Psychological displacement theory explains why it wants to talk about anything other than its own political failure.
Michael Gove
I will make a little progress, then I will give way to the hon. Lady.
The reason I oppose all the new clauses and amendments is that, as was pointed out by my right hon. Friend the Member for Chingford and Woodford Green, every single one of them, if implemented, would delay and potentially frustrate the legislation. They would require a huge list of impact assessments to be published and other work to be undertaken before we could trigger article 50.
I know that the hon. Member for Greenwich and Woolwich (Matthew Pennycook) said that it was not the mission of the Labour party to delay, but he is rather in the position of what guerrilla organisations call a cleanskin—an innocent who has been put in the way of gunfire by other wilier figures, such as the shadow Chief Whip who is in his place. I am sure that the hon. Gentleman is entirely sincere in his belief that the new clauses and amendments would not delay or complicate the legislation, nor frustrate the will of the British people, but I have to say that he is wrong. He is in the position of the Roman general, Quintus Fabius Maximus Verrucosus Cunctator, “the delayer”: everything that he is doing—every single one of these new clauses and amendments—seeks to delay.
Let me draw attention briefly, for example, to new clause 48, which stands in the name of the hon. Member for Bishop Auckland (Helen Goodman). Subsection (1), as clarified by subsection (2)(s), would require us to have an impact assessment on leaving the European Union Agency for Railways. It may have escaped her notice, but Britain is an island.
Michael Gove
The hon. Gentleman makes a very good point, but the idea that we should spend an inordinate amount of time and money trying to determine whether this country will suffer or benefit by being freed from the bureaucracy of that particular agency would seem to be a massive misdirection of effort. More than that—
Michael Gove
I will give way to the hon. Lady in just a second.
More than that, if we were to publish impact assessments on every single one of these areas, we would be falling prey to a fallacy that politicians and other officials often fall prey to, which is imagining that the diligent work of our excellent civil servants can somehow predict the future—a future in which there are so many branching histories, so many contingent events and so many unknowns. If we produce an impact assessment on leaving the European Union Agency for Railways, how do we know how leaving that agency might be impacted by the enlightened proposals being brought forward by my right hon. Friend the Transport Secretary for the more effective unification and cohesion of our transport network? We cannot know, unless we have that fact in play, but we do not yet know—quite rightly, because he is taking time to consult and deliberate—what that policy will be. What we would be doing is commissioning the policy equivalent of a pig in a poke. With that, I am very happy to give way to the hon. Gentleman.
Mr MacNeil
I am surprised to hear the right hon. Gentleman saying he does not know, because I thought everything was known after the 23 June vote. I know he will tell us that the vote on 23 June meant leaving the single market. Does is it mean the WTO or does it mean a deal from Europe? He says he knows. Which will it be? Tell us.
Michael Gove
My argument throughout has been that in seeking to find the certainty the hon. Gentleman wants from the publication—
Michael Gove
I am a humble seeker after truth, but I recognise that in a world where there are contending versions—the Scottish nationalist version, the Green version, the independent Unionist version and the Labour party version—there is for all of us a responsibility to use reason in the face of so many attractive and contending versions of the truth.
Michael Gove
I will, in the spirit of inclusion, seek to give way seriatim to the four Members seeking to catch my eye.
Lady Hermon
May I say, ever so gently to the right hon. Gentleman, that I am deeply offended by being accused, wrongly, of trying to frustrate the will of the people of the United Kingdom? I am a Unionist. I would like him to address a very serious issue. Sinn Féin, a republican party, will use a hard Brexit to trigger a border poll in Northern Ireland. We may be seeing the break-up of the United Kingdom because of the rhetoric of the right hon. Gentleman and others. Will he address this serious point?
Michael Gove
That is a very serious and important point. I do not know if, strictly speaking—I defer to the Chair—it is relevant to the new clauses we are debating. What I would say to the hon. Lady is that, in this House and elsewhere, I will do everything I can to work with her to ensure that we honour the vote of the whole of the United Kingdom, and, at the same time, work on the progress she has helped to secure in making sure we have peace on the island of Ireland.
Caroline Lucas
What we do know is that the people on 23 June did not vote to deliberately reduce environmental protection. What we do know is that Brexit, as currently planned, will massively reduce environmental protections, because we suddenly will not be part of the European Environment Agency, the European Investment Bank and so on. Does the right hon. Gentleman not think it reckless to be quite so contemptuous of the Opposition amendments tabled to try to ensure we have in place adequate safeguards for our environment before we trigger article 50?
Michael Gove
I may not agree with the hon. Lady on everything, but I agree that effective environmental protection is really important. I would make two points in particular in response to her important intervention. First, it is entirely open to us, as we leave the European Union, to maintain the current standards of environmental protection, but it is also open to us, once we leave, to enhance them. We can, if we wish, have higher standards of environmental protection, for example for moving livestock. Secondly, we can reform the common agricultural policy, against which her party has campaigned for many years, and against which her hon. Friend in the other place campaigned so brilliantly by arguing to vote leave. We can replace the CAP with an approach to subsidising land use that is both more environmentally sensitive and more productive.
Michael Gove
To be fair to the hon. Gentleman, for whom I have a great deal of respect, the next Member kind enough to ask to intervene was the hon. Member for Feltham and Heston (Seema Malhotra).
The Temporary Chair (Sir Roger Gale)
Order. Just before we proceed, it is customary and courteous to allow the right hon. Gentleman to respond to one intervention before trying to make another one. I find the debate progresses better that way.
Seema Malhotra
The right hon. Gentleman describes himself as a humble seeker of truth. That strikes me as interesting, given that he campaigned so hard to leave on the basis of an extra £350 million a week to be spent on the health service. Why will he not support amendment 11, tabled by my hon. Friend the Member for Streatham (Mr Umunna), which states:
“the Prime Minister must prepare and publish a report on the effect of the United Kingdom’s withdrawal from the EU on national finances, including the impact on health spending.”?
Surely, as a humble seeker of truth, he might want to know the answer to that?
Michael Gove
That is a very important point very well made, but the point I sought to make earlier—the hon. Lady’s intervention gives me a chance to underline and further clarify it—is that if we want more money to be spent on the NHS, or, for that matter, anything else, and we want to take back control of the money the EU currently controls or spends on our behalf, then we should seek to expedite the will of the British people and leave the EU as quickly as possible. We will then have that money back and we can invest it in the NHS more quickly.
Michael Gove
The hon. Member for Bishop Auckland sought to intervene earlier, but I suspect the point made by the hon. Member for Feltham and Heston (Seema Malhotra) was very much hers and that it was an example of sisterly collaboration. In the spirit of fraternal humility, I hand over to the hon. Member for Hove (Peter Kyle).
Peter Kyle
I am grateful. Many members of the public are also humble seekers of truth. If we do not pass these new clauses and get these impact assessments, how will they be able to judge how Brexit is going? How will they be able to judge the impact on health, education, transport, environment and their communities if they have no information at all?
Michael Gove
This gets me back to the heart of my argument, which is that if one believes that the only authoritative evidence, the only view that matters, is that produced by the Government, one is turning one’s back on 400 years of Enlightenment thinking. There is not one single canonical view that is right in every respect. As was made clear earlier, there is a proliferation of views about what the impact of leaving the EU might be in different areas.
Further, if we were to have published the Government’s policy advice in every area, which is the inference behind the hon. Gentleman’s question, it would make the business of Government impossible. He might remember, as I certainly do, reading the words of the former Prime Minister, Tony Blair, in his autobiography, “A Journey”, in which he said that the Freedom of Information Act was his biggest mistake—I think there were some bigger. [Laughter.] That is one view that commands a consensus around the House. He thought he had handed a weapon to his enemies and made impossible the business of Government, which requires confidential advice to be prepared by civil servants and accepted by Ministers.
When I was a Minister, I received excellent advice—my mistakes were all my own, all the good ideas were civil servants’. Nevertheless, however good the civil service advice that a Minister receives, it is only one source of wisdom, and every Minister worth his or her salt will want to consult widely. Any Minister who sought to steer only by civil service advice would rightly be held by the House to be a timid mouse constrained by their brief, incapable of ranging more widely and of making a judgment in the national interest.
Wayne David (Caerphilly) (Lab)
On finance, does the right hon. Gentleman agree with the Secretary of State for Brexit, who is prepared to consider our paying the EU for access to the single market?
Michael Gove
To be fair to both the hon. Gentleman and my right hon. Friend, I think that that is a mischaracterisation of what he said. [Interruption.] It is. It is a mischaracterisation that was sedulously reported in some sections of the media. I make no criticism of the hon. Gentleman, but my interpretation was different, and in a way the fact that two such fair-minded—I hope—figures as he and I can, from the plain words in Hansard, reach two different conclusions rather proves my point, which is that we can ask for evidence but we cannot have a single definitive view. The argument, as made in the new clauses, that we cannot proceed until we have that so-called single, definitive, canonical view represents a profound misunderstanding.
Mr Charles Walker
The most important word used in this debate is “accountability”. We are accountable not to the House but to our constituents, and it will be they at future general elections who hold us to account for the success or failure of Brexit.
Michael Gove
My hon. Friend makes a characteristically acute point, and it goes to the heart of my argument, which is that if, come the next election, we have not left the EU, the British people will feel that, having asked a decisive question and been given a clear answer, we have dishonoured the mandate they have given us and not respected the result. That leads directly to my concern about the amount of work required by the new clauses and about the tools that these assessments would give to others outside the House who might wish to frustrate the will of the people further.
Mrs Anne Main (St Albans) (Con)
As most of us found out during the campaign, people wanted us to get on with it, whatever the result. Nowhere on the ballot paper did it say that we should get tied down in knots forever and a day, which is in effect what Opposition Members are seeking to ensure.
Michael Gove
My hon. Friend is absolutely right. New clause 40, tabled by the hon. Member for Bishop Auckland, states that the Prime Minister must, before even
“exercising the power under section 1”
and before triggering article 50, publish an impact assessment of the effect on the United Kingdom of leaving the customs union. How can we know that?
I am sanguine about leaving. I take the lead from Shanker Singham and other distinguished trade negotiators that leaving the United Kingdom—[Interruption.] A Freudian slip: I mean leaving the customs union—will lead not just to GDP growth in the United Kingdom, but across the world. I take that view, but it is entirely open to others to take a different view, and it is entirely open to Her Majesty’s Government to choose to follow policies that, once we have left the customs union, will either maximise or minimise our GDP. Once again, by insisting on a narrow focus on what is believed to be one truth and holding up the advance of this legislation as a result, the promoters of this new clause are, I am afraid, once again seeking to frustrate democracy.
Nigel Huddleston
I certainly welcome my right hon. Friend’s conversion to listening to experts. Does he agree with me, though, that no good will come to British business or to our constituents if all we do for the next two years is rehash the results of or indeed the debate about the referendum? I respectfully disagreed with my right hon. Friend during the referendum, and I am sure we will respectfully disagree for many times to come, but this is not going to help the outcome of the Brexit decision.
Michael Gove
I entirely agree, and my hon. Friend makes two important points. Of course, we had the referendum and some people on the remain side feel sore because they think the result was not just a betrayal of their hopes, but was won by means that, to put it mildly, they do not entirely endorse. I absolutely understand that, and there is a responsibility on those of us who argued for leave to listen carefully and to seek to include in the type of new relationship we have with the European Union the very best ambitions and aspirations that were put forward as reasons for staying. I think that can be done and that this House has a critical role in bringing it about, but it can be done only once article 50 has been triggered and the British people have had the confidence that we are leaving.
Julian Knight
I thought that the hon. Member for Streatham (Mr Umunna) spoke powerfully about breaches of promise, but is there any bigger breach of promise than blocking Brexit by supporting these wrecking amendments?
Michael Gove
My hon. Friend is absolutely right, and there is a particular element to it, as well. One of the important principles of our constitution, which as a former Justice Secretary I wholeheartedly believe in, is the principle of judicial review. It is absolutely right that Executive action should be subject to judicial review. It is the only way, apart from the exercise of power in this House, that we can be certain that the Executive is following the rule of law. I am one of those people, albeit that I campaigned for and voted for us to leave the European Union, who was pleased that the Supreme Court held this Government to account so that we have this legislation before us now.
Having said all that, and having placed on the record my support for both this legislation and the principle of judicial review, if we accept any of these new clauses or amendments, we will subject the operation of article 50 to judicial review. That would mean that if any single one of these impact assessments were not prepared in exactly the right way, at the right time, with appropriate care, the whole process and the democratic will of the British people could be upended. Different people have different views about experts—I shall come on to them in a few moments—but I know whereof I speak.
As I have said, I made a number of mistakes during my ministerial career—too much for us to be able to run over now, given that our debate has to close at 9 o’clock. One thing I remember is that judicial review on the basis of a relatively small infraction, as admitted by the judge, of an equality impact assessment—one I deeply regret—nevertheless resulted in the paralysis of this Government’s school capital building programme. Now, if we want to create a feast for lawyers and a festival for litigators, we should accept these new clauses and bring in these amendments. In so doing, we will see the tills ching in the Middle and Inner Temples and hands wring up and down the country, as we once again frustrate the will of the people.
Lucy Frazer (South East Cambridgeshire) (Con)
My right hon. Friend makes a very powerful argument. Does he remember that during the campaign, an assessment of the economy was given by the former Chancellor of the Exchequer? Does he remember whether it was accepted by the Opposition, or whether the Leader of the Opposition said that he did not accept the assessment and would not implement it?
Michael Gove
Again, my hon. and learned Friend, who is a silk and who took with forbearance my comments about lawyers before making her own very acute point about economics, is absolutely on the button.
Are we to accept that for the first time ever, once the impact assessments have been published, an official Government document will be taken by my friends in the Scottish National party or the Labour party as holy writ? Are they going to say, “Thank heavens, this document bears the name of the Secretary of State for Exiting the European Union, so it absolutely must be right, because this is the only way in which I can form a judgment on whether or not leaving the European Union will be a success”? Can I expect the hon. Member for Ross, Skye and Lochaber (Ian Blackford) to say, “Oh look, the impact assessment from the Department for Exiting the European Union said X, and now, six months later, X has been satisfied, so I am going to give up and accept that the Secretary of State is right, because everything that he has done is in accordance with what he has previously said he would do”?
Ian Blackford (Ross, Skye and Lochaber) (SNP)
The right hon. Gentleman has said that members of the Government have made mistakes in the past. This is about the House holding the Government to account. We must recognise the reality of what has happened. He talks about the estimates that are out there, but the reality is that the currency has already fallen substantially against the dollar, and we are aware of the impact of an increase in inflation. The impact assessments must be informed by the reality. Let us also not forget that we have heard nothing from the Government—no plan—about how we are going to effect trade with Europe. Of course we need impact assessments if we are do our job properly as Members of Parliament.
The Temporary Chairman (Sir Roger Gale)
Order. Before the right hon. Gentleman continues his speech, may I again gently say that a great many Members wish to speak? He has been extremely generous in giving way, but I trust that he is nearing his peroration.
Michael Gove
I am grateful for the intervention from the hon. Member for Ross, Skye and Lochaber, who combines the roles of crofter and former investment banker with rare skill. He is right—the pound has indeed fallen—but one of the reasons why many people in our shared country of birth rejected the Scottish National party’s referendum promise in 2014 is that at least we know what currency we have in this country, the pound. If Scotland were to become independent, it would not have the pound and it could not have the euro, so we do not know what it would be left with. A hole in the air? The groat? There is no answer to that question.
Michael Gove
No.
Let me now deal with the substantive point made by the hon. Member for Ross, Skye and Lochaber, because it is critical. He argues that the only way in which we as Back Benchers and Opposition spokesmen can effectively scrutinise the Government is through impact assessments. That is a grotesque misunderstanding of the opportunities that are available to us in the House through freedom of information requests, parliamentary questions—written or oral—and the diligent use of all the other tools that enable us to scrutinise the Executive. The idea that we are mute and blind until an impact assessment has been published, the idea that there is no relevant tool available to us and no relevant source of information that we can quarry other than an impact assessment—
Michael Gove
No.
That idea is a misunderestimation—if I may borrow a phrase from George W. Bush—of what all of us, as Members of Parliament, are capable of.
That brings me to my final point—
Tom Tugendhat (Tonbridge and Malling) (Con)
My right hon. Friend is expounding entirely on the principle of the House, which is the principle of democracy under the rule of law. He is not arguing, as others have done, for the rule of lawyers.
Michael Gove
I could not agree more, and my hon. Friend’s intervention gives me an opportunity to commend him for the work that he has done to draw attention to the way in which some lawyers have used some legislation to enrich themselves at the expense of those who wear the Queen’s uniform and defend our liberties every day. His work is commendable, and it is an example of what a Back Bencher can do. He did that work without any impact assessments having been published, and without waiting for the Ministry of Defence to act. He did it because he believed in holding the Executive to account, as we all do—and the one thing for which we all want to hold the Executive to account is the triggering of article 50. So if anyone wants to have the opportunity for perennial judicial review, they should vote for these amendments. If they want to earn the scorn of the public by putting pettifogging delay ahead of mandate—
Michael Gove
Yes, it is one of my favourite polysyllabic synonyms for prevarication, procrastination or delay.
Patrick Grady (Glasgow North) (SNP)
I, on behalf of the Scottish National party, would like to speak to new clause 143, on which I hope we will test the will of the Committee later on, to amendment 58, which I tabled, which relates to the European development fund, and the 27 other amendments in the names of my hon. Friend the Member for North East Fife (Stephen Gethins) and other hon. Friends. The SNP tabled a total of 50 new clauses and amendments to this Bill, and I hope that we get a chance to debate as many of those in this group as possible—amendments 47 to 53, 57 to 62, 64 to 77, 79, 80 and 82, as well as new clause 138.
Government Members who have spoken were quite exercised about the possibility of the amendments causing some delay to the triggering of article 50, but I am not entirely sure what that delay might be. I have read the Bill—all 137 words of it—and nowhere in it is there a date for the triggering of article 50. The Bill gives the power to the Prime Minister and the Prime Minister alone—as I said last week, it is a very presidential power, not a parliamentary power—to choose the date on which article 50 is triggered.
Stephen Gethins
My hon. Friend makes a very good point about the new clauses we are arguing for this evening. Is he aware that the Scottish Parliament this evening voted by three to one against triggering article 50, which comes on top of the two to one of Scots who voted against triggering article 50 as well?
Patrick Grady
I am fully aware of that. It reflects the consensus across Scottish society that Scotland should retain its membership of the single market and the fact that it did not vote to leave the EU. The Scottish Conservatives have run a mile from that.
Several hon. Members rose—
Patrick Grady
No, I will not give way yet; we are just getting started.
I might add that in the time that the Scottish Parliament took that vote, as well as votes on several amendments, barely one Member had spoken in this debate. Voting in the Scottish Parliament is far quicker than here; its Members can vote on far more amendments than we ever can, because they do not have the archaic procedures that we have to put up with down here.
Yesterday’s amendment paper had more pages—142—than there are words in the Bill, but today we are down to just 121 pages. The number of amendments that have been tabled highlights the dreadful inadequacies of both the Bill and this scrutiny process. There is nowhere near enough time to consider the massive implications of what Brexit will actually mean and how the Government intend to achieve it, and of course there is still no kind of meaningful information on what they think those implications might be.
Mr MacNeil
A theme is emerging of what Brexit might mean: a plea—I noticed this in the speech of the right hon. Member for Surrey Heath (Michael Gove)—for the EU not to punish the UK. Yet from the same lips all the time comes the threat of a punishment to Scotland if we become independent. These acts and words will not be missed in the 27 member states of the EU—the hypocrisy, the double-edged sword and the brass neck and bare-faced cheek in the UK.
Patrick Grady
I have not responded to my hon. Friend yet.
The Scottish National party—for the record, that is its name, as I think Hansard is probably fed up with hearing—has always understood that our kind of independence is defined by our interdependence and by the role that we want to play in the world, whereas it is increasingly clear that the hard right, Tory Brexit that is being foisted upon us against our will is an isolationist independence—[Interruption.] It is Trumpist, triumphant and narrow nationalism, as I hear my colleagues saying from the Back Benches.
Patrick Grady
No, I still have not even begun to talk about our new clauses and amendments, and I am sure that Members want to hear why it is so important that the Government should publish impact assessments on the machinery of government, which will be profoundly affected by our leaving the European Union.
The Government must give us a benchmark. They must give us their own assessment against which we can measure and test these things so that we can hold them to account. The Chair of the Procedure Committee, the hon. Member for Broxbourne (Mr Walker), under whom I am proud to serve but who is not in the Chamber, has said that we are accountable to our voters—that is absolutely correct. However, the Government are accountable to us, and they have to provide us with the necessary information so that we can hold them to account.
Kwasi Kwarteng
It seems to have taken the Scottish nationalist party six months to realise that a third of those who voted yes in 2014 actually wanted to leave the EU. SNP Members seem completely oblivious to that fact, but I would like to hear what the hon. Gentleman has to say about it.
Patrick Grady
I think that that counts as a minority.
The First Minister herself said on 24 June that we would respect, listen to and understand the people in Scotland who voted to leave the European Union. We never heard anything like that from the Prime Minister about those on the other side. The First Minister’s words were reflected in the compromise position that was published by the Scottish Government. They have moved heaven and earth to try to reach a compromise arrangement with this Government, but their words are still falling on deaf ears.
Patrick Grady
No.
I want to address some of the new clauses and amendments that have been tabled by various factions on the Labour Benches, and I shall focus particularly on the ones relating to Euratom. The exchanges on this subject on Second Reading demonstrated the utter chaos that has gripped this Administration and their predecessor. Euratom’s role is to provide a framework for nuclear energy safety and development. I would have thought that, no matter how much some of the Brexiteers hate the European Union institutions, this one would have been among the least controversial. Surely there must be consensus on protecting us from nuclear meltdowns. Do they not think that that is a good idea? No.
The Command Paper that the UK Government published in February last year on the impact of Brexit made no mention of coming out of Euratom. Nevertheless, we are being taken out of it without any warning and, if the Government will not accept the Labour new clause on this matter, there will be no further discussion about it. I do not remember the subject featuring on the side of buses or in showpiece debates, yet here we are with another ill-thought-out unintended consequence of a Brexit vote that started as an internal ideological battle among Conservative Members and that is going to leave decades of uncertainty in its wake for us all. That is just one example. Each new clause and amendment, from whatever party, that calls for an impact assessment shows the Government’s lack of preparation across the whole suite of policy.
Tom Tugendhat
I should like to ask the hon. Gentleman a small question, if I may. Has he given his constituents an impact assessment of any change that might take place at the next election? Has he prepared them fully and properly for the impact that a change of Member of Parliament might have on them? Or does he trust them to make their own impact assessment—does he trust the people to decide?
Patrick Grady
I am sure that the hon. Gentleman was here for my Second Reading speech last week, so he will know that 78% of my constituents voted to remain in the European Union. I am therefore reasonably confident that their voice is at last being heard. They will make their judgment at the next election, whenever it comes, and I will be happy to live with their decision.
We want to test the will of the House on new clause 143. It tests the Government not only on the practical costs of Brexit but on the hard money, because we know that the financial costs will be high. It is simply not in the interests of the remaining member states for the UK to be better off as a result of Brexit. We have already seen the shocks to the currency market described by my hon. Friend the Member for Badenoch and so on—[Laughter.] I am not quite as good at this as the right hon. Member for Surrey Heath (Michael Gove). We have seen the shocks to the currency market and the revisions that have already happened in the economic forecasts. Withdrawing from the European Union and exiting the single market will lead to an enormous hit on our economy, and new clause 143 calls on the Chancellor to bring forward further revised forecasts and an assessment of the UK’s financial liability to the EU on the completion of the triggering of article 50.
Ian Blackford
We are talking about financial considerations, but this is about the impact on people and we have to think about UK citizens who are living in Europe. At the moment, they are entitled to healthcare cover and to a UK state pension that will be uprated, but there is no certainty that that will continue post-Brexit—the UK does not pay pension increases in countries with which it does not have a reciprocal arrangement. This is also about the EU citizens who may return to France, Germany, Spain or wherever and be caught up in the same trap, because while they paid national insurance here, the UK might not have a commitment to uprating pensions. Those are the sorts of issues that the Government must provide certainty on.
Patrick Grady
Indeed. That is covered in amendment 72, in which we ask the Department for Work and Pensions to provide an assessment. I hope that there will be time for the House to discuss that measure in more detail later on.
Patrick Grady
No, I want to make a little progress.
We have seen the leaked reports of the Government’s assessment that a hard Brexit could cost the UK economy up to £66 billion a year—9.5% of GDP—if we revert to WTO terms. The hon. Member for Bishop Auckland (Helen Goodman), with whom I serve on the Procedure Committee, said earlier that analysis in the Financial Times shows that the cost of simply leaving is up to €20 billion due to the shared assets that we are a part of, and that there are up to €300 billion of payment liabilities that need to be settled in the negotiations. Even after all that, there will be ongoing costs, as well as funds that we might wish to continue to contribute to. That is covered in amendment 58, which is about the European development fund. The European development fund is the main method for providing European community aid for development co-operation in African, Caribbean and Pacific countries and the overseas countries and territories of EU member states.
Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)
Will my hon. Friend give way?
Patrick Grady
I am happy to give way to my hon. Friend, who sits on the International Development Committee.
Dr Cameron
Does my hon. Friend agree that the European development fund is crucial not only to achieving our commitment to the sustainable development goals, but to providing long-term sustainable funding for projects, rather than letting them fall at the first hurdle?
Patrick Grady
Absolutely. The European development fund saves and changes lives in developing countries. I would have thought that there would be a little consensus—[Interruption.] If the hon. Member for South West Wiltshire (Dr Murrison) wants to talk to me about the EDF, I am happy to take an intervention.
Dr Murrison
Would the hon. Gentleman’s constituents rather that development aid from this country was spent by the UK and overseen by the Independent Commission for Aid Impact, or spent by the EDF, which has none of that oversight?
Patrick Grady
The EDF is highly respected around the world for its effective use of international development aid. Indeed, I have pursued that with Ministers. I have received equivocal answers, but they have recognised from time to time that the EDF is actually quite an important part of the suite of European institutions and that we do make important contributions. If those contributions were ripped away, that would have a devastating effect on the EDF, so we must explore this area and understand it.
Over the years, the UK has contributed around £10 billion to the EDF, which has been a crucial component, as my hon. Friend the Member for East Kilbride, Strathaven and Lesmahagow (Dr Cameron) says, of our meeting the 0.7% aid commitment. According to the Government’s timetable, Brexit will happen before the end of the current 2020 commitment period, so what will happen after Brexit? The other important thing about the EDF is that it is one of the main instruments for providing development capacity to British overseas territories, so how will they be affected? What plans are being made for them? We are trying to test such things through the amendments.
The Government have indicated from time to time that they ought to continue funding the EDF, so perhaps there are European institutions that they will have to continue to fund and support, and to have some kind of retained membership of. That makes me wonder. We hear about hard Brexit and soft Brexit, but perhaps this is some sort of hokey-cokey Brexit whereby we leave everything and then have to start joining things again: “You put your left wing in; Your right wing out; In, out, in, out”—I do not want to think about anything being shaken all about.
Amendment 49 calls for a report from the Secretary of State for Environment, Food and Rural Affairs on the level of agricultural maintenance support grants beyond 2020.
Alan Brown (Kilmarnock and Loudoun) (SNP)
Scotland is already losing out on more than £230 million of EU funding that was supposed to go to Scottish farmers. The UK Government promised a review in 2016, but they have not carried it out. It is critical that we have an impact assessment that tells Scottish farmers what will happen so that they can plan for their future.
Patrick Grady
There is absolutely no certainty for Scotland’s farmers, or indeed for farmers across the whole United Kingdom. During the EU referendum campaign, the then Secretary of State for Environment, Food and Rural Affairs, the right hon. Member for South West Norfolk (Elizabeth Truss), made it clear that there would be a guarantee of capital and funding beyond 2020. Then, at the Oxford farming conference last month, the current Secretary of State completely changed her tune. Such confusing and contradictory comments about the long-term future show precisely why we need the Government to spell it out in far more detail than they have in the White Paper. Of course, we particularly want to know whether the agriculture powers currently exercised by the European Union will come to the Scottish Parliament. The principle is clear in the Scotland Act 1998: if something is not reserved, it is devolved. Therefore, everything that the EU is currently doing on this should go to the Scottish Parliament.
Patrick Grady
If the hon. Lady agrees with that, I am happy to hear from her.
Mrs Main
I will make my own point, thanks very much. Can the hon. Gentleman give the Committee some idea of how long all these impact assessments will take? How much time does he expect the House to devote to debating them and the statements? What other business will not happen because we are debating all the spurious impact assessments that he thinks should occupy the House 100%?
Patrick Grady
With the greatest of respect, we voted against the referendum Bill. We did not think the referendum should happen. When it became clear that the referendum would happen, we said that the debate should last longer. In Scotland we had two full years to debate the consequences of independence, and the voters heard both sides of the debate and made up their mind. We had less than six short months between the announcement of the date and the referendum—[Interruption.] I am hearing that the Secretary of State for Brexit backed a longer debate. There should have been time before the referendum. As I said at the start of my speech, the White Paper says that article 50 will be invoked at the end of March, but the Bill does not say that. It is entirely in the gift of the Prime Minister, and she might change her mind. There is no mechanism to hold her to account for that.
Stephen Gethins
My hon. Friend makes an excellent point. The SNP obviously backed a longer debate, and I am delighted that the Secretary of State for Exiting the European Union did, too. A little more scrutiny might not have gone amiss.
Patrick Grady
Precisely. The Brexiteers’ whole point was about parliamentary sovereignty and how this House would take back for itself the opportunity to make decisions, so why are they now afraid of our having those opportunities?
Mr MacNeil
May I provide an answer to the hon. Member for St Albans (Mrs Main)? The impact assessment would take slightly longer than jumping off a cliff.
Patrick Grady
That is a good point, well made. As I said at the start of my speech, we need the facts in front of us.
Patrick Grady
I will make a little progress because, as I said, we have a number of important amendments to discuss, but my hon. Friend can try to intervene later.
Amendment 51 calls for a report on the impact of UK withdrawal on Scottish seaports. The problems caused by Brexit that are facing Scottish seaports are expensive and complex. Concerns for the maritime industry surround general policy areas such as employment law, immigration, border controls and contract law, as well as transport-specific areas such as freedom to trade, safety, the environment, tonnage tax and security. The White Paper offers only more uncertainty.
The UK Government’s stated approach to immigration post-Brexit may create an increased need for border activity at Scottish seaports, and the Government’s preferred arrangements for trading post-Brexit—out of the EU customs arrangements—will necessitate additional customs checks on exports and imports at seaports, and will affect trade volume at seaports, so the Government have to mitigate that uncertainty by publishing a full impact assessment of those complex issues for Scottish seaports before triggering article 50.
Amendment 52 calls for an assessment of financial implications for charities, on which I have a certain amount of experience from my international development portfolio. International development charities across the United Kingdom are already feeling the impact of Brexit and the currency fluctuations. Money that they had raised—money that the UK public had voluntarily donated—is now worth less as a direct result of the Brexit decision, which is having an impact on the day-to-day lives of people in developing countries to whom charities had pledged money that is now not worth what it was when the pledges were made. I hear nothing from the UK Government saying that they want to make up the difference or give the charities any kind of support. UK charities generally receive some £200 million a year from the social fund, through EU structural funds and from the regional development fund.
Dr Cameron
Is it not extremely concerning that the chief executive of the UK-based international charity World Child Cancer stated that the fall in the pound had resulted in a 9% to 13% cut in its programme funding?
Patrick Grady
I agree entirely. All of us who deal with stakeholders in the third sector will hear stories such as that time and time again. It probably explains why research published by the Association of Chief Executives of Voluntary Organisations, which represents more than 3,000 employees and 15,000 volunteers, revealed that its charity chief executives were increasingly worried about the future. Half of those surveyed receive funding from the EU and 30% confirmed that indirect funding was at risk. As I have said, in the immediate case we have seen the devaluation of currency being spent by those charities.
Amendment 53 calls for a report on the relationship between the Channel Islands and the EU. The Channel Islands are not a member of the EU, but they have access to the single market and now face being denied that by a hard Tory Brexit. That is why our amendment seeks a report that sets out the full implication of the relationship between the Channel Islands and the EU, and the impact that Brexit will have. That is vital because there will be a serious impact on many key Channel Islands industries, including finance and fisheries. Again, that is an example of why we need these impact assessments.
Amendment 57 calls for a revised strategic defence and security review. The last SDSR was based on the 2015 national security risk assessment, which took place before the European referendum and did not consider any post-Brexit scenarios. As such, it is no longer fit for purpose. The SDSR makes no mention of the EU’s common security and defence policy, whereas the White Paper outlines existing UK participation in the CSDP and expresses the intention to continue that co-operation post-Brexit. Again, we see the in and out of the Tories’ Brexit.
Ian Blackford
My hon. Friend is giving a damning indictment of the UK Government’s lack of preparedness for Brexit, but this is also about what will change. We have heard about agriculture and fisheries, but the fact remains that Europe has delivered for Scottish crofters and Scottish farmers, and one institution that we have not been able to depend on is the UK. The EU has given the UK €233 million of convergence uplift funding, which was primarily to go to Scottish crofters and farmers, yet we have only got 16% of it. Who should we be trusting? Should we be trusting Europe or should we be trusting the UK Government to deliver for our crofters and farmers
Patrick Grady
That is a fair point. We hear Government Members saying, “Where did that money come from? It came from UK taxpayers”, but my hon. Friend is exactly right in what he says. The road I cycled up to school every day, in Inverness and in the country—this was when I was slightly younger than I am now—was built and paid for with EU money. There is no way on God’s earth that Thatcher’s Government would have spent that money on that road, which shows why people in Scotland voted to remain in the EU.
Alan Brown
My hon. Friend is highlighting some issues, but I wish to get back to the SDSR. The National Audit Office has identified that a key risk to the strategic plan is fluctuations in the pound because of pricing against the dollar. If the NAO is highlighting that as an issue, should the Government not be looking at it, rather than having a Secretary of State who stands at the Dispatch Box and tells us, “Everything is okay; we made contingency plans”? We need to know what the contingency plans are and what the impact will be.
Patrick Grady
Of course we do, which is why we tabled all these amendments. We were asked why we were doing that and what we were trying to achieve, but my hon. Friend is making the case on that very clearly.
I have already spoken about amendment 58, so I shall move on to amendment 59, which calls for a report on the medium-term economic forecast in the event of the UK leaving the single market. Again, Scottish National party Members have made points about the dangerous long-term and medium-term economic realities of a hard Tory Brexit. We know that the OBR forecast said:
“we asked the Government in September for ‘a formal statement of Government policy as regards its desired trade regime and system of migration control, as a basis for our projections’. The Government directed us to two public statements by the Prime Minister that it stated were relevant”.
Given the far-reaching and devastating consequences that leaving the single market would have on the economy, teamed with the lack of detail given to the OBR, it has to be the Treasury’s responsibility to publish a medium-term forecast.
George Kerevan (East Lothian) (SNP)
It is clear that even in the short term the fall in the value of the pound is triggering significant inflationary pressure across the British economy, which will hurt ordinary people in their wage packets, with an impact on industrial costs, in a way that was wholly avoidable.
Patrick Grady
My hon. Friend is absolutely right. We see no action from the Government whatsoever, other than to pretend that everything is bright and breezy. We are witnessing a bit of a false dawn.
Carol Monaghan (Glasgow North West) (SNP)
In the longer term we have other issues, because many of the key shortages in science, technology, engineering and maths skills are filled by EU nationals, who simply are not getting the guarantees they need either to stay in the UK or to come here in the first place.
Patrick Grady
My hon. Friend is absolutely right. She and I share a boundary with the University of Glasgow and we know the vital contribution it makes, not only to the city but to Scotland’s economy as a whole. Higher education institutes throughout the country are expressing those concerns.
Pete Wishart
My hon. Friend is making a fantastic speech, exposing the real difficulties at the heart of this bad Tory Brexit. I am trying to figure out exactly what is going on with Conservative Members. Perhaps they are opposing the economic impact assessments because they know the true nature of Brexit and the damage it will deliver. Does he agree that that seems to be the underlying reason why they are so opposed to having just a short glimpse of what Brexit will do to this country?
Patrick Grady
My hon. Friend is absolutely right. We have every right to continue to question them; after all, as I said earlier, this is what they wanted. They wanted Parliament to regain its sovereign status.
Michael Gove
As ever, the hon. Gentleman is making an impressive speech, but I should say one thing—
Michael Gove
I should, actually—just the one. Why is it that Scotland now has to import scientists and engineers when in the 19th and early 20th century we used to export them? Is it anything to do with the drop in international league table rankings for science and mathematics that has occurred under the Scottish National party’s stewardship of the education system?
Patrick Grady
First, I am not convinced that the words “import” and “export” are the right ones to use when we are talking about human beings—some of the most capable and talented human beings in the world. [Interruption.] Secondly, I hear my hon. Friend the Member for Motherwell and Wishaw (Marion Fellows), who is on the Education Committee, saying, “So is the rest of the United Kingdom.” Finally, we want to welcome people to Scotland. If the Government want to devolve immigration policy to us as part of the Brexit process, they should feel free to. As has been pointed out many times in these debates, the right hon. Gentleman himself has said that immigration policy should come to Scotland so that we can attract the brightest and the best, and we are not afraid to do so.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
Having grown up in Inverness, my hon. Friend will remember the Kessock bridge well. When people come over it now, they can see the shining example of the new University of the Highlands and Islands campus there. Thanks to £200 million-worth of EU structural funds over the past 20 years, we have been growing our own scientists and academics in the area. Does he agree that it is absolutely scandalous that up to 2022 an estimated £19 million will be lost, with no impact assessment?
Patrick Grady
My hon. Friend is absolutely right. This is exactly what we are trying to achieve.
Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)
In response to the right hon. Member for Surrey Heath (Michael Gove), I would say that it was because of the failure of UK economic policy that after my brother graduated as a scientist he was forced to emigrate to Canada. He eventually became the chairman of the OECD science and technology committee and helped to write the science and technology policy for the free South Africa, yet the failure over here forced him to emigrate.
Patrick Grady
My hon. Friend makes an absolutely valid point.
Amendment 61 calls for a revised national security strategy. The existing national security strategy is based on a 2015 assessment that took no account of Brexit—[Interruption.] I am not sure what Government Members are so concerned about. It is completely legitimate for Opposition Members to table amendments to the Bill and it is perfectly right and proper that we have the opportunity to debate them.
Philip Boswell (Coatbridge, Chryston and Bellshill) (SNP)
My hon. Friend has mentioned a long list of issues that are not being properly scrutinised in this rush to Brexit. The Government’s White Paper was hastily prepared, and in haste, we make mistakes, as conceded by the right hon. Member for Surrey Heath (Michael Gove). Does my hon. and most European Friend know how to spell Liechtenstein?
Patrick Grady
I will give way to the hon. Lady in just one second. [Interruption.] Right, okay.
Helen Goodman
Does the hon. Gentleman think that perhaps the Procedure Committee should have a look at the practice of filibustering, as there are many hon. Members who want to make important speeches?
The Chairman of Ways and Means (Mr Lindsay Hoyle)
Order. The hon. Gentleman is speaking. I know that there has been some latitude, but I also know that he wants to get back on the subject of impacts, and that is where we are going now. Let me just say that there are seven other speakers.
Patrick Grady
The short answer to the hon. Lady regarding the Procedure Committee is, yes, I do believe that this House should introduce rules against filibustering, and, as soon as that happens, we will be happy to abide by them.
On the point about Liechtenstein, I do know how to spell it, but I will not find it by looking at page 54, chart 9.3 of the Brexit White Paper. Amendment 62 calls on the Chancellor to publish an assessment of future payments to the European Union. It is similar to new clause 143, which we want to push to a vote later on this evening, so some of the points should have been covered already.
Amendment 64 calls on the Secretary of State for Education to publish an impact assessment on her Department’s responsibility in this area. We have already heard from some Members about the serious implications regarding the ability of our universities to attract talented researchers and students in the event of the UK leaving the European Union. Figures for 2014-15 show that there were 13,450 full-time equivalent EU students studying for undergraduate degrees at Scottish universities. Frankly, almost every single one of them will have been shocked and saddened by the result on 23 June. None the less, they have appreciated the warm welcome and reassurances that have been provided to them by academic institutions up and down Scotland, by the Scottish Government and by the friends, neighbours and families who live in their cities.
Carol Monaghan
I thank my hon. Friend for giving way once again. One of the uncertainties faced by EU nationals wanting to come and study in the UK post- Brexit is what fee structure will be imposed on them, and absolutely no answers have been given on that.
Patrick Grady
My hon. Friend is absolutely correct. Again, we will continue to push the Government on that. I hope that the Minister will have some time to respond to some of these important points. I have spent a lot of time in exchanges with him in Westminster Hall, which perhaps should be renamed “Brexit Minister Hall” in due course once the Brexit process has been completed.
Michael Gove
Will the hon. Gentleman enlighten us? Has any impact assessment ever been undertaken by the Scottish Government of the impact of their education policies on participation in higher education, particularly given that the most recent statistics demonstrate that the Scottish Government’s policies—
The Chairman
Order. The problem might have come from somewhere else in the Chamber, but I do not want it to be from the right hon. Gentleman. You have been around this Chamber for far too long and you know that you are way outside scope. I think that I preferred you on the Front Bench than on the Back Bench.
Patrick Grady
I think the Prime Minister might disagree with you on that, Mr Hoyle.
I want to talk more about education and health before I start to wind up. There are elements of education that are shared with the European Union. Will they also be devolved fully to the Scottish Parliament? That also applies to some aspects of health. Leaving the EU will have serious implications for the workforce of our health service. According to the Trade Union Congress, just under 50,000 citizens from the European economic area work in the NHS—9,000 doctors, 18,000 nurses, and the list goes on. Those people are a vital source of skills and experience, plugging gaps left by the underfunding of training places, especially in England and Wales, in recent years. This again is where the failure of the UK Government to guarantee the rights of EU nationals to remain and to live and work in the UK after we leave the EU is causing uncertainty and disappointment.
The UK Government have also yet to set out how they will deal with cross-border health issues after leaving the European Union.
Stuart Blair Donaldson (West Aberdeenshire and Kincardine) (SNP)
I thank my hon. Friend for giving way on that point. Many people have received medical treatment abroad under the European health insurance card. That includes me, and I have the scars to prove it. Does he share my concern that we may no longer have access to the card after Brexit?
Patrick Grady
My hon. Friend makes a crucial point, which he was right to raise eloquently in the House in the run-up to the European Union referendum—[Interruption.] I hear dissent from Labour Members, but the reality is that these are the uncertainties and confusions. Nobody seems to know exactly the right answer, which is why we continue to press our amendments.
Neil Gray (Airdrie and Shotts) (SNP)
One impact assessment that has been researched is by End Child Poverty. Its report “Feeling the Pinch” has assessed that prices are due to rise by 35% between 2010 and 2020, which will have a massive impact on the exponential rise in child poverty. Does my hon. Friend agree that impact assessments like that—of the impact on families and children—are so important, and that is why we table our amendments?
Patrick Grady
Absolutely. As I said at the beginning of my speech on these important amendments that we want the Committee to debate in full, the Brexit debate was for too long an ideological debating society game being played on the Government Benches. As the reality hits home, we are now beginning to realise the kind of consequences my hon. Friend mentions. It is important that as many of the powers and as much of the budget that are relevant and appropriate come to the Scottish Parliament as part of the Brexit process so that we can protect and defend the rights that people have enjoyed under the European Union and that are now at risk. That is why we continue to press for impact assessments.
Amendment 66 is important because it calls for the Secretary of State for Environment, Food and Rural Affairs to publish an impact assessment on her Department’s responsibilities, which, of course, include the common fisheries policy.
Patrick Grady
Yes. It was decided in 1972 that the policy was somehow expendable, as my hon. Friend the Member for North East Fife (Stephen Gethins) is saying.
Patrick Grady
I will give way to my hon. Friend, who has a lot of experience.
Mr MacNeil
I represent probably the only constituency to reach 200 miles of the exclusive economic zone. Is there not a case not just for putting Scotland in control of fisheries, but for giving the Hebrides and island groups some power over them? We should certainly not leave them in charge of the guys in Westminster who sold them down the river once and, given this White Paper, are looking to sell them down the river yet again?
Patrick Grady
My hon. Friend is absolutely right. That is why the fishermen and women of Scotland will be particularly concerned when the Government talk about a UK-wide approach. When the Prime Minister makes passing references to Spanish fishermen, everyone knows what she is signalling. Fishermen should not be on the table as some kind of bargaining chip. The UK Government must not sell out our fishermen as they did in 1972. They must tell us now what access arrangements they will seek to negotiate, and conduct a full impact assessment for our fishing sector.
Leaving the EU will create significant uncertainty within the agricultural sector, and the UK Government have to produce an assessment of that. It is particularly true in the case of the food and drink industry, as I am sure that hon. Members who were at the briefing from people in the food and drink industry earlier today would want to know. Some 69% of Scotland’s overseas food exports go to the European Union.
Calum Kerr (Berwickshire, Roxburgh and Selkirk) (SNP)
I share my hon. Friend’s passion for the rural economy. Would he be surprised to learn that when an audience of 800 mainly English farmers at the Oxford farming conference were asked how many had confidence that DEFRA could deliver in the Brexit environment, the only hand that went up was that of the Farming Minister?
The Chairman of Ways and Means (Mr Lindsay Hoyle)
If we kept that rule going, nobody would speak on either side.
Patrick Grady
The reality is that my hon. Friends have a very important role in representing the interests of their constituents. There is a reason we tabled this many amendments and why we want to partake in the procedures of this House. We have been sent down here to do a job: to scrutinise this Government and hold them to account, as the official Opposition have been almost singularly unable to do so.
Alan Brown
Is it not the case that when the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith) was on his feet, he was begging for interventions? He did it at least five times, and his hon. Friends were all laughing at the time.
The Chairman
Order. We are not getting into a debate about that. I think Mr Grady wants to come to the end of his speech, because he recognises that seven other people are waiting.
Patrick Grady
You are absolutely right, Mr Hoyle. As we know, six of my hon. Friends were waiting to be called last night, and they were unable to be called, because some people chose to vote for the programme motion and not to allow sufficient time. So I think it is important that I remain within order and that I speak to the SNP provisions in my name and those of my—
The Chairman
Order. If I was keeping everybody in order, your speech would have finished 15 minutes ago. We have latitude for all sides here tonight, so let us see how we go, but I do hope that you will recognise that others are waiting.
Margaret Ferrier (Rutherglen and Hamilton West) (SNP)
Does my hon. Friend agree that an impact assessment on the justice system is crucial because our membership of Europol, Eurojust, the European arrest warrant and other key areas of co-operation on security matters remains at risk following a hard Tory Brexit?
Patrick Grady
That is exactly what amendment 67 calls for. Members can see that my hon. Friend has read all our amendments and is prepared to debate them on the Floor of the House. Justice issues are particularly important. Where will the Government be on the European convention on human rights? Where will their Bill of Rights be? How will all of that interact with the instruments of justice in the European Union that my hon. Friend speaks of?
Amendment 68 calls for the Home Secretary to publish an impact assessment on her Department’s responsibilities. We heard about immigration earlier. Is that responsibility going to be devolved to the Scottish Parliament, as the right hon. Member for Surrey Heath called for during the campaign? Our membership of Europol, our participation in the European arrest warrant and other key areas of co-operation on security remain at serious risk following Brexit, and that is why we need an impact assessment on the role of the Home Office.
Likewise, amendment 69 calls for the Secretary of State for Defence to publish an impact assessment on his Department’s responsibilities. As I said on Second Reading, we are at risk of being left with Trump, Trident and a transatlantic tax treaty. At this rate, Trump and Trident will be the beginning and end of the UK’s security policy.
Lucy Frazer
Does the hon. Gentleman have a timetable for how long it would take to conduct all these impact assessments?
Patrick Grady
I am absolutely certain that these impact assessments can run in parallel, but the hon. and learned Lady touches on an important point, which goes to the heart of all these points about impact assessments and the capacity of the UK Government to deal with all of this. There is an impact on the whole machinery of government—
Patrick Grady
If the hon. Lady wants to talk to me about the machinery of government, I will be happy to take her intervention.
Nadine Dorries
Does the hon. Gentleman know exactly how much these impact assessments would cost the taxpayer?
Patrick Grady
That is exactly the point. The whole machinery of government is going to be tied up for years and years—this was supposed to be about taking back control. The reality is that, if the Government do not accept these amendments and do not do these things before article 50 is triggered, they will have to do them afterwards. They are simply going to have to figure out how Brexit impacts on every single Government Department. The whole machinery of government will have to be reformed—it stands to reason. So they can do what we propose before triggering article 50 and have some kind of certainty, or they can do it afterwards and the complete chaos can continue.
Patrick Grady
I think we need to continue looking at the various proposals.
Patrick Grady
I think we have heard enough from the former Justice Secretary for now.
The point made by the hon. Member for Mid Bedfordshire (Nadine Dorries) is exactly what amendment 70 touches on. It calls on the Chancellor to publish an impact assessment on his Department’s responsibilities. The responsibility of the Treasury will change quite significantly. As we heard from the Brexiteers throughout the campaign, the Treasury currently channels all this money into the European Union. It is going to have to reabsorb that money and have the structures to apportion it back out to lots of different Government Departments.
Deidre Brock (Edinburgh North and Leith) (SNP)
My hon. Friend is doing a fantastic job of outlining a series of important areas that are likely to be greatly impacted on financially by the UK leaving the EU. Does he agree that the assessments we are calling for are the very least one should expect from any responsible Chancellor of the Exchequer?
Patrick Grady
My hon. Friend is absolutely right. An impact assessment, by definition, is more than simply something printed on the side of a bus.
Mr MacNeil
The argument put forward by the hon. Lady from England somewhere—the hon. Member for Mid Bedfordshire (Nadine Dorries)—is quite strange. It is akin to the person who says, “Given the cost of buying a map, isn’t it far better that we stumble around in the dark?” That is the argument against impact assessments: do not buy a map, stumble in the dark.
Patrick Grady
Exactly.
Talking of maps, my hon. Friend brings me to amendment 71, which calls for the Foreign Secretary to publish an impact assessment on his Department’s responsibilities. We need clarity on the working relationships and the division of labour between the Foreign and Commonwealth Office and the Department for Exiting the European Union, especially as regards the UK’s permanent representation at the European Union, which we have to assume will continue in some form.
Patrick Grady
Does the hon. Gentleman welcome the fact that UKRep will probably have to get bigger? Does he welcome more UK bureaucrats in Brussels?
Mr Rees-Mogg
I hope that UKRep will be very slim. The hon. Gentleman is surely now suggesting the most pointless of all his impact assessments, because the Department for Exiting the European Union will cease to exist at the end of the process, and therefore having an impact assessment on what it might do before the process has ended is otiose beyond measure.
Patrick Grady
I am afraid that the hon. Gentleman has clearly not read the amendment. The amendment calls for the Foreign Secretary to publish an impact assessment that will include, but not exclusively, his relationships with the Department for Exiting the European Union.
Amendment 72—perhaps the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith) will want to intervene on this—calls on the Secretary of State for Work and Pensions to publish an impact assessment on his responsibilities. The Scottish Government are seeking to give people in Scotland reassurances that they are allowed live and work here.
Patrick Grady
No, I am not giving way.
One of the key agreements of the UK’s renegotiation in earlier years was that the UK would be able to establish a four-year period before non-UK EU nationals have access to in-work benefits such as tax credits, child benefit and housing benefit. It is unclear whether the new deal that is done with the EU will enable the UK to impose such restrictions. The Scottish Government did not approve of the proposal and would want to seek different arrangements if they could. Again, there is a question about whether these powers will be devolved to the Scottish Parliament. There were only two pages—
Patrick Grady
No, I am not giving way to the right hon. Gentleman.
The token total of two pages on securing rights for EU nationals is telling about the UK Government’s real priorities.
Amendment 73 calls for the Secretary of State for International Trade to publish an impact assessment on his Department’s responsibilities. Trade policy is currently under EU competence, and leaving the EU single market and customs union would mean that it fell under the responsibility of the UK Government. The Secretary of State therefore needs to outline how his Department is going to make use of its new competence over trade policy.
Patrick Grady
If the hon. Gentleman can tell me that, I will be happy to hear from him.
Kevin Foster
The hon. Gentleman is certainly giving a speech that is great in length. On amendment 73, would he suggest that the assessment by the Department for International Trade should include the potential impact of having to deal with Scotland outside the UK single market as an international trade partner?
Patrick Grady
Conveniently, we have heard from the Prime Minister in recent days about her support for friction-free travel and friction-free trade across the islands of the United Kingdom, so I have every confidence that when Scotland becomes an independent country—
Mary Creagh
On a point of order, Mr Hoyle. I wonder whether you can advise me. There are seven other hon. Members waiting to speak in this debate, including me, as a Select Committee Chair wanting to share with Members the scrutiny of our cross-party Committee. Does the time limit for this debate not indicate that important assessments on areas such as the environment and agriculture will not be heard by the Committee tonight? Can you send a message to the Lords to make sure that they do the job that this House is incapable of doing?
The Chairman of Ways and Means (Mr Lindsay Hoyle)
We can enter into an argument about it, but the House decided on a programme motion, and unfortunately some people are a victim of that.
Mr MacNeil
Yes. I seek your guidance, Mr Hoyle. Is it in order for Members who abstained on the programme motion to complain about the programme, when they have taken no part in it?
The Chairman
I knew that my instinct was correct, and that that was not a point of order.
Patrick Grady
I take the point that the hon. Member for Wakefield (Mary Creagh) is making, and I believe she is indicating that she joined us in the Lobby to vote against the programme motion. I agreed with the point made by my friend from the Procedure Committee. We are all in favour of reform of this House. As it is, we will use the procedures of the House to hold the Government to account.
Amendment 74 calls for the Secretary of State for Business, Energy and Industrial Strategy to publish an impact assessment on his Department’s responsibilities. The vote to leave the European Union has plunged our business and energy sector into further uncertainty.
Nadine Dorries
On a point of order, Mr Hoyle. The Scottish National party has now been here for almost two years. That is sufficient time to have learned some of the manners and the protocol of the Chamber, which includes referring to Members by their—
The Chairman
Order. As a member of the Panel of Chairs, you know that you are not making a point of order.
Patrick Grady
That is an interesting point. The hon. Lady is sitting where a couple of other Members are accustomed to sit on Friday afternoons, and we have watched them rise and talk out private Member’s Bill after private Member’s Bill. So I will not hear Members of the Conservative party complaining about the legitimate use of the procedures of the House. We have tabled amendments. We went up to the Table Office and lodged amendments in precise accordance with the rules of the House, and we have every right to stand here and explain to the House the importance of our amendments.
Patrick Grady
If the hon. Gentleman wants to talk to me about my amendments, I will be happy to listen to him.
Mr Rees-Mogg
I entirely agree with the hon. Gentleman. He is completely right to use the procedures of the House as they allow, and, if he carries on like this, he will reach the heights attained by my hon. Friend the Member for Shipley (Philip Davies). [Interruption.]
Patrick Grady
I hope I am not hearing applause from Conservative Members, because that would be a breach of order.
It is important that we consider our amendment about BEIS, because the vote to leave the EU has plunged the business and energy sectors into further uncertainty.
Alan Brown
I reiterate that we are speaking to the amendments that we have tabled. One of the better productions from the UK Government is the Green Paper “Building our Industrial Strategy”, published by BEIS. The Green Paper highlights the challenges in skills gaps, in productivity and in research and development. It does not mention the challenge of leaving Europe, and it does not mention that leaving Europe is even an opportunity. That proves the need for an impact assessment from BEIS—
The Chairman
Order. Let us be a little bit fair. We understand what is going on. In the end, interventions have got to be shorter for Mr Grady to get towards the end of his speech.
Patrick Grady
I outlined at the start of my speech the amendments that we tabled. My hon. Friend makes a good point. We have spoken about the uncertainty caused by Euratom, which was, I accept, covered in important detail by Labour Members.
Chris Stephens (Glasgow South West) (SNP)
Is not amendment 74 the most important one, because it includes workers’ rights? Many of us view the Government’s attitude to workers’ rights with great suspicion.
Patrick Grady
Absolutely; indeed, an entire new schedule on workers’ rights has been tabled.
Amendment 75 calls on the Secretary of State for Communities and Local Government to publish an impact assessment on his Department’s responsibilities. Local government throughout the UK receives a host of funding from the European Union, not least the structural funds that we have heard about many times.
Alison Thewliss (Glasgow Central) (SNP)
Does my hon. Friend agree that with so many regulations being implemented by local government in areas such as food protection and waste disposal, local government needs to know what form those will take once we leave the EU?
Patrick Grady
My hon. Friend is absolutely right, and that is why we have tabled amendments calling for impact assessments.
Amendment 76 calls on the Secretary of State for International Development to publish an impact assessment on her Department’s responsibilities. Again, we need clarity and a full commitment to 0.7% of gross national income going to overseas development. That is similar to the amendment in my name, amendment 58, which I have already spoken about.
Amendment 77 calls on the Secretary of State for Culture, Media and Sport to publish an impact assessment.
Patrick Grady
No—which is exactly what the right hon. Gentleman said to me on Second Reading.
The UK Government need to clarify what involvement the EU’s digital single market, which is vital for supporting highly paid jobs in an exciting growth sector, will have. They have been completely silent on the digital single market, which will be one of the most important sectors of our economy—like tourism, which also comes under the remit of the DCMS. Approximately 20,000 EU nationals work in Scotland’s hospitality sector—12% of the total. What will be the impact on them?
Amendment 79 calls for the Chancellor to publish a report on matters relating to the pensions of UK nationals living and working in the European Union. Again, that is an area of great uncertainty, and I have heard about it from my own constituents. Some 400,000 UK nationals living in the EU receive a pension from the United Kingdom Government, and they are incredibly concerned about the impact of Brexit. The Government have done nothing to reassure them.
Amendment 80, one of the most important, calls on the Government to publish an equality impact assessment. We heard earlier from the hon. Member for Streatham (Mr Umunna) about the whole range of minority and interest groups in our society—faith groups, LGBT groups and so on—that are completely absent from the UK Government’s White Paper. That is why it is important that we hear about them in an impact assessment.
Kirsten Oswald (East Renfrewshire) (SNP)
Does my hon. Friend agree that the Government’s failure to include an equality impact assessment is very distressing? It is completely contrary to their words of support for equality, which are so often let down by their actions.
Patrick Grady
Of course. Equalities are at the heart of the European project, which the Brexiteers have wanted to rip us away from.
Amendment 82 calls for a regional and national economic impact assessment.
John Mc Nally (Falkirk) (SNP)
Why do we need an impact assessment? Well, right now chemical manufacturers and importers from non-EU countries are using the UK as a base from which they can guide chemicals through the REACH programme through the appointment of a UK-based only representative. When the UK leaves the EU, only representatives will no longer be able to be based here. Does my hon. Friend agree that that will incentivise—
Patrick Grady
It will not surprise the House to hear that I entirely agree with my hon. Friend. The single market has allowed Scotland’s economy to flourish over all these years, and that is now at stake in a hard Tory Brexit.
Finally, new clause 138 addresses trade agreements. We have heard the FCO and the Department for International Trade boasting in public about new trade agreements that the UK will sign after it leaves the EU. Of course, it cannot sign them until it has left. That is why the Government have to be transparent and report on which trade agreements they are working on and give details on the nature and terms of those deals. It is crucial that the UK Government inform and consult Parliament in their ongoing trade talks and allow scrutiny throughout the process.
Mr MacNeil
Of nearly 200 members of the United Nations, only six states are outwith a regional trade agreement. The UK is to become the seventh, joining the likes of Mauritania and East Timor. Does my hon. Friend share my concerns and those of the chemical industry about where that leaves us and everybody else involved? The UK is going headlong towards a cliff in joining countries as small as those.
Patrick Grady
My hon. Friend is absolutely right. I hope that by examining in detail these vital new clauses and amendments tabled by Scottish National party Members, the Government will begin to understand how seriously we are taking this issue.
Stephen Gethins
My hon. Friend has made excellent points about the amendments and about how many there are. Does that not underline the woeful lack of time given to this entire process in respect of article 50?
Patrick Grady
Absolutely. As has been pointed out, we had more time to discuss the Scotland Bill. That will now probably not be the last legislation on Scotland; I see that the Secretary of State for Scotland has taken his place. He will probably have to steer through another Scotland Bill during this Parliament as a result of Brexit, to give us all the powers he promised he would.
This is only the beginning. The Government want to bring forward the great repeal Bill, increasingly known as “the great power grab”. They must be willing to stand up to the scrutiny of the House. We have been sent here to do a job, and that is what we have done this evening with our amendments. That is what we will continue to do during the passage of this Bill and all the future legislation that comes with Brexit. [Interruption.]
The Chairman
Order. Let us move on, and let us keep going. I call the Minister.
The Parliamentary Under-Secretary of State for Exiting the European Union (Mr Robin Walker)
What a remarkable debate this has been. I congratulate the hon. Member for Glasgow North (Patrick Grady) on speaking for 58 minutes and for the ingenuity with which he made sure that the Committee heard so many Scottish voices. It will be clear to those who read the record that the voice of Scotland has been heard loud and clear in scrutinising this Bill.
I congratulate the hon. Member for Greenwich and Woolwich (Matthew Pennycook) on making a clear and concise speech. Indeed, other hon. Gentlemen in the Chamber could have learned from his conciseness.
Mr Walker
I will come back to the hon. Lady later, because I suspect she wants to address environmental issues and I will come to those in my speech.
Our programme of analysis is important in enabling us to seize the opportunities and in ensuring that our EU exit is a smooth and orderly process. As we discussed yesterday, the Joint Ministerial Committee on exit negotiations was set up to develop a UK-wide approach to the forthcoming negotiations. I know that analysis has been and can be exchanged confidentially through that forum. The Committee should be in no doubt that policy relating to EU exit is underpinned by rigorous and extensive analytical and assessment work. As with all internal analytical work in government, it is not the standard practice to give a public commentary as the analysis develops.
We have said all along that we will lay out as much detail as possible on EU exit, provided that doing so does not risk damaging our negotiating position. The House voted on a motion that confirmed that there should be no disclosure of material that could damage the UK in negotiations. In any negotiation, information on potential economic or financial considerations is very important to the negotiating capital and position of all parties.
Most of the new clauses and amendments would require the Government to publish analysis or assessment work before the process of negotiating with our European Union partners begins and, indeed, before the Prime Minister provides a notification under article 50, as Government Members have pointed out repeatedly. Those include new clause 5, which stands in the names of the Leader of the Opposition and many other Members; new clause 49, which stands in the names of the hon. Member for Pontypridd (Owen Smith) and many other Members; and new clause 143, which stands in the name of the hon. Member for North East Fife (Stephen Gethins) and many other SNP Members; as well as more than 40 other proposals that I do not intend to list. The common requirement is that we publish information at a time when it could either delay the triggering of article 50 or jeopardise the UK’s negotiating position. That runs contrary to the approach that has already been accepted by this House. For that reason, I cannot accept those new clauses and amendments.
I want to touch briefly on amendments 24 to 26, which were tabled by the hon. Member for Ilford South (Mike Gapes) to ensure that the Government take account of our responsibilities to represent the interests of Gibraltar, the Crown dependencies and the overseas territories. I assure him that we are doing exactly that. The amendments are not necessary. I met the members of the Joint Ministerial Council for the overseas territories this morning to take their views on board in this process.
Mike Gapes (Ilford South) (Lab/Co-op)
Given that I was not able to make a speech, I am very grateful to be able to intervene. Is it not the case that we need more than a personal consultation with the Minister? This House and this Parliament should be aware of the implications for the overseas territories, the Crown dependencies and Gibraltar.
Mr Walker
The hon. Gentleman makes a very fair point. I am very pleased to say to him that the very first debate I replied to as a Minister—the hon. Member for Glasgow North (Patrick Grady) was kind enough to name Westminster Hall “Brexit Minister Hall”, because of the number of debates we have had there on this issue—was on Gibraltar and the impact of leaving the European Union. Colleagues across the House represent the interests of Gibraltar extremely well. I have had regular and productive meetings with the Chief Minister of Gibraltar, Fabian Picardo, who has made sure that its voice is heard very clearly by the UK Government. All the Chief Ministers of the overseas territories are being consulted, as are the Crown dependencies.
As a former Parliamentary Private Secretary to the Secretary of State for Women and Equalities, I welcome the interest in new clause 98, which makes reference to the Equality Act 2010 and protected characteristics. We are, of course, assessing a wide range of impacts as we develop our negotiating position, and we will continue to do so throughout the negotiation period. The Equality Act already provides a strong framework to ensure that the UK is well placed to continue driving equality forward. I assure the Committee that all the protections covered in the Equality Act 2006 and the Equality Act 2010 will continue to apply once the UK has left the European Union.
The Prime Minister has been clear: we want the UK to emerge from this period of change stronger, fairer, and more united and outward-looking than ever before. We want to get the right deal abroad, but ensure we get a better deal for ordinary working people at home. In the White Paper, we set out our ambition to use this moment of change to build a stronger economy and a fairer society by embracing genuine economic and social reform.
New clauses 42 to 48 and new clause 187 were tabled by the hon. Member for Bishop Auckland (Helen Goodman) who, sadly, is no longer in her place. What they have in common is a requirement for the Government to publish impact assessments no later than 18 months after Royal Assent. We cannot know, however, that 18 months after Royal Assent we will not still be engaged in negotiations with the European Union. If we were, those negotiations might be at an important and decisive stage. The new clauses could significantly jeopardise our negotiating position, so I hope the hon. Lady will not press them.
Similarly, new clause 167, in the name of the hon. Member for Feltham and Heston (Seema Malhotra), requires publication no later than 12 months after Royal Assent, and new clause 17, in the name of the hon. Member for Nottingham East (Chris Leslie), specifies publication 30 days after the Act comes into force. In each case, I reiterate and amplify my previous objection that the United Kingdom might well be in the middle of negotiations with the European Union.
I turn now to the new clauses tabled by the hon. Member for Penistone and Stocksbridge (Angela Smith) and others, including new clauses 101, 102, 103, 106 and 107. I would be happy to give way to the hon. Member for Brighton, Pavilion (Caroline Lucas) on the matter of the environment at this point.
Caroline Lucas
Will the Minister acknowledge that moving environmental policy from the EU to domestic policy through the repeal Bill will not be enough on its own? We need to make it enforceable and monitorable. What legal measures will he put in place to ensure we can enforce environmental legislation? While I have his attention, and at the risk of challenging his stereotype, how does he plan to replace the nuclear safety function if we recklessly leave Euratom?
Mr Walker
The hon. Lady raises very important points, which we will debate in detail when we come to the great repeal Bill. On Euratom, we absolutely want to continue to collaborate internationally to achieve the best and highest standards of nuclear safety, as well as to continue to work on nuclear research, where our country has been a global leader.
On the environment, the Prime Minister made very clear in her speech that Parliament will have the opportunity to debate and scrutinise any policy changes that result from our exit and the forthcoming negotiations. I have given evidence to the Environmental Audit Committee and have appeared before the House on a number of occasions. I have been clear that the UK will still seek to be an international leader on environmental co-operation. As part of the great repeal Bill, as the hon. Lady says, we will bring current EU law, including the current framework of environmental regulation, into domestic British law. We will ensure that that law has practical effect. This will preserve protections, and any future changes in the law will be subject to full parliamentary scrutiny. This House will therefore have the opportunity to debate this and other topics throughout the process.
That and future debates will no doubt draw on many assessments of what leaving the EU will mean for a wide variety of issues. The Government will also shortly be launching two closely linked Green Papers on food, farming and fisheries, and on the environment. They will be the next important stage in our dialogue on future policy with industry, environmental non-governmental organisations and the wider public.
No one can say what the final elements of the new agreement with the EU will be, and we do not know exactly how the timetable will work after negotiations are concluded. Parliament will have its say, but so too will others. Greater certainty will emerge as we go through the process, but for now there remain unknowns. For these reasons, we do not consider it wise or prudent to fix now in statute what the Government must publish at the end of a process that has not even begun or been timetabled. Doing so would constrain the flexibility of the UK Government at the end of the process and therefore potentially during negotiations. I come back to the simple purpose of the Bill—to allow the process of negotiation to begin and, in so doing, to respect the decision of the people of the UK in the referendum.
New clause 167, on young people, was also tabled by the hon. Member for Feltham and Heston, who unfortunately has had to leave us. I recently participated in a roundtable, along with colleagues from the Department for Culture, Media and Sport, with a wide range of young people from all over the country—from Scotland, Northern Ireland, Wales and England—to talk about their views on Brexit. It was interesting to hear from groups such as Undivided, bringing people together from both sides of the campaign to talk about the future. Every Member wants to focus on delivering a bright future for the young people of the UK, so I welcome the intention behind the new clause, but we can do that by coming together to represent the 100%, focusing on the future, getting the right deal for the UK in a new partnership with the EU and working together to deliver the opportunities those young people want.
Unfortunately, the new clause would require us to produce an economic analysis and so put us in the position of potentially giving information to the other side in the negotiations that could prejudice our position. The new clause also mentions the importance of Erasmus. The Government recognise the value of international exchange for students and are considering all the options for collaboration in education and training post-Brexit. In the spirit of looking to the future, however, we should not use the Bill to publish information that could undermine our negotiating position.
For all the reasons I have set out, I hope that hon. Members concerned will not press their amendments. We will produce careful assessments of the vast majority of these factors as we prepare for and take part in the negotiations, and we will use them as evidence to protect the national interests of the United Kingdom, but we cannot and should not commit to putting that information into the hands of the other side. Well intentioned as the amendments are, I urge the Committee to reject them so that we can get on with the Bill in the interests of the whole United Kingdom.
Matthew Pennycook
In responding, I shall be as concise as I was earlier and simply say that although the Minister has said that the Government are internally carrying out rigorous analytical assessments, he has not given us the guarantees we sought on the publication of Her Majesty’s Treasury’s impact assessments of our future trading relations with the EU. For that reason, we will be pushing new clause 5 to a vote.
Question put, That the clause be read a Second time.
Business without Debate
(7 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text
Driving Offences: Government Consultation
(7 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Wayne David (Caerphilly) (Lab)
Most drivers drive safely, and Britain has one of the best safety records in the world. It is good to see growing public awareness of the need for safety, and a growing number of community groups are working with the police to reduce the incidence of speeding on our roads. I refer, for example, to the excellent work of the Draethen, Waterloo and Rudry community voice project and the Machen community road watch, both in my constituency.
At the same time, with a growing number of vehicles on the road, there is growing public concern about aspects of the law as it relates to driving. In particular, the law and sentencing guidelines do not always provide a proportionate response to the crimes committed on our roads. In that context, I refer to an accident that occurred in south Wales a year-and-a-half ago.
In October 2015, an horrendous accident occurred in Georgetown, Merthyr Tydfil in which three young men from Gilfach, Bargoed in my constituency lost their lives. They were passengers in a car that crashed into a roadside telegraph post. Two of the young men were presumed dead at the scene of the accident, and the third man died of his injuries some weeks later. The driver of the car and the front-seat passenger both survived the accident.
The driver of the car was arrested some weeks later on suspicion of causing death by dangerous driving. He was released on police bail and allowed to continue driving. I understand that the law has now been changed to prevent such an occurrence.
At the end of the trial, the judge stated that there was insufficient evidence to
“prove to the right standard that the defendant’s driving was dangerous”.
Instead, the defendant was found guilty of causing death by careless driving. The defendant admitted three counts of death on that basis and was jailed for 10 months. The charges of death by dangerous driving were dismissed by the judge.
The sentence that was delivered was, I am told, in line with sentencing guidelines and reflects the plea of guilty made by the defendant. But given the severity of the crime, the families of the three young men who had lost their lives were naturally shocked and appalled by the leniency of the sentence. Indeed, everyone who has read or heard about this case has been aghast at how such a lenient sentence could have been imposed. I am told that the defendant showed no remorse during the trial and, to make matters worse, he was released from prison having served only five months of his sentence.
Although I do not expect the Minister to comment on this case, I would like to make two further points relating to it. First, I am told that a material fact was not brought to the attention of the judge due to a police failing: some months before the accident, the defendant had been cautioned for a driving offence, but that caution had not been recorded properly by Gwent police and therefore it was not brought to the attention of the judge. The caution would probably have been inadmissible as evidence, but it may have had a bearing on the sentence delivered. The matter has been taken-up with Gwent police and with the police and crime commissioner for Gwent.
I am also concerned about the apparent lack of sensitivity and support for the families of the deceased young men shown by the Crown Prosecution Service. Having indicated to the families that a charge of death by dangerous driving was being pursued, the CPS did not then sufficiently explain to the families why a lesser charge was being imposed. This case is obviously germane to the Government’s consultation on “Driving offences and penalties relating to causing death or serious injury”. That consultation concluded at the start of this month. It was an important consultation and I have made a submission to it. The Government will now consider whether the sentencing guidelines ought to be modified.
Jim Shannon (Strangford) (DUP)
The hon. Gentleman has brought a very important issue to the House for consideration, and we are all here because we support him and congratulate him on doing that. Does he agree that the average sentence of not even four years is certainly not enough of a penalty for those who take a life in this way? Does he further agree that we should consider a life sentence for those who have a history of careless driving offences, such as those he has referred to?
Wayne David
I have a great deal of sympathy with the point that has been made. One point I want to elaborate on later is the inadequacy of the sentencing for crimes of this sort.
I referred to the consultation and I am disappointed by it, as, unfortunately, the Government circumscribed it from the start. They did that by stating that they had already decided that there was to be no change in the legislation relating to the definition of careless driving and dangerous driving. Although the consultation paper from the Ministry of Justice acknowledges that the distinction between careless and dangerous driving has been
“the subject of extensive scrutiny and debate”,
the Government indicated that they had already made up their mind in favour of maintaining the status quo. This is most unfortunate.
The case regarding my constituents from Bargoed has, among other things, highlighted that the distinction between careless driving and dangerous driving is artificial and unhelpful in ensuring that sentences reflect the gravity of the crime they seek to punish. The definition of careless driving is set-out in section 3ZA of the Road Traffic Act 1988 and it stipulates that a person is driving carelessly if they are driving without “due care and attention'”. The law also adds that there is careless driving if the manner of driving falls below what could be expected of a competent and careful driver.
What constitutes dangerous driving is set out in section 2A(1) of that Act. It applies to a person whose driving falls far below what could be expected of a competent and careful driver.
The consultation paper makes the fair point that it is impossible to set out what might constitute careless or dangerous driving in every case because, quite obviously, every case is different. However, that is a strong argument for having a continuum of what I will call bad driving, rather than a division between careless and dangerous driving. As things stand, given that the threshold for proving dangerous driving is quite high, it is much easier to err on the side of caution and secure a conviction for the lesser offence of careless driving. That is an argument relevant to a prosecutor’s decision, as well as to a judge’s determination.
As I have said, I have made a submission to the consultation. An important submission has also been made by Brake, the road safety charity, in which it, too, argues that the distinction between careless driving and dangerous driving is questionable, particularly in cases relating to death and injury. Brake has also pointed out that there is a lack of consistency in the differentiation between careless driving and dangerous driving. Its submission says:
“the test lacks any bench-mark for consistency due in large part to the variability of facts on a case to case basis”.
In reality, the line between the low of what is expected of a competent and careful driver, and far below that, is impossible to pinpoint with any degree of accuracy. As Brake has pointed out, there is also a need to change our terminology. I accept that it is insufficient simply to advise the judiciary to refer to “bad driving”. Equally, it is inappropriate to talk of careless driving when we are referring to death or serious injury. The language of the charges needs to be changed to reflect the seriousness of the issue.
It is clear that the law needs to be changed. As it stands, the law, and the sentencing guidelines that emanate from it, do not command full public confidence. Surprising though it must seem, only a minority of people convicted of death by careless driving are given a custodial sentence, and the average sentence is little over a year. In 2011, the average length of a custodial sentence for causing death by careless driving was 15.3 months; in 2014, it was 10.4 months; and in 2015, it was 14.4 months. In the case I have highlighted, in which three young men lost their lives, the sentence was a mere 10 months.
I hope the Government listen to what members of the public are saying and take heed of what Brake is arguing for. The consultation may have concluded, but I very much hope that the Government will begin a more fundamental consultative process that will eventually lead to a change in the law. Any changes made will not correct the wrongs that have been done to the families of the three young men from Bargoed, but they will at least help to ensure that other families might not have to go through the torment that they have experienced over the past year and a half.
The Parliamentary Under-Secretary of State for Justice (Mr Sam Gyimah)
I congratulate the hon. Member for Caerphilly (Wayne David) on securing this debate about the Government’s consultation on driving offences and penalties relating to causing death or serious injury. In one way, the debate is timely, as the consultation closed last week—on 1 February. I want to take this opportunity to thank the thousands of people—more than 9,000, in fact—who took the time to respond. We received responses from road safety groups such as Brake, driving organisations, academics, Members of this House, police officers, prosecutors, defence lawyers and families who lost loved ones as a result of terrible driving offences. We also heard from from members of the general public who simply wanted to share what they thought about road traffic offences and penalties. I am grateful for the time and effort that all those people put into their responses.
I am sure that Members appreciate that I am not going to set out now, just a week later, the Government’s assessment and our response to the consultation. We will, of course, consider every one of those 9,000-plus responses. We will then produce a written response and bring forward proposals for legislative or other changes.
Before the consultation closed, I met a number of families who have experienced terrible losses as a result of driving offences. I was struck by how much they wanted to respond to the consultation because they needed to share their experience and wanted to make the law as effective as possible. As a Justice Minister, I cannot comment on individual cases, inlcuding the charges brought or the sentences imposed. However, from talking to those families and a series of debates that I attended last year, I know that many Members of this House will be aware of cases involving road deaths in their own constituencies.
I know that there was a particularly tragic case in the hon. Gentleman’s constituency when three young men were killed by a driver who was subsequently convicted of causing death by careless driving. I extend my deepest sympathies to the families and friends of those three young men who died when they were just at the beginning of their adult lives.
Although I cannot comment on individual cases, I do want to deal with the main points raised by the hon. Gentleman. He suggests that the Government should have expanded the consultation to include a consideration of the differences between careless driving and dangerous driving. The consultation does in fact deal with that important issue, particularly the suggestion that the distinction between careless driving and dangerous driving should be abolished and replaced with one “bad driving” offence.
I recognise, as is set out in the consultation, that this can be a difficult area of law. What amounts to dangerous driving is determined not, as is more normal in the criminal law, by considering the driver’s state of mind or intentions, which in the context of driving is often difficult to ascertain, but by examining the nature of the driving. The law sets out an objective test that is designed to compare the driving of a defendant in the specific circumstances of their case with what would be expected of a notional careful and competent driver. In general terms, if the court considers that the defendant’s driving falls far below that standard, and it would be obvious to a competent and careful driver that the manner of the driving was dangerous, the court will find it to have been dangerous driving.
Our law needs to reflect that while the harm caused in homicide cases and fatal driving offences is the same, because someone has died, the offender’s culpability for the death may be significantly different. The consultation examined the option for a single bad driving offence. It set out in detail why the Government are not persuaded of a case for change. Those who propose a single test have said that it will lead to more convictions and longer sentences. As is set out in the consultation, we do not believe that that is necessarily the case. That is because the maximum penalty for the single offence would have to be broad enough to cover the most serious cases—we have proposed a life sentence for causing death—and also the least serious when the driver’s culpability for the death is very low. If we do not have a distinction in the offences between the seriousness of the offending, it is possible that the conviction rate may actually fall because juries might be reluctant to convict a driver in lesser cases—one where they can imagine themselves in the same position—for an offence with a very serious maximum penalty.
Wayne David
I acknowledge the Minister’s argument, which I have heard before. If we went out to consultation on this specific issue, which we have not really done, would it not be far better if the Government were informed by a wider legal debate as well as public opinion in case they might want to change the law in the future?
Mr Gyimah
The hon. Gentleman makes an important point. I suspect that if I were to look at his submission to the consultation, I would see that he has made points similar to those that he has raised in this debate. When members of the public have concerns, I am sure that they will have made us aware of them through the consultation process. That is absolutely fair—it is why we have a consultation—but a consultation has to start and finish somewhere.
The Government’s case is that if we do not have a distinction between the seriousness of offences, the conviction rate could fall. Sentences might not increase either, because the judge in the case would still consider the culpability of the offender when deciding the appropriate sentence. I would not want to mislead victims and families by suggesting that a broader offence would necessarily result in higher sentences.
I disagree that a single offence would mean that the Crown Prosecution Service would be unable to accept a lesser plea in circumstances when that was inappropriate. The CPS operates under the code for Crown prosecutors and will bring the most serious charge appropriate for the behaviour when there is a reasonable chance of securing a conviction that is in the interest of justice. It is worth noting that a judge may direct that there is no evidence to sustain a more serious charge in some cases.
In conclusion, let me repeat that there can be nothing more tragic than the loss of young lives—any lives—especially when that loss is avoidable. I know only too well that many hon. Members have seen cases where people have died in such circumstances in their constituencies, and where there are concerns about the sentences imposed. As I said in a debate at the end of last year, for too long these concerns have not been acted upon. At that time, I reaffirmed the Government’s commitment to consulting on the offences and penalties for driving offences resulting in death and serious injury. That is what the Government have done. We will analyse all the responses and come forward with plans in the near future.
Question put and agreed to.
Steel: Preserving Sustainable Jobs and Growth in Europe
(7 years, 9 months ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chair
Before we begin, it might be useful if I reminded Members of European Committee procedure. Proceedings must conclude no later than two and a half hours after we start. First, I shall call a member of the European Scrutiny Committee to make a brief statement about why the Committee decided to refer the documents for debate. Secondly, I shall call the Minister to make a statement. That will be followed by questions for up to one hour, though I have some discretion to extend the time if there is an appetite for me to do so. Thirdly, the Committee will debate the Government motion, and I will put the Question on the motion when it has been debated, or when the time available is exhausted, whichever comes first.
Stephen Kinnock (Aberavon) (Lab)
It is a pleasure to serve under your chairmanship, Mr Wilson. The UK steel industry is of vital national interest. The importance of steel to the maintenance of resilient supply chains and to the strength of our key defence, automotive, construction and rail industries cannot be overstated. As steel is so important, and as the UK steel industry faces major challenges, the European Scrutiny Committee recommended this communication from the European Commission for debate in April 2016. The communication sets out a wide range of proposals intended to ensure that the European steel sector can overcome its short and long-term challenges.
As we prepare to leave the European Union, the development of an effective policy framework to ensure the long-term viability of the UK steel sector becomes even more important. The European framework and rules will continue to apply to the UK until the moment of Brexit, but we need some idea of UK policy thereafter. It is obviously deeply disappointing that despite our repeated reminders, the debate has been delayed for so long. Our frustration at the failure to schedule the debate at a time of crisis in the steel industry led us to arrange a joint evidence session with the Committee on Energy and Climate Change, the Committee on Welsh Affairs, and the Committee on Business, Innovation and Skills in July 2016. Despite that session, a number of fundamental questions raised by the European Scrutiny Committee at the outset remain unanswered, and they assume greater significance given events since then. I hope that the Minister will shed light on those questions today.
The first question is about trade defence. We have asked the Government why they oppose the removal of the lesser duty rule in the face of a continuing flow of cheap steel from China. The long-standing deadlock on that in Brussels was broken in December, and it now looks likely that the application of the rule will be subject to significant limits. What approach will the Government take to the UK’s future trade defence regime to ensure that our steel industry is no less protected than that of the EU?
The second issue that the European Scrutiny Committee raised relates to market economy status for China. We have repeatedly asked the Minister for the Government’s position and analysis on granting MES to China, and about whether there were any links between their opposition to limiting the lesser duty rule and wider UK-China trade and investment relations. We asked, in particular, whether bilateral and multilateral discussions thus far had had any success in addressing the challenge of overcapacity and unfair trading practices.
The third area is investment for innovation, modernisation and training. The communication highlights a number of EU funds that are available to strengthen competitiveness, innovation and training. The Committee asked the Government what steps they were taking to encourage industry to avail itself of funding opportunities and to address underutilisation. Although the Government have confirmed that the Treasury will guarantee EU funding obtained before we leave the EU, we asked them what arrangements they would put in place to ensure that the UK steel industry had access in the longer term to funds to support new technologies and modernisation, and, in other cases, to support workers facing structural change and redundancy.
Related to that is the question of state aid. In response to the Committee’s questions on what reforms or additional flexibility the Commission might be considering in respect of state aid to the steel sector, and whether the Government would support those, the Minister informed us in late October that the UK has secured state aid compensation for UK energy-intensive industries for the impact of renewables and climate change policy on electricity costs. It is pertinent to ask, then, what approach the Government plan to take to support for the steel sector once the UK is no longer bound by state aid rules.
Finally, the communication on steel highlights energy prices, the emissions trading scheme and the circular economy package, which deals with recycling. There has been much talk in the House of the effects of high energy prices on energy-intensive industries; I will leave that point to other Members to raise. The Committee asked the Minister whether the Government envisaged any short-term amendments to the ETS to address challenges faced by the steel industry. The then Minister informed us in July that the Government were not planning any amendments to the ETS in the short term, and that they were working closely with industry towards an approach that better targets the available free allowances at the sectors that need them most.
The Minister informed us in his last communication that the UK remains an active participant in the latest phase of ETS negotiations, and was hopeful that a general approach could soon be agreed. I look forward to the Minister’s briefing on the progress of those negotiations, to his comments on the approach that the Government plan to take in this area following our withdrawal from the EU, and to an informed and lively debate.
The Chair
I call the Minister to make an opening statement. I remind the Committee that interventions are not allowed.
The Minister for Climate Change and Industry (Mr Nick Hurd)
It is a pleasure to serve under your chairmanship, Mr Wilson, I think for the first time. I thank the hon. Member for Aberavon for setting out his stall in such a typically clear way.
I genuinely welcome this debate. The hon. Gentleman is right: this is arguably a pivotal moment in the evolution of steel-making in our country, for all sorts of reasons, not just Brexit. It matters a lot, not least because, as he was right to say, the steel sector is extremely important. It is right to describe it, as Members on both sides of the House do, as a foundation sector. It is important to the general economy, but also matters a great deal in certain parts of the country, and in constituencies where communities and livelihoods depend on it. The Government understand and respect that.
The hon. Gentleman regrets not having an earlier debate. I think he knows, because he is a reasonable man, that quite a lot has happened since the beginning of 2016, but there has been no shortage of debate about the steel sector in the House. In fact, many of us were convened not that long ago in Westminster Hall to address exactly this issue.
Let me start by setting out some of the background to the Commission’s communication on steel, published in March 2016. During the past two years, the steel industry has faced very challenging global economic conditions. A combination of low demand in markets such as Europe and the US—demand has not recovered to pre-recession levels—and a slowdown in the rate of China’s economic growth and investment created surplus production capacity on a huge scale, which caused steel prices to fall dramatically. It also led to an increase in the volume of steel products dumped on world markets, which had damaging effects on European steel producers.
Collectively, the EU is the second largest steel producer after China, with significant production in a number of member states, including the UK. Steel production accounts for over 1% of EU GDP and employs more than 300,000 workers, mainly in skilled technical jobs. Taking account of that European interest in the steel sector, the Commission communication was intended to set out what a response at EU level could be, and also what member states could do to support their steel sectors and ensure that they were competitive and sustainable.
The communication identified several areas for action at EU and member state level. At EU and international level, those included trade policy and tackling global steel production overcapacity. Within the EU, they included creating innovative and sustainable steel producers through investment in research and development, skills and energy efficiency, and clarifying the state aid rules on support for them. It also encouraged efforts to make the industry more sustainable, and in particular to encourage the recycling of raw materials and waste, as well as steel scrap.
With your permission, Mr Wilson, I will set out what action has been taken by the EU and the Government in those areas. First, on trade policy, which the hon. Member for Aberavon opened with, the communication identified the importance of protecting European steel producers from unfair trade practices. The Government have worked with the Commission and EU member states to do that. There are now 41 trade defence instruments relating to steel in force within the EU. They have been effective in reducing the level of dumped products significantly, with reductions ranging between 70% and 90%.
The UK has worked with the Commission to accelerate the process of investigation and the imposition of provisional duties. That has been achieved in the two most recent investigations into hot-rolled flat products and heavy plates. In addition, the Commission proposed taking forward the modernisation of the EU’s trade defence instruments first proposed in 2013. The UK is fully supportive of the modernisation of those instruments and we continue to work constructively with the Commission, member states and the European Parliament, because global production overcapacity is a challenge faced by all steel-producing countries and requires a global solution.
The World Steel Association estimates that, in 2016, about 70% of production capacity was utilised and 30% was surplus. That is why the G20 chose to act and created the global forum on steel excess capacity at the Hangzhou summit last September. The UK said clearly that we will actively participate in that with G20 and OECD partners to take forward the commitment to exchange information on capacity and to take effective action to tackle the problem.
The hon. Gentleman talked about investment. The communication identified the need for the steel sector in the EU to be sustainable and competitive, an objective the Government share. To support that, the communication sought to clarify the operation of state aid rules in relation to the steel sector. As hon. Members are aware, the steel sector is subject to specific rules, which preclude it from receiving regional or restructuring aid. However, it can receive other forms of aid, including support for research and development, skills development, and energy and environmental projects. The Government have already provided such funding, with significant investment at Warwick and Swansea Universities, funding provided by Innovate UK through the high-value manufacturing catapult centres, and by supporting research and development projects.
We are also able to assist the UK steel sector to access European funding opportunities, whether the research fund for coal and steel or the Horizon 2020 programmes. In addition, I am aware that European structural funds have been used to support projects that will benefit the steel sector in the UK in south Wales and south Yorkshire.
The communication highlighted the fact that state aid rules allow member states to compensate energy-intensive industries for the indirect financing costs of renewable energy support schemes. The Government have already taken action to compensate energy-intensive industries in the UK, including the steel sector. To date, the Government, on behalf of taxpayers, have paid £133 million in compensation to the steel sector for energy-intensive industries.
We fully understand the importance of the steel sector becoming more sustainable. I would go further than that. As the hon. Gentleman knows from previous debates, the Government are interested in helping to move the sector along from a story of survival and hanging on to one of growth and being a dynamic member of the supply chain in the UK. At the request of the UK steel sector, we have commissioned a future capabilities study to map the capabilities the sector will need to be competitive and to exploit new market opportunities. One aspect will be to consider technological innovation in steelmaking processes and product life cycle management, which will help to improve the long-term sustainability of the sector.
Our industrial strategy, the first stage of which was published last week, provides a great opportunity for the steel sector to share its vision of a sustainable future with us. We are actively asked it to share its post-Brexit plans and we will work with it, as we have said in public and in private, to ensure a long-term and sustainable future.
In conclusion, the Government have taken action to support the steel sector and respond to the requests made by the industry. We have taken action on trade through 41 trade defence instruments; provided £133 million to compensate for the costs of energy and renewables policy; and given an additional four and a half years for the sector to adapt to secure flexibility in the introduction of EU emissions regulations. We have issued new guidelines on the public procurement of steel, which I hope the hon. Member for Aberavon welcomes, and a pipeline of forthcoming opportunities for which UK steel producers can tender.
The Secretary of State and I will continue to work with the steel sector, the devolved Administrations and other stakeholders such as the all-party parliamentary group on steel and metal related industries, which recently published its report and of which the hon. Member for Aberavon is a distinguished member, to ensure a sustainable and competitive future for the UK steel industry.
The Chair
We now have until 3.37 pm, which is one hour after the start of the statement, for questions to the Minister. I remind Members that questions should be brief. It is open to a Member, subject to my discretion, to ask related supplementary questions.
Gill Furniss (Sheffield, Brightside and Hillsborough) (Lab)
It is a pleasure to serve under your chairmanship, Mr Wilson. First, I thank my hon. Friend the Member for Aberavon for his helpful and insightful introduction. I also take this opportunity to congratulate him and his colleagues in the APPG on steel and metal related industries for their recent “Steel 2020” report, which has no small relevance to our discussions. I am sure the Minister has read it thoroughly.
In Yorkshire, the Royce Translational Centre at the Advanced Manufacturing Park in Rotherham will be delivered with £4 million of European regional development fund money. That is expected to support growth and innovation in companies employing more than 13,800 people and is estimated to generate £668 million in the Sheffield city region. Is it the Minister’s opinion that EU funding is still underused and suffering from low take-up and a lack of strategic use? Have the Government reduced their enthusiasm for directing industry towards EU funding?
We would welcome a commitment to match EU funds granted before Brexit. On current timescales, EU funds are set up to 2022, while the Government’s pledge is only up until 2020. Will the Minister confirm that the total funding available post-Brexit will be significantly reduced due to the lack of access to EU funding programmes, including Horizon 2020?
Mr Hurd
I thank the hon. Lady for her question. The Chancellor of the Exchequer has made public statements about honouring EU funding commitments. Beyond that, in terms of support for things such as technical innovation and research, which she rightly talked about—it is fundamental to a more dynamic future for the sector—she will be well aware that the Government have made it extremely clear that we see innovation as the cornerstone of the industrial strategy. In fact, this Government have made the largest commitment since 1979 to science, research and innovation.
Through the industrial strategy, we are creating an environment in which sectors—as we have said, we fully expect the steel sector to be towards the front of the queue—come to us and say, “This is our vision of the future in terms of both sustainability and growth. This is how we think we can contribute to what you need in terms of productivity, jobs and better wages, but this is what we need from you in terms of unlocking that potential.” That is the kind of conversation we expect to have with a number of sectors, including the steel sector.
I do not know enough about the specific facility that the hon. Lady mentioned, which I am guessing is in her constituency.
Mr Hurd
Okay. I am certainly interested to know more about that. It seems part of an ecosystem that we need to nourish in the future, because access to innovation and new ways of making and doing things will be critical to the sustainable future that we all want for this foundation sector.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
I have a number of questions for the Minister, some of which stem from the dialogue we had with his predecessor back on 6 July 2016 in a joint sitting of the European Scrutiny Committee, the Business, Innovation and Skills Committee and the Energy and Climate Change Committee. The main issue still outstanding for me is on trade defence measures. I asked the Minister’s predecessor about China playing by the rules and wishing to acquire market economy status. I asked whether it was
“the Government’s policy, whether we are in or outside the EU, to grant China market economy status. At the moment, China, of course, loses $35 per tonne of steel it produces.”
Of course, we are talking about the Chinese state, because it owns the Chinese steel industry, which is unlike the case of any of our other competitors. I said to the Minister:
“You support the Commission’s strategy for bilateral and multilateral discussions to tackle overcapacity in the market. What specific measures so far”
could she give as evidence to demonstrate that China was
“playing by the rules and reducing that overcapacity”,
or was it playing by its own statements? All the evidence showed that it was ramping up capacity.
Mr Hurd
I thank the hon. Gentleman for that question. Indeed, may I pay tribute to him for his persistence on this subject? There is rarely a moment when we discuss steel when he does not raise this issue personally. Since the referendum, the Government’s objectives have not really changed: our priorities are to maximise the benefits to the UK from international trade, honour our international obligations, and take effective and proportionate action to tackle unfair trade where it arises.
The hon. Gentleman has followed more closely than I have over the years the conversations at EU level about China and market economy status. Clearly, there continue to be major misgivings about that and the continued actions of the Chinese, which is why they do not have the status, which is why they are in dispute. He will know as well as I do that before Christmas, the Commission published a proposal for a new anti-dumping methodology that will cover countries with market economy status and those without it. That proposal is well worth serious consideration, and that is what we are giving it. We want to understand the associated impacts of that. We are looking at that seriously, because it looks like a sensible response to the issue we face.
I come back to the point I made in my statement: overcapacity is a global issue. It is a major issue for the EU, but it is a global issue, which is why I think the initiatives through the G20 steel forum are important.
Tom Blenkinsop
I thank the Minister for that response. At about the time of that conversation with his predecessor, it was the Government’s policy to support market economy status for China. Is that still the case? Will we support that, through European channels, while we remain a member of the European Union, and until Brexit? Will we support Chinese requests for market economy status, post-Brexit? Following on from that, European funding will obviously no longer be available post-Brexit; what are the Government’s plans on trade defence mechanisms? While we remain a member of the European Union, we are subject to mechanisms that we have, in the main, opposed. What do the Government intend to have happened by this time in 2019, as regards those mechanisms?
Mr Hurd
On China’s market economy status, I do not have much to add to what I said. Our focus is on examining the Commission’s proposal, which we think is a sensible response to the situation. That is not without its difficulties, because there are different views in the European Council and in the Parliament, so that politically will be a challenge. However, that is where our focus is.
As for the future, post-Brexit, it is difficult/impossible for us to give the forward visibility and certainty that I understand Members want. We are where we are on that. My colleague the Secretary of State for International Trade is leading the work on future trade protection plans, and those will become clearer as we go through the Brexit process.
As I general point, I hope that we have made it clear through the industrial strategy, which is very much interlinked with the Brexit strategy, that this is fundamentally about how we strengthen the competitiveness of the British economy and important sectors within it. The hon. Gentleman knows from the conversations we have had that, within that, the steel sector is extremely important.
As I said in my statement, we have taken active steps to try to help the competitiveness of the sector through a difficult situation. There is more to be done, not least on energy costs, which I am sure we will get to, but I want to try to give the hon. Gentleman some reassurance. As we look to the post-Brexit future, although, naturally, I cannot give him the certainty and visibility he is pressing for, I hope that he takes some reassurance from my saying that we will not do anything stupid to undermine the competitiveness of the economy at this pivotal time. We have to get this right, which is why we need more time to think it through.
Tom Blenkinsop
One last question, if the Committee allows. On the Minister’s predecessor’s comments about outright opposition to any changes to, or retraction of, state aid rules in respect of rescue and restructuring regional aid for the steel sector, what are the Government’s views on those issues, given the debacle at Redcar only two years ago?
Mr Hurd
While we are a member of the EU, we play by the EU rules, and we try to be as creative and intelligent in playing that system as anyone else. As I said in my statement, we have managed to release funds in quite a strategic way. I make no comment on the past, because I was not involved in that process. Looking beyond Brexit and at the Government’s approach to using public money to support the competitiveness of key industries, that is work in progress, but the industrial strategy Green Paper is the first step.
Richard Fuller (Bedford) (Con)
Of course, the question is not only what gets done, but how speedily those actions are taken. One problem with the EU is that it is lamentably slow. The document that is the source of the debate talks about
“Additional efforts to accelerate the process”.
May I ask the Minister some questions on progress? Will he advise us of any progress that he and the Commission have made? For example, the document says:
“The Commission will further optimise its internal procedures, follow a stricter approach when dealing with requests for deadline extensions of questionnaire responses”
and
“streamline hearings by grouping them together.”
Those are all very obvious things.
The Commission also says that
“additional reforms need to be considered, taking into account the inter-institutional debate”.
Will the Minister advise us on what progress there has been on streamlining inter-institutional debate to assist the steel industry in the EU since May last year?
The document also talks about
“intermediary deadlines such as those for sampling of interested parties or parties’ reaction to the disclosure of the essential facts”.
Again, that refers to efforts to speed up any progress that is being made. Finally, the document says that
“the Commission will propose a prior surveillance system on steel products.”
I ask those questions because an important consideration during the debates was that the EU had been slow off the mark compared to the United States, and it is obvious that that is recognised in the document. It sounds to me that some fairly basic, fairly sensible steps were meant to be taken, but quite a few months have passed. Will the Minister update us on any progress that has been made on those issues?
Mr Hurd
I thank my hon. Friend for his questions. I do not think it is any secret: anyone who has dealt with the EU emerges from that process frustrated about the pace of action. That is perhaps not surprising, because getting agreement between 28 countries is convoluted. That is the reality of it; it is slow. The UK has played an honourable role in putting pressure on the system to improve. I would make a couple of observations in response to his questions. Whether the EU has been slow or not in responding, I am reasonably satisfied that we have made significant progress within that response. I cited the 41 trade defence measures that have been put in place, but more important is the impact of those measures, in terms of reductions of 70% to 90% in the level of dumped products. Slow or not, what has been put in place has clearly had an impact.
There has been some suggestion from Members on the Opposition Benches that the UK has been a drag anchor in the process, but that is not the case. We were in the lead in pointing out that provisional duties on products such as rebar and cold-rolled flat products were too low. We pressed for higher definition on that and got that. Higher duties were put on rebar from China. On 29 July, an increase from 9% to 13% was announced.
My hon. Friend talked about pace. Again, we were instrumental in pressing the Commission to conduct its investigations into cases more rapidly than usual, and there is some evidence of response to that. Driving pace continues to be a challenge for any UK Minister involved with the EU, but let us be clear about the context. There is widespread recognition across the EU, not least by the UK, that the sector has a deep structural problem with overcapacity, and it is no secret where most of the problem comes from. In that context, I doubt the EU scores anywhere near 10 out of 10, but it is certainly not at the lower end of ones and twos. There has been significant progress, and the policies put in place have had an impact.
Marion Fellows (Motherwell and Wishaw) (SNP)
It is a pleasure to serve under your chairmanship, Mr Wilson. I wanted to ask the Prime Minister—[Laughter.] I apologise, but I hope I have woken everyone up by making them laugh. I think we are all rather more tired than normal today. The Prime Minister has said that we will be outside the EU customs union and the single market. In that scenario, we will not be part of anything that the EU is doing to deter Chinese dumping of steel in the UK. Can the Minister confirm that when the UK leaves the EU, the UK tariff on Chinese steel will be consistent with the strong common tariffs that EU states are trying to set at the moment? Is he aware of any World Trade Organisation rules or regulations on tariffs that may restrict the UK’s ability to set a tariff on Chinese steel imports to deter dumping?
Mr Hurd
I thank the hon. Lady for that question, although it contained an announcement that might have career-limiting implications for me. I think we call it an alternative fact. She represents a constituency in which a mothballed plant is coming back to life, and I hope she welcomes that. I congratulate Liberty and all the team involved. It is a good, positive sign for the UK steel sector.
In response to the hon. Lady’s main point, which is a fundamental one, I frustratingly cannot give her the exact clarity and visibility that she and colleagues want, because we are about to embark on a complex negotiation, in parallel with which we have to work through a whole set of deep and complex policy responses to the implications of UK independence from the EU, which includes duties and future participation in the emissions trading scheme.
I come back to the point that I made to the hon. Member for Middlesbrough South and East Cleveland: we are acutely aware that we have to do everything we can in this country to maintain the competitiveness of the key industries on which many communities rely for income, jobs and skills. That has arguably never been more important as we take this big step of independence from the EU. That is our great challenge and responsibility as a Government.
Marion Fellows
I thank the Minister for his response, which did not give me the answers I was seeking, as he indicated. I thank him for mentioning the plant in my constituency, which was saved by a work party set up by the Scottish Government. It worked very hard in conjunction with the UK Government, and we managed to save the steel plant, for which I am eternally gratefully. It is important that we know that UK steel will be protected if and when we leave the EU.
Another issue that really affected the plant in my constituency was high electricity and power charges. The devaluation of sterling has had a big impact. We are tied to dollar prices, which makes things very difficult. Has the Minister made any assessment of the effect of that on energy costs for businesses? What support might the UK Government provide after we exit the EU?
Mr Hurd
I thank the hon. Lady for that question and, through her, congratulate everyone involved in what sounds like a very positive process and outcome in relation to the plate rolling mill in her constituency.
Energy costs have been front and centre of every conversation that I have had about the steel sector with leading management in the sector, trade unions and Members of Parliament who are passionate advocates of the steel industry in their constituencies. We recognise two things very clearly. First, I mentioned the £133 million, but even though we have gone a huge way to compensate the industry for policy costs, we still have not reached a point where we have the kind of competitive, level playing field that the sector and others—not just steel—are asking for, quite reasonably in the circumstances. We take that very seriously. If there were an easy answer, we would have pulled the lever, but we have removed something like 85% of the policy costs. We are now in a residual situation where the premium industrial electricity price in the UK reflects wholesale energy prices, network costs and a bit of policy cost. It is not a straightforward situation. We have said—I am sure that this is right—that we need to move on from a sticking plaster-type situation and look at the issue strategically and long term to ensure that our heavy, energy-intensive industry can compete on a level playing field.
As there is not a simple, straightforward solution that I can announce today, we announced in the industrial strategy—in case the hon. Lady missed it—that we are committed to publishing a road map later this year showing how we intend to reduce and control business energy costs. An external review looking at the opportunities to reduce the costs of decarbonisation in the power sector and heavy industry will feed into that road map. There is a very serious piece of work under way that I know from the conversations I have had with representatives of the steel sector is welcome. We are absolutely serious about it; we just need a bit of time to work through it properly, because there is not a silver bullet that we can fire today that will address the issue in a sufficiently strategic and long-term way. We take the issue very seriously, and I hope that the process we have set out reflects that.
Marion Fellows
Finally, will the Minister commit to contacting the Scottish Government, Skills Development Scotland and all the agencies that were involved in the steel taskforce that took part in saving the Dalzell works in my constituency? A lot of good work was done and a lot of innovative ideas were brought forward. If, as the Minister says, the Government are looking at different strategies, I think it would be useful to him to consult with people who have already applied some of those strategies.
Stephen Kinnock
I thank the Minister for his comprehensive answers. The question that needs to be addressed is about the impact of Brexit and what sort of Brexit we are looking at. The Prime Minister said in her Lancaster House speech that she thinks that no deal would be better than a bad deal. That seems to indicate an openness to a WTO-type of Brexit, in which we resort to WTO rules. That is combined with an apparent ambition to get the article 50 negotiations and the future comprehensive trading relationship done within a two-year period, which seems to be a heroic assumption, to say the least.
In that light, does the Minister agree that the impact of a WTO type of Brexit would be catastrophic for the British steel industry, not so much because of the tariffs on steel, which at WTO levels look to be about 2% to 3%, but because of the automotive sector, whose fundamental role as the customer base of so much of this country’s steel industry would be wrecked by a 10% tariff on every car we are trying to export into the European Union? Will he assure us that he will press the Prime Minister and other key colleagues as hard as possible to ensure we do not have that form of Brexit?
Mr Hurd
I thank the hon. Gentleman for his question, which I will answer in two parts. First, although I do not blame him for this, the situation we are in precludes any Minister responding to speculation about what the outcome is likely to be. We are embarking on a negotiation, which has to play out. The Prime Minister made it clear in her speech that we are aiming to maximise access and minimise friction—the friction point has been important in the conversations I have had with the industry.
That leads me to my second point. I represent the Department for Business, Energy and Industrial Strategy. A large part of our job is to listen to business and ask two questions, the first of which is: what are your priorities and concerns in relation to Brexit, in terms of both risk and opportunity? The second question, in relation to the industrial strategy, is: what is the most pressing and important issue supporting and underpinning the competitiveness of your sector, and your ability to create good jobs and pay better wages? Those are the conversations we are having at the moment.
It is no secret that tariffs are fundamental to the auto sector, which the hon. Gentleman rightly identified as being extremely important to the dynamic growth potential that we want in the steel sector. It was absolutely fundamental to the conversations that the Secretary of State and I had with Nissan. He knows that, and it is entirely clear why. It is our job as a Department to do two things: first, to ensure that that is properly understood by those leading the negotiations—it is—and, secondly, to reassure large, important companies such as Nissan and give them confidence in the fact that we are going to do everything we can to support the competitiveness of the car industry and the industries that supply it. Nissan made its decision, which everyone welcomed, and there is a series of ongoing conversations with other companies in the same vein. Their concerns are understandable. It is our job to listen to them and do what we can to reassure them, because significant jobs are at stake as a result of the investment decisions they make.
Stephen Kinnock
I thank the Minister for that response. I have one humble suggestion, which is that a push for an interim deal—a transitional arrangement—to smooth the transition into the new form of our relationship with the EU will be absolutely critical to avoid the cliff edge.
I have a specific question on energy and some more generic points. The specific question is this. The Minister rightly pointed out that the Government agreed to provide compensation to energy-intensive industries. That was cleared by the European Commission, in terms of state aid, which was very welcome. We also know that the period of time for that energy-intensive industry compensation package expired last month. The Government put in place no contingency measures, and nothing has been done to secure a permanent exemption for our energy-intensive industries, in terms of being able to provide that aid without having to keep going back to the Commission for approval. Will he give us a specific assurance that our steel industry will not face a cliff edge in April, when the compensation package ceases, with no transition to a new arrangement, which would be disastrous? That is the specific point.
On the more general point, the APPG report was mentioned earlier—I am sure that the Minister has read it closely. I encourage him to accept our recommendations, such as publishing an annual comparison of UK steel industry energy prices with those of our competitors; completing the energy-intensive industry compensation exemption package I just mentioned; looking at wholesale costs and developing mechanisms for UK steel producers to access lower-price wholesale energy, which is a critical issue; looking at network and transition costs, which are far too high in this country; and considering aid to energy efficiency—there are fantastic opportunities, such as the off-grid generator in Port Talbot, which would use gases from the blast furnace. What are his views in that context?
Another recommendation was to do with reform of the EU emissions trading scheme, because there is a real problem around what happens in 2021. What will we do to get long-term reform? There is also the broader issue of the remodelling of our energy model. Far too much pain seems to be concentrated in our manufacturing sector. There must be a better way of distributing the costs under climate change policy, which we all welcome. The costs are far too concentrated in our manufacturing and energy-intensive industries. The Minister has said that the Government are looking to reform the energy industry, so I suggest he uses our APPG report as a starting point for that process.
Mr Hurd
I thank the hon. Gentleman for his suggestions. He opened with a humble suggestion—experienced Ministers know that those are the most dangerous. I will, in the same spirit, take what he said on board and feed it to my Secretary of State, whom I am seeing after this Committee, because we have a meeting with the steel sector trade unions. I make that undertaking.
On the energy costs, the assurance the hon. Member for Aberavon is seeking is one that I gave on the Floor of the House at departmental questions the other day. As he knows, we have made a commitment on compensation. We have made it quite clear that we want to move to an exemption-type scheme. He knows because he is well informed, but that process is taking longer than we expected and wanted. We will therefore continue with compensation until that is worked through. I have made that undertaking on the Floor of the House and it stands, because we totally understand the need for consistency and visibility. I hope that that is reasonably clear.
On the broader challenge, I genuinely welcome the APPG report. As the hon. Gentleman knows, it feeds into what I hope is quite a deep collaborative set of conversations between Government and leaders of the steel sector about its future. Those leaders have embraced the challenge we have set, which was that we need to move on from the language of survival, sticking plasters and muddling through, to a situation in which we have politicians and society recognising the steel sector for what it needs to be, which is an incredibly important foundation sector and part of a dynamic and valuable national supply chain. They bind to that, and the process that we are working through is informed by the capability study we funded and input such as the APPG report. That will all feed into, I hope—if the right spirit and rigour are in place—some form of sector deal in which Government and industry can set out their mutual commitment to some form of agreed common goal. That is an exciting process and I hope he welcomes it. We welcome his contribution.
In that context, and going back to what I was saying, the hon. Gentleman and the report are quite right to identify that the issue of energy costs is now a complex one. We have to move from where we are now. After a lot of sticking plasters have been applied, we still have a gap. As he said, the factors determining that are complex and relate to wholesale energy costs, our energy mix and network costs. They also relate in part to ongoing policy commitments. We need to take a bit of time and work with people who have an interest and expertise in this area, so that we thoroughly investigate all our options.
As the hon. Gentleman might expect, the Department has done a lot of work in this area, but it needs to be sweated a bit harder. Our commitment is to publishing a road map later this year to show what our strategy is. That will be informed by the review that we are setting up, which is, in part, an external challenge relating to our processes and work. This issue is of such importance that it requires a structure and process around it that leads to a strategy that is more long term than the sticking-plaster approach we have taken until now. That has not got us to where we need to be, in respect of having a level playing field for this sector and others—this is not just about the steel sector—that are, quite rightly, pushing us hard.
Michael Tomlinson (Mid Dorset and North Poole) (Con)
I want to pick up the point about the automotive sector specifically and the 10% tariffs. The hon. Member for Aberavon said that our Prime Minister—not this Minister—said that no deal was better than a bad deal. However, does the Minister agree that the best way to get a worse deal is by saying that we want a deal at any cost? Specifically on tariffs, the value of the pound has dropped by some 15% since 26 June. Therefore, in the automotive industry there is still a 5% net even on 10% tariffs. Nobody wants tariffs—we all want free trade—but we can surely go into negotiations in the knowledge that we are already 5% better off.
Mr Hurd
I agree with my hon. Friend. The only thing I would add is that currencies move. Therefore, this is not necessarily a structural shift that we can rely on. It has provided some relief and some offset not only for the auto sector, but for the steel sector, as hon. Members who represent steel seats, if I can put I that way, are well aware. The message that I get from chief executives of steel companies is, “Yes, it is helping.” The picture is complicated because some input prices have increased, but either way, we cannot rely on that completely as the long-term solution for the steel sector. The sector is facing other big, structural issues, not least the massive, deep-seated problem of structural overcapacity, which we have to address. Arguably, that is even bigger and more fundamental than the issues raised by Brexit.
Tom Blenkinsop
Added to that, before I get to my question, there is an assumption—this was implicit in the previous question—that an object passes across a national boundary once, but of course, a tariff could be added multiple times depending on how many times the product has to go over national boundaries.
I want to revisit a question I have asked before—I asked this question to the Minister’s predecessor—on the Government’s opposition to any relaxation of state aid rules in respect of rescue and restructure and regional aid for the steel sector in the interim before we get to a change of situation in 2019. The Government said that they have
“reconsidered the arguments for relaxing the rules for steel in respect of both rescue and restructuring and regional aid. However, we are concerned that, in the context of global excess capacity”—
which is still there, of course—
“if Member States were able to offer rescue and restructuring aid, this would simply depress prices and allow inefficient plants to continue to the detriment of all.”
Of course, in that window of time, the second most efficient plant in the European Union closed—namely, Teesside Cast Products in Redcar. Does the Minister believe that that position is still logical, given the results?
My second point relates to previous rescue plans, which have worked, of course. Redcar was saved once before. Dalzell was saved as a result of Scottish Government and national Government action. There is also an argument about the saving of Scunthorpe steelworks. A mill is a lot easier to save than an integrated steelworks, but without any slab to squash at a mill, there would not be any product to squash. That shows exactly the integrated nature of steel, or rather, its British nature—rather than English or Scottish.
What lessons have the Government learned from those plans? We have seen Greybull come in and save the old long products division of Tata; Tata itself has changed its position through good interaction with the Government and trade unions, and Liberty, of course, has stepped in in a number of plants across the UK. What model have we learned from them? What lessons can we learn for a post-Brexit Britain that we can take forward and build on? What processes are the Government putting in flow to make sure that we have a materials strategy to develop a UK steel industry and attract further investment around our expertise, which is widely known across the world?
Mr Hurd
I thank the hon. Gentleman for a typically thoughtful intervention. On my predecessor, I think she was always logical, at least in her own mind. As for the state aid strategy, I come back to what I was saying before: we have to work through the whole set of complex, challenging Brexit issues and see where we come through, in terms of our ability to make funds available, and our strategy to support the competitiveness of our industries. That is clearly work in progress.
On Redcar, I recently had the privilege to visit the site. It was one of the most memorable and impressive ministerial visits I have ever been on. I was enormously impressed by the scale of the site and the industrial landscape that it sat in, and the clear sense of opportunity that still resides there, as well as by the people I met—not just their resilience in coping with a seismic shock, but how they had moved on from that into a determination to secure an attractive future for the site and the area.
The hon. Gentleman knows that my Secretary of State was born and bred in that area. We are determined to play what part we can in supporting a cost-effective regeneration of the site. There is clearly plenty of potential there, and plenty of players who are looking at that site and saying, “We want to be part of that. We have a vision for that site. We can see how we can regenerate it.” There are deep complexities associated with it, in terms of the costs of cleaning it up—the hon. Gentleman knows that—and there are complexities relating to charges that the Thai banks have on that, but there is a group of people who have our support and who are determined to work through all those issues. That visit simply further galvanised me into making sure that we play our full part in that process, however difficult the challenge. The site has enormous potential to be reborn as a generator of great jobs.
Motion made, and Question proposed,
That the Committee takes note of European Union Document No. 7195/16, a Communication from the Commission on Steel: Preserving sustainable jobs and growth in Europe; and notes the action taken by the Government to secure a sustainable and competitive future for the steel industry in the United Kingdom.—(Mr Hurd.)
Gill Furniss
The UK steel industry is a foundation industry that underpins many others and has a supply chain that runs across the country. It is an innovative sector, with new products constantly being created. It is also a sector that requires careful planning and a co-ordinated strategy, particularly around trade but also around training, around access to funding for research and development and for innovation, and around decarbonisation and energy costs.
We are here due to the insufficiency of the answers given to the European Scrutiny Committee on the Government’s position across issues affecting the steel sector before the Brexit vote, so I would have expected the Minister to be at pains to make the Government’s strategy as clear as possible. I can see that he is not doing so, for several reasons, I understand the complexities of the negotiations ahead, but the Minister has left a lot of questions unanswered.
Recently in the Chamber, I noted in a question that the industrial strategy Green Paper referred to steel on only one occasion. The only clarification that I received from the Government then was that they had had very productive discussions with the industry; the Minister has certainly reiterated that today.
I am very concerned about the lack of any clarity on the compensation energy package. It is getting closer and closer every day, and we certainly do not want to be at the cliff-edge, as my hon. Friend the Member for Aberavon described it. I am sure we will all be pursuing the matter further. We really need some concrete answers about the Government’s plans for trade defence measures, about international co-operation on Chinese dumping and overcapacity, about what will be available once EU funding sources have gone, and about the ETS.
There is still a crisis in the steel industry. Steelworkers throughout the UK and working people in the industries that depend on steel all along the supply chain deserve some clarity on what is being done to support the sector at this crucial time.
Stephen Kinnock
On behalf of the European Scrutiny Committee, I thank the Minister for his time today. To follow up on the additional challenges made by my hon. Friend the Member for Sheffield, Brightside and Hillsborough, we have not really talked enough today about the long-term future of the industry in respect of research and development and skills. I commend to the Minister the all-party group’s report, in which we make a number of recommendations such as establishing tripartite public-private partnerships that also involve the trade unions, to identify capability gaps so that we have the right skills for a future-facing industry.
We need low-cost loans to support R and D and innovation. We want the Government to consider intervening more in incidents of corporate failure, particularly with soft loans and with the financial underpinning that is required for things like mothballing, which needs to be far more carefully and strategically managed. We feel that there is a real need to look at the opportunity of creating a national bank for industry that would give the kind of short and long-term financial assistance that is required for research and development.
Fundamentally, it comes down to primary steel making in this country. If we are committed to primary steel making, we have to ensure that we have a blast furnace capability that is fit for the future, has maximum efficiency and is able to make as broad as possible a portfolio of products to keep the British steel industry at the cutting edge. That will require support from the Government, and it will require industry to step up, along with our friends in the trade union movement.
Mr Hurd
I thank all hon. Members who have contributed today—I genuinely welcome all their contributions.
A point that I omitted in my response to the hon. Member for Middlesbrough South and East Cleveland, but that was picked up by the hon. Members for Sheffield, Brightside and Hillsborough, and for Aberavon, was the need to support the industry in research, innovation and the exploration of material development. The Government have made a very big commitment and statement of intent with our support for innovation. It is generally recognised that we look to the future of steel making in the UK.
There is a fundamental issue about supporting the competitiveness of primary steel making, but there is a big challenge with the value that we add in this country. Most commentators on the industry think that that has to be a large part of the future, and the process of research and innovation is a large agent of it. That is certainly part of the conversation that I expect to have with the sector as part of the construction of a sector deal. We want to hear from many organisations within the steel ecosystem, such as the Materials Processing Institute, on the sector’s needs, and we expect their views to be reflected in the capability study that we have commissioned on behalf of the sector.
I do not want to leave Members in any doubt about the importance that we attach to that agenda or to the steel sector. The hon. Member for Sheffield, Brightside and Hillsborough spent a lot of time trying to check how many references there were to the steel sector in the industrial strategy. She rather misses the point, because we want to move on from the past where the industrial strategy was about picking a few sectors that the Government threw everything at. Some Opposition Members may regret that. Our challenge to sectors is this: here is what we want to achieve and this is what the strategy is about—improving productivity, securing better quality jobs in areas that need them, helping young people to get the skills they will need to take the jobs of the future—so how can they help us? What is their vision and strategy for growth and adding value, and what role can we play in helping to unlock the potential that they seek? We have made it very clear to the steel sector—it has embraced this—that we expect to hear from it because it is a foundation sector, as we have described. I do not use that word lightly because we want to move on from the process of picking winners, but we recognise that the steel sector is a foundation sector and our challenge to it is to work with us to move it on from a story of survival to one of growth.
Question put and agreed to.
Draft Investment Bank (Amendment of Definition) and Special Administration (amendment) Regulations 2017
(7 years, 9 months ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Economic Secretary to the Treasury (Simon Kirby)
I beg to move,
That the Committee has considered the draft Investment Bank (Amendment of Definition) and Special Administration (Amendment) Regulations 2017.
May I say, Mrs Moon, what a pleasure it is to serve under your chairmanship?
The investment bank special administration regime was introduced in 2011 following the failure of Lehman Brothers. It is a modified insolvency procedure for investment banks that sought to protect more adequately the interests of clients and those engaging in financial transactions.
Two years after the special administration regime came into force, the Treasury appointed Mr Peter Bloxham to carry out a comprehensive review of it. The review was published in 2014 and recommended a set of reforms to strengthen the regime. The draft regulations will implement the recommendations that fall within the Treasury’s remit. They are part of a wider insolvency regime, and should be considered alongside the work of the Financial Conduct Authority to improve client protections.
The draft regulations will improve the speed with which assets can be returned to clients and ensure that the administration process operates more efficiently and more effectively. They have been subject to widespread consultation with the different parts of the market that would be affected by the failure of an investment bank, including the creditors and clients of such banks as well as insolvency practitioners. We also took advice from the banking liaison panel on specific aspects of the regime, in particular to ensure that appropriate safeguards are in place.
I am happy to answer any questions that the Committee might have on the detail of the draft regulations but, in the interests of not detaining Members for much longer, I will do so in my closing remarks.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
May I, too, say what a pleasure it is to be here under your chairmanship, Mrs Moon, bright and early after such a late sitting in the House last night?
I thank the Minister for his speech. He and I have now discussed several pieces of legislation to improve the oversight and regulation of the financial system following the financial crisis, and the amendments in the draft regulations are clearly another part of that.
It is well documented that even before Northern Rock crashed many people had expressed concerns that the standard insolvency legal procedures did not work for banks. Providing a regime that is fit for purpose must therefore be a priority, so this is a particularly important and interesting area of legislation and, although we do not oppose the draft regulations, I have a number of questions on which I am seeking clarity.
I have two general questions. First, why did more than two years elapse between the January 2014 publication of the Bloxham review and the March 2016 launch of the consultation? That seems to be an abnormally elongated procedure. Secondly, it would be interesting to know why the measures to require certain third parties to co-operate with the administrator, which were considered in the consultation last year, will not be implemented under the draft regulations. Why did the Government feel it was unnecessary to proceed in that area?
On the specific content of the provisions, I have a number of further questions. I appreciate that this area of law is fairly detailed and not especially accessible, but because of its importance I feel the level of scrutiny in Committee must be fairly thorough. I take advice from a number of sources of expertise in the City when preparing remarks such as these for the simple reason that I would never wish someone to read our exchanges following a subsequent financial crisis and find that we had not dealt with any measures with sufficient rigour. I am happy to receive answers from the Minister either today or in writing later.
Proposed new regulations 10A and 10B, on page three, specify how the client assets that the investment bank is required to hold on trust for its clients—money that does not belong to the bank, but which it holds beneficially for clients—are to be dealt with. Basically, the bank needs to confer with the Financial Services Compensation Scheme about such assets. The client asset regulations, which were overseen by the FCA, have been shown to be defective in a fairly recent Supreme Court case. In Lehman Brothers v. CRC Credit Fund Ltd and others in 2012, it emerged that they failed to specify how the trust arrangement worked. The courts held there must be a trust but that the regulations did make not clear how that trust worked. It was unclear whether the trust failed, in that case, because Lehman Brothers had failed to separate each client’s assets into a separate trust account or whether all assets held for clients should be treated as being held on the terms of one enormous trust. The Supreme Court held by majority that there should be held to be one enormous trust, so that clients could be protected.
That creates a certain degree of confusion. Can the Minister say how conferral with the Financial Services Compensation Scheme will solve the chaos, after a bank goes into insolvency, of identifying which assets are held on trust and are, therefore, ring-fenced from insolvency proceedings and which assets are to be divided up among the unsecured creditors?
Several investment banks have been fined by the old FSA and now the new FCA for failing to organise their clients’ assets into trusts in compliance with those regulations. What do the Government propose to do to ensure that banks operating in the UK do not indulge in what might be a criminal practice of treating assets that should be held on trust for their clients as though they belong beneficially to the bank?
In the Supreme Court, in Lehman Brothers v. CRC, Lord Walker commentated that, as a result of that case, in his view, investment banking can be
“more of a lottery than even its fiercest critics have supposed.”
He had some very strong words about regulatory non-compliance. His particular focus was on the failures of the system for protecting client assets in times of bank insolvency and that litigation is important in relation to the regulations being analysed today. The case shows that senior employees at Lehman Brothers had known the bank was failing to protect its clients’ assets for several years and had knowingly used those assets for its own purposes.
Mark Field (Cities of London and Westminster) (Con)
The hon. Gentleman makes a good case, and he will appreciate that this is pretty complex. There is an assumption that there are very easily defined pots of money that can be assigned to a particular client, which clearly is not the case. Does he not recognise that the nub of the problem, and the main issue with Lehman’s, was that it was an issue of liquidity rather than solvency? As it happens, it has been able to give more than 100p in the pound, albeit many years on. Therefore, we have learned quite a few lessons from Lehman. The Bloxham review has made an important contribution in trying to clarify these issues, but we should not think it is going to be entirely simplistic to have a template in place that does not lend itself, in part at least, to some of the commercial realities on the ground in the investment banking world.
Jonathan Reynolds
I absolutely recognise that and I certainly agree this is a far from simplistic area to get right. It is our role as a Committee to probe the Government on how the regime would operate in the event of that lack of liquidity that we all seek to avoid in future. What are the Government doing to confront this failure on the part of banks, regulators and the FCA regulation in that eventuality? How do the regulations confront those issues?
How does proposed new regulation 10B(12) confront the issue of knowing which assets are to be held beneficially for the bank and which assets are to be held beneficially for the clients? In the interest of certainty, would it not be preferable to require banks to segregate each client’s assets into a distinct account and stop the practice referred to in that Supreme Court decision of bundling all those assets into one large account, perhaps making it easier to misappropriate them due to the size of the account? Does new regulation 10B perpetuate the confusion identified by Lord Walker in the Supreme Court case?
The second point made by the right hon. Member for Cities of London and Westminster moves me on to new regulation 10D on page five. The regulations appear to bundle together too many things that are not the same. Regulation 10D(2) refers to set-off agreements, netting agreements and title transfer arrangements and seems to be based on the assumption that those agreements are similar. That was not my understanding when the regulations were explained to me. Consequently, would it not be preferable for the regulations to separate more clearly the different types of agreement and arrangement so that no confusion is caused by treating them as though they were functionally identical?
As we all remember from 2007 and 2008, it is fairly chaotic when banks go into insolvency. Any uncertainty about the types or nature of assets that parties have will only add to the confusion. The regulations need to ensure that they deal with the different types of right with sufficient clarity to guide the authorities and the insolvent bank’s administrators through a future crisis.
Thirdly and finally, new regulation 10E refers to the Prudential Regulation Authority, which the Government are changing to the new prudential regulation committee. The reference to “security interests” in the title of the measure is unclear and perpetuates the problems of uncertainty in previous provisions. The term “security interest” does not describe any specific legal position, but tends to be a catch-all term that commercial lawyers use to describe a right that they hope will protect their clients if the counterparties go into insolvency. A security interest could be a trust, mortgage, charge and so on, and it would be preferable if the legislation were clearer about the rights involved. The regulations attempt to bundle the rights together, therefore leaving it to general law to sort out the problems of detail that the rights may create in future. However, that does not seem optimal when as much certainty as possible is required.
In conclusion, to move away from the specifics of the regulations, the Minister knows that many of our fellow citizens feel that despite changes for the better, the UK banking system somehow remains a liability, rather than a strength. That worries me and should worry us all because, as we initiate Brexit, financial services are clearly fundamental to the UK economy, and we have to make sure the public understand that. In responding to those points, I hope that the Minister will provide reassurance that the lessons of the financial crisis are being learned and that steps are being put in place to ensure that our regulatory regime is fit for purpose.
Kirsty Blackman (Aberdeen North) (SNP)
As the two hon. Gentlemen said, it is a pleasure to serve under your chairmanship, Mrs Moon.
I have two questions—the Minister will be pleased to know that they are brief. First, the hon. Member for Stalybridge and Hyde talked about the duty to co-operate. In the guidance that was mentioned, it is not clear whether the Government plan to implement the duty in future. It would be useful to know whether they are planning to look at the duty to co-operate as regards supplying documents to the administrator, when they can see a clear mechanism for doing that. That would be useful to know.
Secondly, the guidance says that the Treasury does not plan to issue guidance. Will the Minister let me know what the process is for ensuring that all organisations can comply with the new rules as they come through? There is no point in having sensible legislation if nobody knows about it, so it would be useful to know what the process is.
Simon Kirby
I welcome the contributions made by both hon. Members during today’s discussion. It is right that we consider whether the special administration regime meets the aims set out for it in the legislation. Indeed, we rightly have a statutory obligation to do so under the Banking Act 2009, and that is why Mr Peter Bloxham was appointed to carry out a comprehensive review of the original regime. His recommendations have informed the reforms that we are discussing, and at this juncture I would like to pay tribute to Mr Bloxham’s hard work and tenacity in compiling such a constructive report.
The reforms seek to strengthen the administration process in three ways: by making it easier for client assets to be transferred, by simplifying the procedure for assets to be returned to clients and by providing increased legal certainty. It is important to note how far we have come since the special administration regulations were introduced in 2011. We have learnt lessons from the banks that have been put into the special administration regime, and in designing these reforms we have worked closely with regulators, the Financial Conduct Authority, and the Bank of England, as well as with expert administrators and lawyers. These regulations represent an important step forward as we continue to strengthen the UK’s important financial services sector, not only to ensure this country’s financial stability, but to help cement further our position as a world-leading financial centre.
Some important points have been raised today that I would like to address. First, the hon. Member for Stalybridge and Hyde asked why it has taken so long for these reforms to be implemented. We carefully considered the Bloxham review’s 72 recommendations, which were broadly technical in nature, and worked closely with regulators and expert insolvency practitioners to develop draft legislation. We consulted on those changes in 2016; over the consultation period, the Treasury engaged with representatives of firms, clients and insolvency practitioners. We tested the proposals with the banking liaison panel and participated in industry forums organised by the FCA. We also met representatives from most of the organisations that submitted formal consultation responses. That work was essential. Developing policies that will make a substantive difference was time well spent.
The hon. Gentleman asked why we are not implementing all the Bloxham recommendations. We have implemented the majority of them, and we consulted on our proposed approach in 2016, setting out our rationale as regards the recommendations that have not been adopted. In some cases, there are very good technical reasons for that; for example, the Treasury does not have the power to extend the use of schemes of arrangement. In other cases, our discussions with industry indicated that the reforms in question, such as the recommendation to limit the liability of administrators, would not be beneficial. He also asked about client money held on trust. The FCA is currently seeking feedback on proposed changes to the CASS—client asset sourcebook—rules on the return of client assets against the backdrop of amendments to the special administration regime regulations. He asked about banks’ duties and I am confident that the existing duties are effective in ensuring that clients can access their assets quickly and efficiently. It has become clear that that could not be done in a proportionate way. A specific duty would be disproportionate given the existing statutory duties on banks, custodians and counterparties. As for his very technical questions about regulations 10B, 10D and 10E, I will, with the Committee’s permission, write to him about them in some detail.
Finally, the hon. Gentleman asked about distinguishing assets held for the bank from assets held for clients. Since the financial crisis, the FCA has taken a number of steps to improve firms’ record keeping. These reforms have been extensively consulted on with practitioners who have experience in dealing with pooled accounts.
I will also write to the hon. Member for—for?
Simon Kirby
Aberdeen North. I apologise—it is a very long way from Brighton.
In conclusion, the regulations make important reforms to implement Mr Bloxham’s recommendations and strengthen the regime that covers the administration of investment banks. The reforms they contain should be seen as part of the wider efforts that the Government and financial authorities are making to enhance the regulatory environment and protect financial stability, such as ring-fencing banks’ investment banking activities from their retail operations, and the forthcoming updates to the FCA’s client asset protection rules. Collectively, such measures represent important steps forward to address the problems of the past and strengthen financial stability. I hope that the Committee has found this morning’s sitting interesting and informative and that it will join me in supporting both our efforts and the regulations.
Question put and agreed to.
Local Audit (Public Access to Documents) Bill (First sitting)
Tuesday 7th February 2017
(7 years, 9 months ago)
Public Bill CommitteesRead Full debate Local Audit (Public Access to Documents) Act 2017 View all Local Audit (Public Access to Documents) Act 2017 Debates Read Hansard Text
The Chair
Welcome to this Public Bill Committee on the Local Audit (Public Access to Documents) Bill. I have a few preliminary announcements. Please switch electronic devices to silent. Tea and coffee are not allowed during sittings. No amendments have been tabled to the Bill, so we begin with a debate on clause 1, but I suggest that Committee members make any remarks about clause 2 during this debate. In other words, we will have a general debate about the contents of the Bill on the question that clause 1 stand part of the Bill. If the Committee is content with that suggestion, I will put the question that clause 2 stand part of the Bill formally once we have completed consideration of clause 1, on the basis that clause 2 will already have been debated. Is that agreeable? [Hon. Members: “Yes.”] Thank you.
Clause 1
Inspection of accounting records by journalists and citizen journalists
Question proposed, That the clause stand part of the Bill.
Wendy Morton (Aldridge-Brownhills) (Con)
It is a privilege to serve under your chairmanship, Ms Dorries, and to have the benefit of your expertise and good guidance. I thank hon. Friends and hon. Members for attending this sitting, and hope that they can continue to support this Bill on its passage through this House. I especially thank the Minister, for representing the Government today in lieu of his colleague, the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Nuneaton (Mr Jones), who I believe is in another Committee. I believe that a number of years ago, before entering this place, my hon. Friend the Minister served as a councillor on Hull City Council, and I am sure that his experience will be of great use today and will serve us well.
We had a very good debate on the Bill on Second Reading, so I do not intend to take up too much of your time today, Ms Dorries. The Bill is short and sweet, with only two clauses in total. It seeks to give journalists and citizen journalists—that is, bloggers and others who scrutinise local authorities, but who may not be accredited members of the press—the same rights of inspection as interested persons under section 26(1) of the Local Audit and Accountability Act 2014. It will require relevant authorities—other than health service bodies—as defined in that Act to make available for inspection the accounting records and supporting documents for such an authority for the audit year.
The Bill’s purpose is simple: it seeks to enable such persons to access a wider range of accounting material, so that they can report and publish their findings, making them available to local electors, thus providing them with information enabling them better to hold their local council to account for their spending decisions, by either questioning the auditor or objecting to those accounts. Let me make it clear that the Bill will not enable journalists to question the auditor or object to those accounts, unless of course they are also a local government elector for the area.
I do not want to repeat all the points made on Second Reading, as the responses received then were comprehensive and covered all the issues raised. However, if anybody wishes to ask a question, I will be more than happy to answer it this morning. Besides, the Minister who has responsibility for local growth and the northern powerhouse, wishes to say a little about the Bill, and perhaps to touch on the consultation that has taken place since Second Reading.
The Parliamentary Under-Secretary of State for Communities and Local Government (Andrew Percy)
It is a pleasure to serve under your chairmanship, Ms Dorries, on my first—and possibly last, depending on how well this all works out—Bill Committee as a Minister. I apologise for the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Nuneaton, who is on a Bill Committee just a couple of Committee Rooms away. It is a pleasure to respond to my hon. Friend the Member for Aldridge-Brownhills this morning. She has already done far more than I managed to do in my six and a half years as a Back Bencher in successfully—hopefully—getting a Bill though this House, and I congratulate her on that. She is right to say that I served as a local councillor; I was also a parish councillor for the village of Airmyn, so this is a matter in which I have some interest from my previous role.
I am delighted to support the Bill on behalf of the Government and congratulate my hon. Friend on steering the Bill successfully thus far. I am reminded of Margaret Thatcher, who in her maiden speech introduced the Public Bodies (Admission to Meetings) Act 1960, which was in a similar vein; it was about opening up local government to journalists and other interested parties. In that respect, my hon. Friend is very much channelling Margaret Thatcher with the Bill. Conservatives will be happy with that, but I am not sure whether the hon. Member for Dwyfor Meirionnydd is quite so pleased.
As my hon. Friend the Member for Aldridge-Brownhills said, this small amendment could increase town hall accountability and ensure that councillors are responsible for their spending decisions. As she also said, we held a consultation with a range of interested parties, including the Information Commissioner, the National Association of Local Councils, the Society of Local Council Clerks, the National Union of Journalists, the News Media Association, local authority treasurers’ societies, Public Sector Audit Appointments, and Smaller Authorities Audit Appointments. The majority of respondents were able to support the Bill’s intentions, but two key issues—whether the Bill’s provisions excluded the very smallest parish councils, and more generally whether the potential cost on local government was onerous—arose during the process that we have considered further, and I should like to put them on record.
As I have said, I served on a very small parish council with a very small budget. During the consultation, we engaged with stakeholders on whether the Bill would grant journalists inspection rights in respect of the very smallest parish councils, by which I mean those with annual turnover of £25,000 or less. Our conclusion is that journalists will have those rights through the Bill. The smallest parish councils are therefore included in the legislation rather than excluded, as we originally thought. That raises the question of whether that is onerous or burdensome for those small parish councils. We have concluded that amending the Bill to exclude those smaller authorities would likely have a limited impact, and is therefore unnecessary. In response to the consultation, the Society of Local Council Clerks stated that
“having a different range of people having inspection rights at bodies under £25,000 compared to those over £25,000 might create confusion, particularly for clerks who serve several councils of differing sizes”.
It is not unusual for a parish council clerk to be clerk to a number of different local parish councils of various sizes. Consequently, we are content that smaller parish councils will be within the scope of the Bill.
With regard to the potential cost of extending inspection rights to a large group of people with no local connection to the area, I can assure the Committee that we have investigated the extent to which current rights are exercised. In 2015-16, it would seem that local electors exercised their rights over a total of 11,000 bodies only around 65 times. Although those rights are to question and make objections to the auditor, rather than broader inspection rights offered to interested parties, it is clear that this set of public rights is not used to any great extent, so it is not particularly burdensome on authorities.
Furthermore, in its response to our informal exercise, the Society of Local Council Clerks, which represents around 5,000 parish clerks, reported that its members had not experienced a high level of interest in their accounting records. I can attest to that, because journalists from around the country did not swoop down on the accounting records of Airmyn parish council, important though it is to have the power to do so. Only around 5% of the 562 attendees at 10 SLCC regional events last year had ever had someone exercise their inspection rights. A significant proportion of those inspections—perhaps a third—were by former councillors. That would seem to bear out our view that the number of requests to inspect is relatively low.
The changes are therefore not burdensome. They are important, in terms of making good on the Government’s intention of increasing local transparency and accountability. This is an excellent Bill. I congratulate my hon. Friend on securing such support so far, and on her handling of the Bill at its various stages. I commend the Bill to the Committee.
Question put and agreed to.
Clause 1 accordingly ordered to stand part of the Bill.
Clause 2 ordered to stand part of the Bill.
Bill to be reported, without amendment.
Local Government Finance Bill (Fifth sitting)
(7 years, 9 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text
Mr Gareth Thomas (Harrow West) (Lab/Co-op)
On a point of order, Mr Gapes. You will remember that last week the Minister helpfully promised us that he would ensure that the 400-plus submissions to the 2016 consultation document would be published soon. To date I have not seen anything on the Department’s website, but I wonder whether you have more information as to when they might be available, to make possible better scrutiny of the Bill.
The Chair
I do not have any information at all, but if anyone does perhaps they can inform us.
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Marcus Jones)
Further to that point of order, Mr Gapes. I have made it clear to the Committee, including when I gave evidence, that we will shortly bring forward a summary of the responses to the consultation. We will certainly do that.
Schedule 1
LOCAL RETENTION OF NON-DOMESTIC RATES
Mr Thomas
I beg to move amendment 24, in schedule 1, page 33, line 13, at end insert—
“(1D) The principles of allocation statement must be approved by a resolution of the House of Commons.
(1E) In the year prior to any reset of the Business Rate Retention Scheme a principles of allocation statement must be approved by a resolution of the House of Commons.”
This amendment, together with amendment 25, would require a principles of allocation statement to be approved by the House of Commons. Subsection (1E) would in particular require a principles of allocation statement to be approved by the House of Commons in the year before any reset of the Business Rate Retention Scheme.
The Chair
With this it will be convenient to discuss the following:
Amendment 25, in schedule 1, page 33, line 27, at end insert
“and that statement has been approved by resolution of the House of Commons.”
See explanatory statement for amendment 24.
Amendment 26, in schedule 1, page 34, line 42, leave out sub-paragraph (4) and insert—
“(4) In sub-paragraph (4), at end insert ‘, which must be approved by a resolution of the House of Commons.’”
This amendment would retain the requirement that an amending statement be laid before the House of Commons and additionally would require that the report be approved by a resolution of the House.
Mr Thomas
It feels a little like the morning after, and I cannot promise to wake up Members and act as caffeine, as I usually like to try to do after a late night. The amendments are about parliamentary scrutiny. In a sense, last week’s proceedings were an hors d’oeuvre to the main course: the case for ensuring that there is proper parliamentary scrutiny of local government finance.
Last week the hon. Member for North Swindon made an enlightening contribution to the Government’s case. It is a pity that the Minister could not achieve the same heights. Given that the hon. Gentleman for North Swindon works closely with the Whips, what he said was revealing, and this is why parliamentary scrutiny matters. He did not have much interest in the case for redistribution of local government finance, and foresaw a new Jerusalem as economic growth incentives kick in.
To be fair to the Minister, there was a small benefit in terms of parliamentary scrutiny when he revealed, after much mulling over, that any local authority that cut its multiplier in the future would not be entitled to any top-up under the new system. I suspect that that means that few local authorities will rush to cut business rates.
Those two small indications—the Government mindset, which the hon. Member for North Swindon helped us to understand a little better, and the Minister’s indication of how future arrangements underpinning the Bill will work—serve as a reminder of the importance of continuing parliamentary scrutiny, which is what the amendments would help to embed in the Bill.
It may be worth reminding the Committee how accountability to the House of Commons is envisaged under the Bill. Paragraph 7 of schedule 1 repeals the requirement to provide a local government finance report that must be approved by the House of Commons. Instead, under paragraph 12 the Secretary of State will be required to publish a principles of allocation statement, which will set out how the tariff and top-up levels have been calculated. Everyone expects that that will substitute for the local government finance settlement.
Under the Bill, the Secretary of State could publish a principles of allocation statement covering several years at once. Indeed, the requirement to publish a statement annually is abolished by the Bill. Paragraph 15 of schedule 1 provides that an amending statement may be made, and again that would not have to be put to the House of Commons for approval. That amending statement allows for tariffs and top-ups to be altered retrospectively up to a year after the financial statement, so presumably the tariff and top-up could in the most dramatic cases be axed completely. I grant that there has to be a consultation with local authorities, but in theory dramatic change to local councils’ spending power could be the result of such retrospective change.
The amendments stand in my name and that of my hon. Friend the Member for Oldham West and Royton. Amendments 24 and 25 would require the principles of allocation statement to be approved by Parliament in the same way as the existing local government finance report. Similarly, amendment 26 would require that any amending statement to the principles of allocation statement would need approval by the House of Commons.
Why on earth would Parliament want to ensure scrutiny for local government finance in future? There is a series of reasons, which I will take a little while to explore. A House of Commons occasion such as the local government finance settlement provides a moment for change whereby the Executive can be held to account for their performance, or lack thereof. That is crucial. For example, the issue of social care has been debated in many guises, both by this Committee and by the House, and last September’s local government finance statement provided an important opportunity to scrutinise the Department for Communities and Local Government on its handling of the social care crisis.
There is also the question of how local government finance should be scrutinised. Should it be done purely by Members of Parliament seeking to discuss their individual local authority’s situation through a Back-Bench debate? There is of course a case for that. I had the pleasure of taking part in a debate on the local government finance of midland authorities, including Birmingham. My hon. Friend the Member for Coventry South (Mr Cunningham) also took part in that debate.
The role of individual Back-Bench MPs in securing an Adjournment debate and fighting their local council’s corner will always be an important way of scrutinising local government finance. Before I returned to a Front-Bench post, I, too, sought to do that, on a number of occasions raising the difficult financial situation of Harrow Council. Before my hon. Friend the Member for Oldham West and Royton joined the Front-Bench team, I had the pleasure of hearing him fight the corner of his local authority of Oldham.
Under reforms to Parliament, Back-Bench MPs on both sides of the House now have the opportunity to work together to secure time—usually on a Thursday and sometimes in Westminster Hall—for a particular subject to be debated. I pay tribute to the hon. Member for Thirsk and Malton for his support in securing a Back-Bench debate on maternity discrimination. Perhaps it would also be legitimate for Back Benchers to work together to secure debates on issues relating to local government finance.
Her Majesty’s Opposition might want to use one of our Supply days to focus on local government finance. Indeed, in this session we have already used one of our Supply days to highlight the problems of social care. The Communities and Local Government Committee has done excellent work looking at local government finance. I will come back to that. Yes, there is a role for Back Benchers, for the Select Committee and for Opposition-led debates, but surely an annual debate on the state of local government should be timetabled in the House. Without our amendments, I fear that that opportunity will be lost.
Mr Thomas
I appreciate the fact that the Minister may have had too much caffeine in the wake of very few hours’ sleep, but I encourage him to be patient. I will come to the merit of the amendments and what they seek to achieve.
I would not have thought that the Minister was naturally frightened of appearing before the House, although he has a track record of getting things wrong. He was recently a member of the Standing Committee that considered the Housing and Planning Bill, which tried to introduce a pay-to-stay scheme. Our parliamentary scrutiny in that debate helped to begin the process of getting Ministers to cave in and to recognise that they were wrong. There is a strong case, not for less parliamentary scrutiny, as the Minister envisages with this Bill, but at least for maintaining, if not increasing, the scrutiny of local government on the Floor of the House.
Jim McMahon (Oldham West and Royton) (Lab)
Does my hon. Friend agree that it is difficult to give an adequate response when the Minister has not bothered to say why scrutiny has been taken away in the first place?
Mr Thomas
As my hon. Friend knows, one of the reasons that I tabled the amendments was to try to draw out from the Minister why he does not want sustained and effective scrutiny of local government finance.
There is a timing issue. You will remember, Mr Gapes, from our debates last week that under the Minister’s plans we can expect a series of new responsibilities to be devolved to local government as the quid pro quo for the extra £12.5 billion being handed down under the 100% business rates devolution. Surely there should be an opportunity, when we know what those new responsibilities are, to be able to debate how, in the context of local government finance, they are likely to be handled by local government up and down the country. Again, proper parliamentary scrutiny and a clear requirement for the House to approve the principles of allocation statement would provide an opportunity for a debate on how those new responsibilities will work in practice.
In addition, this is effectively a completely new system of finance. Sure, we have been working with 50% business rates devolution for three or four years now, but to have 100% of business rates devolved and the revenue support grant, along with a whole series of other Government grants, axed is a very different landscape for local government finance. Surely there should be a regular opportunity to test how that new system of finance for vital public services up and down England is working. It would be sensible to at least maintain the current level of parliamentary scrutiny as part of the new order.
There are also significant unknowns about the future pattern of local government finance. We do not know how the system of tariffs and top-ups will work in practice. We have had only mild illumination from the Minister. We know that people who reduce their business rates will not be entitled to a top-up, but we do not know any arrangements for tariffs. Last week I gave the example of Heathrow and the third runway. I will come back to that later, too, but what about tariffs that might or might not be imposed on Hillingdon and Maidenhead councils, both of which potentially stand to gain significantly from a third runway at Heathrow? Many local authorities want to know whether there will be an enhanced contribution from such local authorities to help with the redistribution process. Surely how little we know about how tariffs and top-ups will work in practice underlines the case for at least maintaining, if not enhancing, the level of parliamentary scrutiny.
I know that England matters hugely to you, Mr Gapes, with your ongoing interest in West Ham football club. In essence, the local government finance settlement is an opportunity for England to take centre stage in the House of Commons and in our political process. Conservative Members, however, seem determined to axe an opportunity for England to take centre stage. That, frankly, is something that we are profoundly disturbed about.
Lastly—well, not “lastly”, I would not want to create a false impression—under the Bill, a range of powers will be available to the Treasury, to the Department for Communities and Local Government and to the Minister to interfere in local government finance. Although the Minister likes to see himself as the Che Guevara of local government finance, ushering in a radical new process, in practice there will be plenty of scope for the nanny state in the form of the Department for Communities and Local Government to continue to meddle in local government finance up and down the country. Indeed, thanks to the House of Commons Library, we know that the Bill—should it go through unamended—contains at least 56 new opportunities for the Treasury, the Minister or other Communities and Local Government Ministers to meddle in how local government finance will operate. Surely that makes another aspect of the case for continued serious scrutiny by the House of Commons and the House of Lords.
The Treasury or the Department for Communities and Local Government may want to introduce new reliefs to help business in future. The official Opposition, as a pro-business party, want to help businesses—[Interruption.]
Rob Marris (Wolverhampton South West) (Lab)
On the question of debate and the lack of scrutiny of reliefs, is my hon. Friend aware—he has talked about the Government possibly introducing more reliefs—that a couple of years ago, the National Audit Office found that approximately 1,200 tax reliefs are in operation and that the Government keep track of the effectiveness of fewer than 300? Therefore, the debate sought by these amendments would be extremely helpful in respect of any reliefs relating to local government.
Mr Thomas
I was not aware of that work by the National Audit Office, or indeed that so many reliefs are not properly scrutinised. That merely underlines the case not only for the work the NAO does generally, but in particular for the work, perhaps by the NAO, relating to local government finance, as well as the more general case for at least maintaining the scope for effective scrutiny of local government finance.
Perhaps this is my last point on the case for scrutiny of the Department, before I seek to develop these arguments further. Given that an amendment to the principles of allocation statement can be laid at any time, albeit after consultation with local authorities, and given that it could have a significant impact on local government finances, surely there should be the opportunity to look at why those tariffs and top-ups have been amended and the impact on councils. Therefore, there are probably eight arguments for maintaining the level of scrutiny. I hope, Mr Gapes, with your permission, to develop the argument a little further to help Conservative Members, who are not always the quickest at getting the argument and the point I am seeking to make. They are a little slow, if I may say so, to react to the point.
Let us think of the series of ways in which local government finance is going to operate. We heard from the Minister last week that section 31 grants will still be able to be offered to local councils.
Mr Thomas
Entirely discretionary, as my hon. Friend says from a sedentary position. One thinks of a situation where perhaps there is a large influx of refugees. I can foresee, sadly, another situation of flooding—the Conservative party has failed to properly protect our country from the impact of climate change—or coastal erosion, which I know the hon. Member for Waveney is particularly interested in. There will potentially be scope for discretionary section 31 grants to local authorities. There will be an assessment of need. We have no idea yet what that assessment of need for each English local authority will look like. We do not even have any sense of when it will be published. All we know is, mañana—it will be published at some distant point in the future, when the Minister and his officials can get around to it. Bearing in mind that the Minister and his officials cannot get round even to publishing the 400 submissions to last year’s consultation on the Bill, we cannot have much confidence that that assessment of need will be brought forward any time soon.
We do know that the expectation is that, aside from business rates, local councils will have to depend even more not only on the fees and charges they can raise from different services they offer, but, crucially, on council tax. My hon. Friend the Member for Oldham West and Royton reminded the Committee of the Government’s own assessment that, over the lifetime of this Parliament, there will be a 25% increase in council tax. One wonders whether that is on the conservative side, bearing in mind what Surrey County Council has done with its planned referendum and the case that it is making for a 15% increase in council tax, such is the terrible state of social care funding for that authority. We have not yet heard from the Minister how he is going to recommend the citizens of Surrey and Members of Parliament who represent Surrey should vote in that referendum. I look forward to hearing from him on that subject.
We know from the way in which Conservative Chancellors have sought to meddle with local government finance that additional reliefs will probably be announced at different times. Local government will get its finance in a series of ways in the new system. Surely there should be an opportunity to debate the way in which those different sources of finance dovetail with each other, so that we can see how individual local authorities throughout England, our great nation, are able to provide—or are not able to provide, as I fear will be the case—the public services that the citizens of England expect.
Bear in mind that Opposition Members, over the last six years or so, have been able to highlight just how much funding local government has lost over the terrible years since 2010, when the Conservative party came to power. By 2020, many councils will have lost more than 60% of their income. Arguably, an annual debate—or at least a regular debate—on local government finance will be all the more important in the first years after the introduction of the system.
It would be helpful to hear from the Minister why he thinks the requirement for a local government finance settlement report should be axed now. Why should there not be a 2018 local government finance settlement report, given that the new system will not be in force? Why should there not be one in 2019? We will hopefully have a little more information than we have now. We hope that, by 2019, the Minister may finally have got around to publishing the 400 submissions that have been put in as a result of the 2016 consultation paper. I hope, perhaps, that the Select Committee on Communities and Local Government might have had the chance to wade through those reports to give us its considered take on the concerns, or not, about the future of local government finance. Specifically, it would be interesting to hear from the Minister not only why he thinks parliamentary scrutiny of local government finance should be reduced in the way that the Bill proposes, but why it should be reduced before the new system has been introduced in its entirety.
We are the most centralised country in the western world. Almost 90% of local government finance is delivered by central Government—all the more reason for scrutiny of local government finance in the way we at least have at the moment. I suggest that it should be enhanced, not reduced in the way the Minister envisages. Our political system is weighted overwhelmingly to the power of the Executive in Whitehall. Notwithstanding the excellent contribution that the judiciary occasionally make to keep the Government honest on issues such as exiting the European Union—at this point, one should surely pay tribute to Gina Miller and her advocacy for scrutiny by Parliament—
The Chair
Order. I am sure that there will be lots of opportunities in the Committee that is considering the European Union (Notification of Withdrawal) Bill to raise those points. I would be grateful if they are not raised in this Committee; we have other matters on the amendment paper.
Mr Thomas
I am very glad to hear that.
My point simply is this: there are few safeguards on the Executive’s power, and one of those is the transparency, openness and scrutiny that Ministers and their officials are subject to through the work of this great House. I struggle to understand why Ministers propose to abolish any scope for further debate about local government finance. They almost want to rush things out quietly. The principles of allocation statement will no doubt come out on the last Friday before the summer or just before Christmas so there is not even a great opportunity for proper media scrutiny of local government finance.
I had the privilege of serving as a Minister, and I have felt the fear of sitting where the Minister sits. I understand that Opposition Members often take delight in trying to catch Ministers who perhaps have not done the work off-guard. Fortunately, I was never caught off-guard or exposed for lack of information in the way that the Minister has been already during the passage of this Bill and his boss was over pay to stay during scrutiny of the Housing and Planning Bill.
As a Minister, I recognised the benefit of parliamentary scrutiny. If a Minister knows that there are difficult, dedicated, serious Back Benchers like my hon. Friend the Member for Wolverhampton South West—I remember a case when he almost caught me off-guard with one of his questions—on a Committee, that keeps them honest in terms of the work that they have to do to prepare for debates. It makes them go through legislation with a fine-toothed comb and work hard late into the night trying to think of all the difficult questions they might be asked. In so doing, they ask their officials similarly difficult questions to try to move things forward if there is a concern that things are not moving forward in the right way, or to understand why things might have gone wrong.
The leverage of a Minister having to stand in the Chamber and answer questions about local government finance up and down the land is hugely important in its own right and may help to ensure high-quality decision making. I fear that will be lost if the current opportunities for parliamentary scrutiny of the local government finance settlement are, if not abolished, swept under the carpet, as the Minister seeks to do by sweeping away the principle of accountability to the House of Commons for local government finance decisions.
It is surely important to air the big issues that affect local government. Social care is a classic example. When the local government finance settlement statement was made in December, Ministers knew that they would face sustained media scrutiny and, crucially, parliamentary scrutiny of their performance on local government finance, particularly in so far as it related to social care, not least because a disagreement between the Prime Minister and the Chancellor of the Exchequer had meant that that issue was not addressed in the autumn statement. Even though the Secretary of State brought forward a dismal package, one has to acknowledge that there was at least an attempt to begin to answer the question that council leaders, the Association of Directors of Adult Social Services and social care professionals up and down the land were asking about how we would continue to finance the system. The local government finance settlement statement forced Ministers to know that they were going to have to come up with at least some semblance of an answer to that big question. Sadly, the response was dismal, and the Secretary of State has continued to be chided by Conservative council leaders, Labour council leaders and many Conservative Members of Parliament—one thinks of the contribution of the Chair of the Health Committee.
Peter Aldous (Waveney) (Con)
I am grateful for the hon. Gentleman’s care and attention to my constituency. Does he agree that business rates retention needs to go hand in hand with a review of core spending and the needs assessment? The Minister has already provided that assurance.
Mr Thomas
Of course it needs to go hand in hand with the needs assessment. Not only that, it needs to go hand in hand with the fair funding review. It would be lovely to know what the needs assessment will be for each council and what the fair funding review will mean for each council, but the brutal truth is that we do not know. I suggest the hon. Gentleman looks at one of the last amendments on the amendment paper to be considered on Tuesday 21 February, which deals with commencement of the Bill. We should wait for the full picture before we allow the Bill to come into force.
We do not know what that needs assessment will be or what that fair funding review will look like for Waveney. We would know more if the Minister and his officials had got around to publishing the 400-plus responses to last year’s consultation document, which may include a contribution from Waveney District Council. However, he has not published the responses, so we do not know what the council thinks of it. All we know from the papers we have seen from Waveney District Council is that it is extremely concerned about the financial position it faces. In its report on the budget and council tax for 2016-17 on 24 February 2016—it was looking ahead—it said there is
“potential to create an extremely serious financial position for the Council, with genuine issues regarding the Council’s financial viability and ability to set a balanced budget”.
The council is worried about its very serious financial position, its financial viability and its ability to set a balanced budget as early as 2018-19. It said that reductions to revenue support grant
“are now much larger and faster than previously forecast”.
Revealingly, it added that
“the Council is not well placed to generate additional localised funding from council tax and business rates–there is very limited potential for growth in the medium term to offset these huge reductions”
in revenue support grant and new homes bonus.
In the new Jerusalem of the hon. Member for North Swindon, everything will be all right in his constituency, but we know from those at the sharp end in Waveney that the situation will be much tougher. The hon. Member for Waveney does a very good job fighting for his constituents—not that a Labour Member of Parliament would not do it ever better, but in the meantime he does a good job. I gently suggest that he might relish the ongoing opportunity to question Ministers on the Floor of the House, either on the fact that a local government finance settlement and report is still to be approved by the House of Commons, or that a principles of allocation statement—the device that Ministers want in the new world—is yet to be approved by the House. He can challenge the Minister or the Secretary of State to think about the problem facing his constituents.
Peter Aldous
I thank the hon. Gentleman for his caring contribution. He very much supports the need for a radical reform of the fair funding formula to address the concerns of councils such as Waveney.
Mr Thomas
I am always up for things that are radical and transformative, but I like to see the detail before I decide whether they are radical or transformative in a positive way. The hon. Member for Thirsk and Malton, of whom I am very fond—I am always keen to promote him to his Whips—made a series of interventions about the case for rural authorities in north Yorkshire. I gently suggest that his contributions were, sadly, slightly less impressive than those of the hon. Member for Waveney. The hon. Member for Thirsk and Malton sought to bash London at every opportunity, which I would gently suggest is par for the course for him.
Kevin Hollinrake (Thirsk and Malton) (Con)
Will the hon. Gentleman give way?
Mr Thomas
I will give way in just a second to the hon. Gentleman. In his contributions to date—he might be about to recover the situation—he failed to mention any assessment of need in London, or indeed in any authority outside the particular ones in north Yorkshire that I suspect he cares about.
Kevin Hollinrake
I am grateful for the hon. Gentleman’s kind comments, which of course are reciprocated.
The hon. Gentleman misquoted me. In my remarks to him, I talked about the differential between Harrow and North Yorkshire—it is £80 more spending per person, per year, despite the income and age demographics. He has a younger and richer population in Harrow. I am not saying that those are the only demographics and the only cost drivers that we need to look at, but the key is fairness. Would he support a system that is fairer and that truly reflects the cost drivers in Waveney, North Yorkshire and Harrow, even if that disadvantages his local area?
Mr Thomas
Of course I would support a fairer system. I think of the ways in which the system is not fair in relation Harrow council’s finances—£80 million plus of cuts in the last four years. I wonder how that is fair.
The exchange that the hon. Gentleman and I have had about fairness is an entirely reasonable debate. I simply think it should be had on the Floor of the House on an annual basis on the local government finance settlement.
Mr Thomas
I will give way to the Minister. I have not forgotten him. I am trying to but not succeeding.
We should have that debate on fairness in local government finance, and on how spending power is allocated across local authority areas, on a regular basis, and ideally on an annual basis, when we debate the local government finance settlement. I cannot understand why it should be abolished before the new system comes in. When there is a principles of allocation statement or an amending statement, surely that should provide the hook for a debate on the Floor of the House of Commons about fairness and a series of other issues related to local government finance.
I will give way to the Minister before I come back to Suffolk, which I know will be of interest to the hon. Member for Waveney.
Mr Jones
With his usual charm and wit, the hon. Gentleman decided to go off on a tangent and talk about coffee rather than answer my earlier question. He still seems to want to back two horses. Does he want an annual vote, or does he want a vote to set the principles at the start? His amendment says one thing, but he seems to be speaking another language at the same time. What does he actually want?
Mr Thomas
Given the sorry state of local government finance, I would be up for a debate every three months if it was going to lead to action on social care.
The point of the amendments, a couple of which are probing amendments, is to explore the issue of scrutiny by the House of Commons. The Minister—let me be generous to him for a second—in responding to an intervention by the Chair of the Communities and Local Government Committee on Second Reading appeared to hint that he might be willing to look at this question. I gently encourage him to do so.
There is a long tradition of Members of Parliament raising the concerns of their local authorities, be they North Yorkshire, Thurrock, Torbay or wherever, on the Floor of the House when we debate the local government finance settlement. I hope the Minister has some respect for local authorities and for the role that this great House plays in helping local government to ensure that there is a regular opportunity for scrutiny of local government finance.
I was dwelling on the authorities of the hon. Member for Waveney as part of the case for such ongoing scrutiny. If the situation in Waveney is bad—this time last year, Waveney was extremely worried about its ability to survive and prosper—the situation for Suffolk is surely as dramatic. The local government finance settlement for Suffolk suggested that it was set to lose more than £73 million in revenue support grant between 2015-16 and 2019-20, and that it was gaining only just over £9.3 million under the system of 50% devolution of business rates.
Suffolk County Council will clearly recognise that more responsibilities are coming its way in the brave new world of 100% business rates devolution. I suspect it will be sceptical that it, like Waveney, can generate significant additional business rates income. If it is getting only £9.3 million under 50% business rates devolution, it seems unlikely that it will be able to get anywhere close to the £73 million in revenue support grant that it has lost or is going to lose by the end of this Parliament.
Let us take an extract from the January 2017 cabinet meeting of Suffolk County Council on 24 January, where that Conservative council says:
“The Council should be under no illusion that the future financial outlook continues to be extremely challenging and deep ‘cuts’ to services will be required to remain viable even with a future general council tax increase.”
Among its proposals were cuts to libraries and archive services; culture, heritage and sport facilities in Suffolk; children and young people’s services; the travel support budget for children and young people; help for local schools with their budgets; public health; and housing. That is the scale of financial difficulty Suffolk County Council faces.
I have a suggestion for the hon. Member for Waveney, who I know will be as concerned about the financial situation facing Suffolk County Council as he is about the one facing Waveney District Council. His leverage as a Member of Parliament will be weakened if Parliament does not have to approve the principles of allocation statement. If there is not an opportunity on the Floor of the House of Commons for a debate, he might be able to persuade Mr Speaker to grant a Back-Bench debate on the finances for Waveney or Suffolk councils or both. He might be able to persuade Opposition Members to come together to look at the local government finances facing the east of England for a Back-Bench debate. He might even be able, if he whispers in my ear, to persuade the Opposition on occasion to use one of our Supply days for a debate on local government finance. Those are all good things in their own right. However, his leverage as a Member of Parliament for his two authorities will be weakened by the provisions in the Bill and the loss of parliamentary accountability envisaged in it. I gently suggest to him that that is surely negative and that he might want to use his considerable influence and charm on the Secretary of State to persuade him to think again.
I want to dwell briefly on another issue linked to parliamentary scrutiny—the mandate for the changes. There was no indication in the Conservative party manifesto. I hope the hon. Member for Torbay has learned the lesson of his experiences of intervening in debates so far—one should read what one’s opponents say before challenging them. I have read the Conservative manifesto—and what a dismal read it was. That is a part of my life that I will not get back. [Interruption.]
Mr Thomas
I am grateful to you, Mr Gapes, for getting Conservative Members under control again.
I return to the essential point: there was no mandate for what the Minister and the Secretary of State propose. There was no mention of a shift to 100% business rate retention in the 2015 Conservative party manifesto. There has been no Green Paper and no White Paper about the changes. There has, of course, been a great session of the Select Committee on Communities and Local Government, of which the hon. Member for Thirsk and Malton is an excellent member, but the only commitment I could see in the manifesto was to a pilot scheme for allowing councils to keep a higher proportion of business rates in Cambridgeshire, Greater Manchester and Cheshire.
Kevin Hollinrake
Is the hon. Gentleman in favour of 100% business rates retention or not?
Mr Thomas
The hon. Gentleman is in danger of suffering from the same disease as the hon. Member for Torbay, and of repeating his question. Of course I am in favour of the principle of 100% business rate devolution. Indeed, we had it in our manifesto as part of a much bigger package of devolution than anything envisaged by the Conservative party. Perhaps the hon. Member for Thirsk and Malton, who has a reputation for hard work, would like to dig out a copy of the Labour party manifesto, where he can check the section on local government. I will happily pay for him to have a cup of tea with the hon. Member for Torbay so he can point out to him the passage about the increased spending power that councils would have had if Labour had been in charge.
Mr Jones
It is good to be back on the Committee with the hon. Gentleman. I have looked at the Labour party manifesto: there was a significant commitment to devolve additional responsibilities for additional funding, but did the former shadow Chancellor, who lost his seat at the general election, say there would not be a penny piece more for local government if the Labour party were elected?
Mr Thomas
I am struggling. I thought that I had helped the hon. Member for Torbay not to make that mistake. Hearing the Minister make the same mistake as a Back-Bench Member is too much. A £30 billion increase in revenue spending power for councils was the centrepiece of our manifesto for local authorities, together with an English devolution Bill.
Kevin Hollinrake
Page 13 of the Conservative party manifesto clearly states that
“we will pilot allowing local councils to retain 100 per cent of growth in business rates”.
Was not the direction of travel clearly expressed in the manifesto?
The Chair
Order. Mr Marris, perhaps you could keep the noise down. I cannot hear what Mr Thomas is saying.
Jim McMahon
I am intrigued that Conservative Members have to check Google to find out what their manifesto commitments were. We are very clear what ours were, and we are very clear that a number of them have been taken on in the Housing and Planning Act 2016 and the Bill. Does my hon. Friend agree that the Labour party’s manifesto commitment was very clear: the local government and health budgets would be brought together, with local government in the driving seat making efficiencies in health to help properly fund adult social care?
Mr Thomas
My hon. Friend is absolutely right, and not only that but we committed to the fair funding, which the hon. Member for Thirsk and Malton wanted to see. I was trying to move on, before being interrupted by interventions from Conservative Members, to explore one of the other concerns about the way in which business rates retention has worked to date and how it might work over the rest of this Parliament. We would not be able to explore that if the local government finance settlement report did not have to be voted on by the House of Commons.
It has been gently pointed out to me that there is a surplus on the main non-domestic rate account. As we all know, in 2013, the Government changed the system, allowing councils to keep 50% of business rates, with the remaining 50%—crucially—paid into a central Government account: the main non-domestic rate account. Councils then still needed £15 billion in funding from central Government on top of the 50% of business rates that were kept. That was called the revenue support grant. In the first two years of that 50% business rates devolution scheme, the Government’s share of business rates was less than the amount they paid out to councils in revenue support grant. However, in 2015-16, the account moved into surplus.
That growing surplus releases resources for the Treasury to use for other purposes such as reducing corporation tax for Sports Direct or banks, reducing capital gains tax, increasing inheritance tax allowance or other things. In 2015-16, this so-called surplus from the central share alone was some £1.9 billion, rising to £4.2 billion this year as revenue support grant continues to be cut further. Crucially, the surplus will reach more than £10 billion in 2019-20. Here is a major source of income for local authorities that is, in effect, being top-sliced by the Government for a whole series of other purposes when it could be used to fund the spending pressures facing local councils.
According to published accounts, in 2015-16, the Secretary of State debited the account by £12.89 billion but only £9.34 billion of that was used to pay revenue support grant to local councils, leaving a surplus of some £3.5 billion. That surplus will grow by at least £2.4 billion in 2016 and at least a further £2.4 billion in the coming financial year. No decision has yet been made about what that £2.4 billion growth in 2017-18 will be spent on. There is an opportunity for the income generated by business rates to be spent on tackling the biggest crisis facing local government spending at the moment: social care. We will have fewer opportunities to debate that if the Minister has his way and parliamentary scrutiny is dramatically rejected.
If that were not reason enough for Conservative Members to be further convinced of the case for change, it is worth pointing out that in the autumn statement and spending review in 2015 the then Chancellor of the Exchequer, before he was sacked for incompetence by the current Prime Minister, cut the funding for local government from central Government for a further five years. He also introduced a series of new reliefs. There was no consultation with local government on the cut in revenue support grant or on the impact on business rates income of introducing those new reliefs, even though both would have a significant impact. We had an opportunity to debate those measures, and seized that opportunity, in terms of the local government finance settlement at the time, but they indicate the way in which the Treasury and the Executive more generally can interfere with local government finance—sometimes for the best of reasons, but nevertheless with a significant impact on local government finance. Surely there is, therefore, a need for ongoing scrutiny.
Kevin Foster
The hilarity that the hon. Gentleman has been causing has certainly kept me awake all the way through the last hour and 10 minutes. To help my hon. Friend the Member for Thirsk and Malton, I point out that he can find the Labour party manifesto in the fiction section of the House of Commons Library. The point that I wished to intervene on is this. The hon. Member for Harrow West has just criticised the previous Chancellor’s decision on business rate reliefs. He said that that was not consulted on. Will he tell me which one of those reliefs he opposed the introduction of?
Mr Thomas
My point was not about whether one opposes particular reliefs, but about the impact on local government finance. There is a consequential impact for local government, which we are debating today—a consequential impact on the finances of the hon. Gentleman’s local authority, my local authority and, indeed, the local authorities of all members of the Committee—and surely those consequential changes need to be considered. My point is that, under the Minister’s proposals, which I suspect the hon. Gentleman has been told he has to support, come what may—that is the reason he has the privilege of serving on the Committee and being mentored by Opposition Members—parliamentary scrutiny is being weakened in relation to local government finance. There may well be further justification for further reliefs to business, or for further public services to benefit from reliefs. We will seek to explore that later. However, there should be an ongoing opportunity to explore the consequential impacts of decisions that the Chancellor or other parts of the Executive might make on local councils’ finances.
Rob Marris
Does my hon. Friend agree that it is right, as the Bill provides, that before making a principles of allocation statement, the Secretary of State will have to consult representatives of local government? That is good, but the Secretary of State will not have to consult or be answerable or accountable to Members of Parliament on the principles of allocation statement, so one thing is being done right and the other is being done completely wrong. The amendments would rectify that imbalance.
Mr Thomas
My hon. Friend makes a very good point and one that I realise I have not dwelled on until now. Of course he is right to say that local government leaders and their councils should be properly consulted, but one suspects from the contributions that we sometimes see in private from Conservative-led local authorities that they sometimes look to the Opposition to make their case more vigorously in public than they feel they can make it to their own Ministers, and that opportunity will be reduced if there is not similarly a requirement to be answerable to Members of Parliament.
I will offer up to the Committee one further example of a very significant change to local government finance. If something like this were done in the future, we might not have the opportunity fully to explore the consequences. I am referring to the decision by the then Chancellor to switch the indicator, in terms of business rates going up or not, from the retail prices index to the consumer prices index. That is likely to have a significant impact on local government finance. In the 2016 Budget, Ministers suggested that it would reduce business rates income by £370 million in 2020-21. In 2020-21, under the Minister’s plans, there will not necessarily be an opportunity for a debate on the Floor of the House on the principles of allocation statement or the local government finance settlement report, to see what the consequences of that change are in that year for local government finance.
And that is just one year. Each year, that reduction in income generated by business rates for local authorities will continue. Over a decade, it is estimated that councils will lose over £3 billion. That is a £3 billion benefit to business, and there is a debate to be had outside this Committee on whether that is the right support to give to business. In the context of this debate, there must be an issue as to whether it is the right choice for local government finance and the public services such as social care that are being provided.
How will Nuneaton, Warwickshire, Waveney, Suffolk, Torbay or North Yorkshire be able to provide public services if they are seeing their authorities hit by their share of that £3 billion cut in capital funding? Sadly, there was no consultation with local authorities about that switch from RPI to CPI. I want to dwell on that issue a little more as part of the clause 5 stand part debate, which I hope we will get on to soon.
Mr Thomas
Shortly. But it is another example of the way in which the Executive can make significant changes that may have substantial merit in their own right in terms of the support they give to business—one could think of other such examples—but which nevertheless have a significant impact on local government finance. Surely it is the responsibility of this House to think about local government finance in detail and about all the complexities that are envisaged, and to worry about what those might mean in future. Amendments 24, 25 and 26 stand in my name. Two of those are, I suspect, amendments that we will continue to regard as probing amendments, but the principle of scrutiny by the House of Commons is something that we on the Labour Benches take extremely seriously.
It was remiss of me not to provide members of the Committee with the opportunity to reflect a little further on one of my favourite areas of the country: Allerdale in the Lake district and the local authority there. After the post-tariff top-up was introduced, it benefited from just £3.64 million in 2013-14 under business rate retention. That went up slightly to £4.91 million in 2014-15. Then it went down to £4.63 million in 2015-16 and by 2016 it had gone up slightly again, to £4.7 million. That is not very much business rates income under the 50% scheme. One assumes that it will get a little more income under 100% business rates retention.
The council is surrounded by agricultural land, which is not rated in business rate terms, and has significant natural barriers to further economic growth—I am thinking of the wonderful lakes of Derwentwater, for example, and the wonderful mountains of Skiddaw. The council faces natural barriers to economic growth, with which the hon. Member for Waveney will sympathise. Surely we have a responsibility—even though we represent other authorities as individual Members of Parliament—to think about the impact on authorities such as Allerdale, whose financial means might otherwise be forgotten if there is not the ongoing opportunity for parliamentary scrutiny.
Mr Jones
I thank the hon. Gentleman for his generosity in giving way. He seems to be criticising my hon. Friend the Member for Harrow East (Bob Blackman). Does he not know that during the settlement process this year, my hon. Friend brought in a finance officer from Harrow Council to discuss its settlement with me? I have not seen any evidence of the hon. Gentleman doing that.
Mr Thomas
I was not going to criticise the hon. Member for Harrow East (Bob Blackman), although the Minister almost provokes me to do so; I was merely suggesting that he might not want to criticise Harrow Council quite so much. I welcome the fact that he brought in the finance officer from Harrow Council. Indeed, I knew about that, and suggested that if I came along too I might upset the Minister inadvertently, so it was probably best for the finance officer to go in with just the hon. Gentleman. I deliberately stood back so as to try to ensure—[Interruption.]
The Chair
Order. I know we have all had relatively little sleep after a late night. Nevertheless, I would be grateful if we could calm down. It will not be long before we adjourn the sitting, but I would like to make a little bit of progress. Mr Thomas, are you coming to the end of your remarks?
Mr Thomas
I am getting closer, Mr Gapes. I thought the Minister’s intervention did not do him justice. I fight for my local authority and I respect the contribution of the hon. Member for Harrow East, although I try to guide him to make better defences of the local authority. I hope that the Minister listened carefully and will act on what the finance officer from Harrow Council said.
Sadly, one thing we have not touched on thus far is bus services—a small issue in the context of the state of local government finance, but it matters—and there will be even less scope to debate it if our amendments are not accepted. You may not know this, Mr Gapes, as, like me, you are a London Member of Parliament—we are lucky to be north London Members of Parliament in particular—but around the country, local authorities that have direct responsibility for bus services say that those services face substantial cuts. That is a concern. There is obviously scope for that to be debated in part at Department for Transport questions, but given that those services are financed by local government, surely that should be part of the issues relating to local government finance considered by the House regularly.
The Campaign for Better Transport says that reductions in local authority funding have already resulted in thousands of bus services being reduced or cancelled in recent years. According to its research, people in Lincolnshire, Derbyshire, Leicestershire, Somerset, Dorset, West Berkshire, Wiltshire, Oxfordshire, Hertfordshire, North Yorkshire and Lancashire will be among the worst affected by the cuts in funding to local authorities—cuts that they will have to pass on to bus services. Surely that is an issue that Members of Parliament want to debate. Certainly, Opposition Members regularly seek to raise it through Adjournment debates or in questions, but it is surely part of the broader picture of local government finance and should be considered properly.
Kevin Hollinrake
The hon. Gentleman said earlier that I was trying to stand up for rural areas as against urban areas, but that is not the case. The biggest disparity is between London and the rest of the country. He talks about transport in London, but we need only walk outside to see buses, trains and trams galore. The top 10 authorities for spending power per head—including Camden, Kensington and Chelsea, Islington, Hackney, Tower Hamlets, Southwark, Hammersmith and Fulham, and Lambeth—all have about £400 more per person per year than North Yorkshire and many other places. The lowest-spending authority in the country is York, an urban area. The disparity is between London’s spending power and that of the rest of the country. That is what needs to be dealt with, and that will also be reflected in our ability to provide decent bus services in rural areas.
Mr Thomas
Over the course of our proceedings, I have been gently suggesting to the hon. Gentleman the need for a proper fair funding review—I strongly support that—but he is a little misguided in his assessment of the level of need in London. It is not an issue of rural and urban outside London against London—that would be a huge mistake to make—but an issue of the quantum of local government finance, and spending power being savagely reduced by the party of which he is a member, in the misguided belief that that will somehow lead to a substantial reduction in the national debt. We know how that played out: the previous Chancellor of the Exchequer got sacked.
I therefore gently suggest to the hon. Member for Thirsk and Malton that if he has been unable to support any amendment of mine up to now, and cannot be tempted—although I hope he will be—to put pressure on the Minister to give way on the issue of ongoing levels of parliamentary scrutiny, he might want to consider the matter of when the Bill should come into law. Should it do so when we know the details of the fair funding review and of the regulations, and when the Minister finally gets around to publishing the 400-plus responses to the consultation document? Should the Bill not take effect at that point, instead of in this financial year?
Kevin Hollinrake
The hon. Gentleman’s point about the distribution is absolutely right. I support a review of the funding formulae that will be introduced before the Bill takes effect in 2020. His point about quantum was interesting, but to increase quantum he has to do one of two things: take spending power from elsewhere in the economy, from other Departments; or raise taxes. Which one would it be? Will he specify which one of those two things he would do, or which Departments he would remove funding from?
Mr Thomas
The hon. Gentleman, in his usually charming way, is tempting me down a path that will get me into a lot of trouble with the shadow Chancellor. [Interruption.] “Be brave!” say Conservative Members, and I am, but nevertheless I will not use the Committee to announce future Labour party policy. It would feel like a missed opportunity if only a few party members were present to hear about the new direction that Labour will take when it returns to government.
Jim McMahon
I find it ridiculous of Conservative Members to suggest that a tax bombshell is waiting, when we know that the only one being suggested is the council tax bombshell—a 25% increase throughout the country. That is the only tax bombshell being discussed, although not at anywhere near the level of detail that is justified. Does my hon. Friend agree that we need to see the funding formula in the round before making a decision on the Bill?
Mr Thomas
I do agree. I have described the changes as a triptych. One normally thinks of triptychs in connection with great works of art, and I suppose the hon. Member for Thirsk and Malton, who believes that the Bill will be a radical transformation of local government, might be tempted to see it as one, but we know that that is a long way from the truth. The Bill is only one relatively small part of the package; the needs assessment and the fair funding review will have to be done before we truly know the impact of 100% business rates retention and whether it is in the interest of all local authorities, as Conservative Members claim.
On the quantum of local government finance, I gently point out to the hon. Gentleman that Unison research shows that there is a surplus in the main non-domestic account for business rates that could be used to fund an increase in social care, if Ministers so chose. If my amendments are not agreed to, we risk having fewer opportunities to debate the quantum of local government finance, the question of how it is allocated and the consequences for the public services that local authorities throughout England are allowed to offer.
I am beginning to contemplate the conclusion of my remarks, but let me first dwell on delayed transfers of care. If my amendments are not agreed to, there will be fewer opportunities for the House of Commons to consider those, too. I have some sympathy—not a lot, but some—with the Prime Minister’s point that the speed and quality of transfers of people from hospital back to a social care setting varies among local authorities and clinical commissioning groups. I do not want to explore that issue in detail, because that would be outwith the purview of the debate, but when Hampshire County Council, a Conservative-led local authority, is responsible for the highest number of delayed transfers of care—more than 8,000 in November alone—I have to wonder whether there is a problem with its funding. I do not represent Hampshire, but I recognise that as Members of Parliament we have a responsibility to think about the fortunes of people in England, not just in our areas but in others, and I worry about what that statistic says about the state of local government finance in Hampshire. Whenever there is a change in local government finance, there should be a regular opportunity for Members of Parliament to explore the situation, not just for each of our authorities, but for others throughout the land.
If Hampshire does not inspire concern among Conservative Members, what about Essex County Council, which had 5,684 delayed transfers of care in last November alone? In Northamptonshire, which at least one hon. Member may have some interest in, there were more than 5,400 delayed transfers of care in November; again, that suggests some difficulties with the authority’s social care funding. Surely it is our responsibility as Members of Parliament not just to focus on the authorities that we represent—on Harrow or Oldham—but to think about the citizens of Northamptonshire, and to worry and ask questions about what their local authorities’ finances look like.
In Kent, there were 4,884 delayed transfers of care—the sixth highest number in the country—in November alone. What does that say about the state of Kent County Council’s finances? Much of that wonderful county is taken up with agricultural land, so in the brave new world of 100% business rates retention, there are likely to be fewer opportunities for business rates growth there than in other areas. Again, those of us who can think strategically should be worried about the situation that Kent County Council faces. I offer those four examples of delayed transfers of care as a reason for concern, and I look forward to the Minister’s explanation of why local government finances should not be debated regularly on the Floor of the House and why the Secretary of State should not have to answer for what he plans to do.
Mr Jones
The Bill will provide the framework for a series of reforms to help local government boost local economies and become more self-sufficient and less dependent on Whitehall. This is a move away from a centralised state. The Bill will provide a clear framework in law for multi-year settlements, which will increase funding certainty and ensure that accountability for funding local services with local resources sits with local councils.
These radical changes require a new mindset. Under 100% business rates retention, there will no longer be a local government finance settlement to distribute central grants to support local services; local authorities will become more financially self-sufficient and will fund local services from local resources.
Mr Jones
The hon. Gentleman raises an interesting issue. If the country had the misfortune of another Labour Government—perhaps a discredited Labour Government, such as the one in the 1970s that went with a begging bowl to the International Monetary Fund—and inflation was soaring beyond belief, the Secretary of State might need to make some sort of amending statement to deal with the inflation and allow local authorities additional funding to deal with the mess that the Labour Government had again made. However, we are speculating, because I suspect it may be a little while before the Labour party is once again in a position to form the next Government.
Jim McMahon
Perhaps we can give the Minister a few seconds to capture his thoughts and reflect on the question. Does he envisage, then, that this power would be used only every 30 to 40 years?
Mr Jones
It is not for me to speculate on how often there will be a Labour Government. I do not think that I want to get into that this morning; I want to come back to the amendments and the Bill.
The amendments shift the focus back to Whitehall and Parliament by introducing a need for a resolution in the House of Commons, thereby jeopardising the move to more local accountability. The Government will be required to consult with local government on the principles for allocating funding over a period of years, and we envisage that whenever there is a reset of the business rates system, further consideration will be given to the allocation principles, in consultation with local government. Above all, it is important to provide as much certainty through this consultation as possible.
I am confused about the proposals, because on several occasions the hon. Member for Harrow West on the Opposition Front Bench has talked about a system of an annual vote, and about a vote at the start of the process to set the principles. He cannot have both things, but he seems to want to have his cake and eat it. I am worried that he is trying to undermine the principles of what the Government are trying to achieve.
Rob Marris
The Minister, who I believe is moving towards suggesting that the amendment should not be accepted, just prayed in aid the consultation with local government representatives. On page 33 of the Bill, proposed new sub-paragraph (2) in schedule 1(12)(4) says:
“Before making a principles of allocation statement, the Secretary of State must consult such representatives of local government as the Secretary of State thinks fit about the general nature of the principles of allocation.”
The Secretary of State could deem two local government representatives fit under that provision. Can the Minister say a little more about how wide the consultation would be? Would it be wider than my extreme example of two, which the Bill would allow?
Mr Jones
The point I was making to the hon. Gentleman is that I am rather confused about what he is looking for here. He has argued against the proposal he makes here and in favour of an annual vote in Parliament on this. There is very little clarity in his argument and, therefore, in what he is seeking to achieve by tabling this amendment, which seeks to undermine the principles of the Bill.
Mr Thomas
I hope in my closing remarks to deal with the fog of confusion that surrounds the Minister. It is the job of Opposition Members to ask questions of Ministers about the Bills they are bringing forward. The Minister needs to give us a justification for why the principles of allocation statement should not be approved by the House of Commons.
Mr Jones
I have spent some time in my contribution explaining that. It is always good to hear the hon. Gentleman speak from a sedentary position, like the archetypal school bully, but I will not take that to heart. I would never think he would do anything other than try to improve the discourse in the Committee.
Mr Jones
The hon. Gentleman mentions from a sedentary position tough love. With regard to his proposals, his version of tough love seems to be very confused. The point I am making, and the reason I urge him not to press the amendments, is that there needs to be far more clarity about what he is looking to achieve. What he suggests at the moment, particularly on having an annual vote—or not, as the case may be—seems to very much undermine the principles behind the amendments, so I ask him not to press them.
Jim McMahon
It is a pleasure to serve under your chairmanship, Mr Gapes. I will be quite brief, as I recognise that we are pushed for time in the morning sitting and that a vote will take place.
My hon. Friend the shadow Minister will want to reply to that very brief response from the Minister, which I struggled with. My hon. Friend explained at length the concerns we have and probed in great detail about where we are trying to get to, but the Minister could do nothing more than read out a pre-prepared statement from his folder in response. That really lacks respect for this Committee and for the amount of work and dedication that has gone into probing these provisions. I ask the Minister to reflect, before this afternoon, on whether he is happy with his performance this morning and to think about the great deal of weight and responsibility that his post carries.
It is not good enough just to dismiss the legitimate concerns raised here and bat them away as if they are not important. We are talking about the future financing of vital public services that our communities rely on. The amendments have not been tabled for the sake of it or to cause trouble and make waves; they are here because we are seeking certainty about the future sustainability of public services. For the Minister’s response to be five minutes—certainly less than 10 minutes—is quite disrespectful, and not only to us. He can be disrespectful to the Opposition—that is part of the Punch and Judy of politics—but to be disrespectful to the millions of people who live in this country and rely on those services is quite unforgiveable.
I would like a bit more clarity on what this provision means. We heard from the Minister in the evidence session that an additional £12.5 billion will be provided through business rates to local authority services, but no detail was provided on what grants would be taken away in lieu of that or what additional responsibilities will be pushed down. We still do not have clarity on whether mandatory relief and small business rate relief will be net of that figure. The Minister was at best confused and vague in his evidence.
Let me run through the numbers to clarify how big the gap could be depending on the financial review that is carried out. We know from the evidence session and the paper that the fantastic team at the Library have produced that the Government will release £12.5 billion, but they have not said whether the revenue support grant, the rural services delivery grant, the public health grant, the improved better care fund, the independent living fund or the early years grant will be included. They have excluded the Greater London Authority transport grant from those numbers. If we were to roll up those grants and expect them to be covered by the £4.5 million, we would have a gap, because their total cost is £14.7 billion. Can we have clarity on whether the £12.5 billion is new money? Is money going to be taken away that is provided to local authorities through grant support at the moment?
The Chair
Order. I am conscious that we are in danger of going wider than the specific amendments under consideration. I would be grateful if the hon. Gentleman would bear that in mind. As he said, we have limited time.
Jim McMahon
I take that on board completely, Mr Gapes, but this is absolutely relevant to the amendments.
The Chair
Order. It is not a matter for argument with me. It is a matter for sticking to the terms of the amendment that we are considering at this moment. There will be other opportunities to make those points.
Jim McMahon
Okay. My contribution is about parliamentary scrutiny and the role of MPs, both Opposition and Conservative Back Benchers, representing their local areas in Parliament. The reason the annual statement has to come to Parliament is so that we can ask these probing questions. However, before we get there, a decision will be made on which of these grants will or will not be included. As far as I can see, there is potential for there to be a very significant funding gap. More than that, we know that the adult social care gap is £3.5 billion. We also know that, despite a 25% increase profiled for council tax, that will generate only £1.8 billion.
There is concern about the grants that have been provided and whether the £12.5 billion will be enough. There is also concern about the £3.5 billion social care funding gap and the £1.8 billion profiled council tax increase. Those questions, which I accept are detailed, are critical and the reason these amendments are so important. For a Back Bencher, this is their only opportunity to have the debate and, more important, to have a vote on the day. The vote says to their constituents that they have represented their interests in Parliament. If the amendment is not accepted, that ability will be taken away from MPs.
Mr Jones
Again, the hon. Gentleman is seeking an annual vote of the House. Does he not think that an annual vote would completely undermine the principles of what we are trying to achieve here, which is certainty for local government over a longer period? This is something that local government itself has wanted for some time and something that 97% of local authorities have signed up to during this spending review period.
Jim McMahon
I thank the Minister for his intervention and for showing that in some ways he may have a slightly better grasp of his brief than I thought. However, 97% of local authorities have submitted their multi-year financial settlement. The Minister has still not confirmed how many of those local authorities have identified a funding deficit. It is all very well saying that local authorities have submitted the plan. What we have not had is the detail of how many are in deficit and will not be able to fund statutory services over the life of that multi-year settlement. That is why the annual scrutiny of public finances in local government is really important.
We do not yet know what the safety net arrangements will be. If there is an in-year shock to the business rate base, how will we know that that will be rectified in the formula that is being assessed? How will we know that any new formula will take into account the very different geographies and demographics in our areas? It may need to be rectified mid-year. That would be picked up in an annual review.
Mr Thomas
I accept the Minister’s point that the question of a vote on an annual basis may raise some uncertainty for local government, but it has coped with that for decades. Is there not an issue about the uncertainty for local government from new decisions that the Treasury may make on, say, small business rate relief? I think of the Budget measure that the previous Chancellor introduced to extend business rate relief to smaller businesses and shops, which took £7 billion out of the total business rate taken in. Arguably, that had more impact on local government finances than any tiny uncertainty about a vote in the House of Commons.
Jim McMahon
That is absolutely right and I fully concur with it. I intend to wrap up now so the shadow Minister can respond more fully and we can hopefully move to a vote.
Think about where politics is not just in this country but in the world. People are fed up of having things done to them and being told that their lot is what it is, and that they have no voice. Parliament’s very important function is to give people a voice. When people talked about getting back control, they did not mean taking power from Brussels and giving it to junior Ministers; they meant that their elected representatives should have a voice in Parliament and real power. For the Minister and the Government to introduce 56 new powers on top of local government and take away the role of Parliament is absolutely unacceptable in today’s political climate.
Mr Thomas
It is a pleasure to have the chance to summarise the debate so far. I indicated in the middle of my remarks that at least a couple of these amendments are probing amendments. At this stage, I do not intend to press amendments 24 and 25 to a vote. I will come to amendment 26 in a second.
I gently suggest that the Minister needs to reflect a little more on this debate and the question of the accountability of the House of Commons. In his response, he did not justify taking away the requirement for the House of Commons to approve the principles of allocation statement and the amending statement, although he made a perfectly fair debating point about whether it should take place annually.
The broad thrust of my remarks was to challenge the notion that Parliament should not have to approve the principles of allocation statement and any amending statement. We will want to return to that on Report. The Minister hinted on Second Reading that he might take seriously the concern of the Chair of the Communities and Local Government Committee about the reduction in scrutiny of local government finance. When the Minister’s feeling that he has been subjected to tough love on this Committee has subsided, I hope he will reflect more positively on the case for parliamentary scrutiny. He may not be able to see it at the moment, riding high as he is in the Department for Communities and Local Government, but things do come around and Governments do change colour. Perhaps he will still be a Member of Parliament in those circumstances, and perhaps the people of Nuneaton and Warwickshire will wonder why he is not doing more to raise questions about the financing of their local public services on the Floor of the House of Commons. The measure that he is locking into the Bill risks denying him an opportunity to give his constituents satisfaction in future.
I take the point that an annual vote on local government might inject an element of uncertainty into the proceedings, but the brutal truth is that parliamentary arithmetic normally allows the Government to get their way, so that element of uncertainty is rather overstated. In that context, I gently say to the Committee that, at a suitable time, I intend to press amendment 26 to a vote, because parliamentary scrutiny is so important. I hope the Minister reflects further on the fact that Conservative Members will table amendments on Report. The issue of parliamentary scrutiny no longer seeks to divide Members on both sides of the House, committed as we all are to the principles of the Bill. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Local Government Finance Bill (Sixth sitting)
(7 years, 9 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text
The Committee divided: - Ayes: 6 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 9 - Question accordingly negatived.
Mr Gareth Thomas (Harrow West) (Lab/Co-op)
I beg to move amendment 31, in schedule 1, page 33, line 31, at end insert—
“(3B) After sub-paragraph (2) insert—
(2A) As soon as is reasonably practicable after calculating the payments to be made or received under sub-paragraph (2), the Secretary of State must assess whether each local authority has sufficient resources to provide all statutory services in its area for the relevant year.
(2B) The assessment under subsection (2A) must be published in a report and the Secretary of State must lay it before Parliament.”
This amendment would require the Secretary of State to assess whether each local authority has sufficient resources to provide all statutory services in its area.
It is genuinely lovely to have you in the Chair, Sir David. This is no shame on Mr Gapes, but his presence in the Chair sadly did not inspire a series of helpful statements from the Minister. You missed three speeches from Conservative Members, including an excellent speech from the hon. Member for North Swindon, who gave away far more detail about the ideology behind the Bill than the Minister was willing to give. There were some very interesting interventions by the hon. Member for Thirsk and Malton, who will be very interested in hearing the case for amendment 31, which I am about to set out.
The Chair
Order. It is very kind for the hon. Gentleman to give me a resume of what happened this morning, but it is not necessary, so I ask him please to speak to the amendment.
Mr Thomas
I am always grateful for your guidance, Sir David, but you intervened on me just as I had finished giving a very helpful resume of this morning’s debate.
I am delighted to have the opportunity to speak to amendment 31, which is in my name and that of my hon. Friend the Member for Oldham West and Royton. It would require the Secretary of State to assess whether each local authority has sufficient resources to provide all statutory services in its area. The explanatory notes state:
“These reforms to the local government finance system will move local authorities away from dependency on central government grant and towards greater self-sufficiency.”
Which side of the divide one sits depends on the extent to which one believes that statement.
A local authority may be able to reduce its business rates multiplier to encourage economic growth, or it may be incentivised to permit new business development, but there is no direct relationship between that and the number of people who need social care or who have been made homeless. A unitary authority at least has responsibility for both local taxation collection and service delivery, but the situation is more complex in areas with two tiers of local government, where one authority collects taxes and another provides some statutory services. I am sure we will return to the mechanism for enabling a billing authority and a presenting authority to consult as we debate the Bill. I want to concentrate on funding for statutory services and whether there is a full and proper assessment of the case for statutory provision at a local level.
We will reach 100% business rates retention in, I understand, April 2019, the revenue support grant and other grants will be phased out and additional responsibilities will be passed down to local government. The Minister tells us that the change will be fiscally neutral. What Ministers have not yet told us is what they envisage happening if local authority revenues diverge significantly from the funding needed to provide statutory services. As the hon. Member for Thirsk and Malton pointed out a number of times—or it might have been the hon. Member for coastal erosion or Waveney—the Government are conducting a fair funding review, but will set the needs baseline only at the point of transition from the current business rates system to the new 100% retention system. One might ask what happens if the overall funding in the system fails to keep pace with the cost of providing services.
It is worth paying close attention to the Government’s record on that point. The cross-party Local Government Association has calculated that local government faces a £5.8 billion funding gap by 2020. Local authorities have statutory obligations to provide several services. As we have said several times, we support the principle of 100% business rates retention, but we want an honest assessment of the implications for councils’ finances and their ability to continue to deliver the services they are obliged to provide.
I stress again that there is no inherent or causal link between a council’s ability to encourage local growth and boost its business rates revenue, and local demand for key services. The hon. Member for North Swindon said that the economic incentives in the Bill would cause a huge surge in business rates income. People who are perhaps more expert than him—there are clearly not that many—worry about whether his optimism is as justified as he might hope.
We heard before lunch that Ministers in Whitehall will retain huge power over the resources available to local authorities but are determined to face less scrutiny in Parliament. There are some 56 new powers in the Bill for the Secretary of State, the Treasury or some other bit of Whitehall to interfere with local government finances. Amendment 31 would place just one additional duty on the Secretary of State—a duty to assess whether each local authority has sufficient resources to provide all statutory services. You are a diligent Member of the House, Sir David, so you will be well aware of the crisis in adult social care, which is perhaps the most visible example of the funding pressures facing local authorities and, in terms of statutory services, the most pressing justification for amendment 31.
Just this weekend, Councillor David Coppinger, who is the cabinet member for adult services and health in the Prime Minister’s local authority, the Royal Borough of Windsor and Maidenhead, and Councillor Simon Dudley, the leader of that council, added their voices to the clamour for a solution to the adult social care crisis. Perhaps they were encouraged to speak out by my amendment 31. Councillor Dudley told The Observer:
“The burden is increasing disproportionately over time against a backdrop of more required efficiencies from local authorities. You see that with situations like Surrey”.
I remind hon. Members that Surrey wants to put up its council tax by 15% purely to pay for social care. [Hon. Members: “No it doesn’t!”] Well, it certainly did last week. Councillor Dudley went on to say that Surrey
“simply can’t achieve that, and there will be others. I have absolutely no doubts at all. Other local authorities will find themselves in the same situation as Surrey over the coming years.”
Jim McMahon (Oldham West and Royton) (Lab)
The situation as of today is that Surrey will not have a referendum on a 15% council tax increase. I understand that that is not because it assesses the need as any less but for other reasons. However, my hon. Friend’s fundamental point about social care funding is absolutely critical and needs addressing.
Mr Thomas
I am grateful to my hon. Friend for making that clear. It will be interesting to see what pressure was applied to the leader of Surrey County Council. He obviously has a close relationship with the Chancellor of the Exchequer, who is one of his Members of Parliament, and it will be interesting to see whether that had anything to do with that volte-face. My hon. Friend may not know this, but Surrey has the great advantage of having one Labour councillor. There is only one at the moment, but I am sure that will change after the elections. His name is Robert Evans. He is a former Member of the European Parliament and was leading the campaign, on behalf of those in Surrey who were only just about managing their finances, against the 15% increase in council tax. I am sure he will be feeling very proud today of the success that he has had in persuading Surrey County Council not to increase council tax and hit those in Surrey who are not so well off.
I will return to Councillor Coppinger of the Royal Borough of Windsor and Maidenhead. He believes that the current funding model for social care is sustainable for only two more years. It is worth remembering that the Prime Minister’s local social care authority is one of the few that has been able to increase spending on social care since 2010 by 5.7% in real terms.
To take another example, Liverpool has been able to increase spending by 6.7% in real terms over the same period. However, the situation there is even worse. Liverpool’s adult social care director, Samih Kalakeche, has tendered his resignation. He said that, as things stand, councils such as his will probably soon be unable to meet their statutory requirements:
“Frankly I can’t see social services surviving after two years. That’s the absolute maximum. If we don’t do something within the next six months, I believe social services will not exist by 2018-19. This isn’t scaremongering, this isn’t me asking you to feel sad for me—whoever is making decisions out there has looked at social care as the Cinderella of the service, which means more and more people are staying at home with high needs because of the removal of the prevention agenda. People are struggling, people are suffering, and we’re really only seeing the tip of the iceberg”.
The Minister may not be sympathetic to the former director of adult social care in Liverpool, but he might be more sympathetic when he considers that the Local Government Association shares similar concerns. He will probably be aware of what Councillor Izzi Seccombe said last month. She is Conservative leader of Warwickshire County Council—I am sure she is well known to the Minister. She is also chair of the LGA community wellbeing board. She said that
“the intentions and the spirit of the 2014 Care Act that aims to help people to live well and independently are in grave danger of falling apart and failing, unless new funding is announced by government for adult social care”.
The leader of the Minister’s own council has set out how grave is the funding for one key statutory service, which is all the more reason to tempt you, Sir David, to agree with the case for amendment 31, albeit you cannot do so given your position.
As far back as 2015, local authority representatives told the King’s Fund that they were struggling to meet their obligations under the Care Act 2014. Just 8% of council directors of adult social care say they are confident they can fulfil their duties under the Act in 2017-18, which is a pretty difficult situation. The LGA is not the sort to scaremonger, but it has been calling for urgent measures to plug a funding gap in social care. It says that £1.3 billion is needed, with the funding gap expected to rise to £2.6 billion by 2020 if nothing changes at all.
A new story seems to emerge every day to illustrate the crisis in social care and to underline the need for the assessment that is at the heart of amendment 31. Yesterday, we learned of the case of Iris Sibley, who was stuck in a hospital ward for six months as a suitable nursing home place could not be found. Mrs Sibley’s son has described how her mental and physical health deteriorated as she was stuck on the ward, well enough to be discharged but with nowhere suitable to go.
One wonders what it would take for Ministers to act. Perhaps amendment 31 might prompt more action, more quickly from Ministers.
Kevin Foster
The shadow Minister is his usual generous self, and I thank him for giving way. I can only say that I can guess who my hon. Friend the Member for Shipley (Philip Davies) looks to for inspiration in terms of brevity in making speeches on Fridays. The hon. Gentleman has been referring to social care. Torbay has one of the lowest levels of delayed discharge, despite its demographics. Does he agree that setting up a good quality integrated care organisation is the actual solution, rather than his amendment?
Mr Thomas
To my great surprise, I am almost in agreement with the hon. Gentleman—there has clearly been a huge improvement as a result of our collective mentoring of him—but I add one reservation to my encouragement. What he suggests makes some sense going forward, but amendment 31 would be a useful addition that would give us the opportunity to understand whether Ministers have properly grasped the social care funding situation for each local authority, whether that is joint or not joint with others.
In making the case for amendment 31, let us move into an area that is particularly topical in the light of the housing White Paper: homelessness services. Clearly, those are key statutory services that local authorities offer. Local authorities have already faced a substantial number of legal challenges on their statutory duties to support the most vulnerable people who are at risk of homelessness. In September last year, 74,630 households were in temporary accommodation, including those in bed and breakfasts. That was the 21st consecutive quarter in which the number of homeless households in temporary accommodation increased. If we factor in the 40% increase over the past four years in the cost of providing temporary accommodation, the LGA—not a body to sound the alarm unnecessarily—estimates that the funding gap for homelessness services will be £192 million by 2020.
I was not able, because I was preparing for this debate, to be in the Chamber to hear the Secretary of State speak, but just from looking briefly at the social media reaction, I did not get the sense that he announced an additional £192 million for homelessness services by 2020. That is a further reason to encourage action after the new system comes in by accepting amendment 31.
Sunderland City Council has already announced that because of the very difficult financial situation it is in, it may have to cut its entire housing support budget, which is used to pay for vital services, such as hostel beds, refuges and supported housing. Services for those who are most at risk of homelessness, including ex-offenders, people with mental health conditions and those with learning difficulties, are also being cut. When we bear in mind that the life expectancy of those sleeping rough is just 47, according to charities in Birmingham, one fears that vulnerable people will die as a direct result of the proposed cuts to housing support services in Birmingham of some £10 million over the next two years. That is an indication of the financial crisis affecting another local authority.
The new duties to be introduced under the Homelessness Reduction Bill, which the Minister prayed in aid last week, are welcomed, but many of us remain sceptical that councils are being adequately funded to fulfil them. On Second Reading, as I recollect from glancing at the debate, quite a few of the interventions raised directly with the Minister concern about the availability of funding. Were amendment 31 on the statute book, Ministers would have less chance of inadvertently not understanding or not recognising financial needs in that area.
There is great concern about the insufficiency of the £48 million of funding that the Minister announced to expand necessary homelessness provision for single men and women. The Association of Housing Advice Services, which is a non-profit organisation, estimates that London’s 32 boroughs alone will face a combined bill of £161 million to implement the new duties.
The full scale of the housing crisis is clearly beyond the scope of the amendment, but I am sure that in our advice surgeries we have all come across incidences of families struggling to find affordable accommodation near their workplaces or children’s schools. It is clear that the funding for the vital role that local authorities play in protecting the most vulnerable and in finding that most basic need, a home, is under severe pressure.
Another key statutory service that should surely be recognised by inclusion of amendment 31 in the Bill is children’s services. Looking after children is one of the most important statutory duties of councils, with a total of £11.1 billion a year spent on un-ring-fenced funding on children’s social care and education services. Again there has been an increase—60% since 2008—in the number of children requiring children protection plans. That is at a time when, from 2010 in the previous Parliament, councils lost 40% of their funding from central Government. The LGA estimated a £1.9 billion funding gap for those vital services by 2020.
For many councils, the pressure on children’s services is even more acute than that on adult social care. Three hundred and seventy-seven Sure Start centres have closed since 2010, with only eight opening in that time. That is the result, I suggest, of a spending cut on the centres of 47% in real terms. Sure Start centres have been crucial in supporting children from disadvantaged backgrounds during the vital early years before they reach school age, but again service cuts are diminishing such children’s prospects. Were amendment 31 on the statute book, Ministers might feel a little more reluctant to push such savage cuts through.
In the context of education and education services, will the Minister explain why the Government still intend to go through with the planned cut to the education services grant? It is entirely appropriate to ask that question in the context of amendment 31—let me explain why. The Education Secretary was correct in deciding not to proceed with the forced academisation programme of her predecessor. Under the proposed education-for- all Bill that would have delivered that programme, it would seem sensible for councils to lose their funding for their school improvement responsibilities—given that all schools would become academies. Forced academisation having been scrapped, however, we are left with a situation in which councils keep their school improvement responsibilities, although the funding is still being cut.
Rob Marris (Wolverhampton South West) (Lab)
May I caution my hon. Friend not to be too hard on the Minister because it is Ministers from the Department for Education who demonstrate time after time on the Floor of the House that they do not understand the difference between early years education and childcare? They constantly elide the two. It is not the Department for Communities and Local Government that makes that mistake, although it may, but the Department for Education and its ignorance is shocking.
The Chair
Order. Before the hon. Member for Harrow West responds to that intervention, may I say that I have been listening carefully? It is certainly within Erskine May, but if we continue to go through the statutory regulations in minute detail we will have an all-night sitting. Will the hon. Gentleman draw his remarks more closely to amendment 31 before we start going on about early years learning?
Mr Thomas
I am grateful for your guidance, Sir David. I will leap forward and give one specific, tangible example of the concern that motivated me to table amendment 31. In 2015, Lancashire County Council commissioned a report by PricewaterhouseCoopers to look at the level of resources it needs to provide statutory services going forward. That report makes sobering reading. It forecast that even if the council achieved everything in its saving plans, it would have an in-year deficit of £148 million in 2020-21 and a cumulative deficit of £398 million.
The report identified several areas in which planned savings were at risk of slipping and not delivering the full range of savings, meaning that the forecast budget gap would be even greater. That example of Lancashire County Council and the independent work by PricewaterhouseCoopers on whether it could continue to fund its statutory services in the future surely cuts to the very heart of the case for amendment 31.
Given the scale of spending cuts that councils have experienced and the sheer number of councils in all parts of the country and of all colours that have outlined their views, councils are under huge pressure. I gently suggest that Ministers cannot continue to press ahead without a significant change in direction and recognition that a central part of the new 100% business rates retention scheme should surely involve putting local councils on a sustainable financial footing. That is the context in which I make the case for amendment 31.
If Ministers are not convinced by the example of Lancashire County Council, let me give the example of Nottingham City Council. Councillor Jon Collins gave evidence to the Committee and made clear the scale of the cost pressures affecting the council—£11.2 million of cost pressures, wage demographics, additional inflation and charges from providers. He talked about the extra funding and pressure on his budget and raised a comparison with a nearby local authority—Rutland. He noted that the spending challenges facing his authority in Nottingham were substantially less than those facing nearby Rutland.
Clearly, amendment 31 might help to persuade Ministers to iron out such difficulties if there was a proper assessment of need. That is the spirit in which I tabled amendment 31. I hope the Minister might now be willing to be more careful with the future of local authority finances. Amendment 31 would be a sensible additional safeguard.
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Marcus Jones)
It is a pleasure to serve under your chairmanship, Sir David. I thank Opposition Members for the amendment, which provides an opportunity to set out the Government’s position on the future sustainability of local government. Before turning to the amendment, I would like to take the opportunity to clarify that medium-term fiscal policy decisions in the United Kingdom are managed, as the hon. Gentleman knows, through spending reviews. The spending review in 2015, for example, set local government expenditure limits to 2019-20. The Government will continue to assess the funding of local government after the introduction of 100% retained business rates through spending reviews.
Mr Thomas
Given the concern about how tariffs and top-ups and distribution of resources will take place between local authorities, will the Minister give a bit more clarity on the criteria for the distribution of that homelessness funding? Will it be guided by the index of multiple deprivation? How will Ministers be guided in terms of the distribution of that finance?
Mr Jones
The hon. Gentleman raises a good question. As was made clear in Committee and, if I recall correctly, on Report of the Homelessness Reduction Bill, a clear commitment has been given by the Government to work with the local government sector, particularly the LGA, on how that funding will be distributed to reflect need. As the hon. Gentleman will know, the spending review process and a number of different processes will follow from the Bill. The Government also take the position that they will work with local authorities and their representative bodies to come to conclusions, particularly on the quantum of funding required and how it is distributed.
Amendment 31 would require the Secretary of State to assess whether each local authority has sufficient resources to provide statutory services in its area. Our concern with the amendment is that it replicates what is rightfully a matter for the Government to consider through a spending review. Furthermore—the hon. Gentleman alluded to this point—the fair funding review will consider the suitable distribution of funding across local government.
I hope I have reassured hon. Members that the Government will continue to consider the level of funding for local government. I therefore ask the hon. Gentleman to withdraw the amendment.
Mr Thomas
I listened carefully to the Minister and take his point about the fair funding review. I would gently suggest to him that that is discretionary, although it is a pivotal element to this particular measure and is one of the parts that will come sometime in the long-distant future to inform us how 100% business rates devolution will work in practice. What we do not know is whether there will be a fair funding review in future if there were to be another Conservative Government. We do not know whether there would be a spending review in future —they are entirely at the discretion of the Government.
Amendment 31 would lock into law the requirement to produce that assessment. In the context of such a radical transformation, to use the Minister’s words, of local government finance, the additional duty on the Secretary of State seems like a sensible precaution to put in place. Much as I would like to accept the assurances from the Minister, I fear that I cannot, and I intend to put amendment 31 to the vote.
Question put, That the amendment be made.
Jim McMahon
I beg to move amendment 27, in schedule 1, page 35, line 32, leave out sub-paragraph (1).
This amendment would retain levy accounts.
It is a pleasure to serve under your chairmanship, Sir David. You have not had the pleasure of attending many of the debates we have had and I will refrain from repeating them, although they were fascinating in many ways. They were a source of great training and education from my hon. Friend the shadow Minister. I would hope that, on reflection, the Minister picks up some of the points about attention to detail, really understanding the brief and assessing the impact of decisions made in Parliament.
I have the honour of explaining some of the more technocratic parts of this Bill. If you are interested, Sir David, in what a levy account is, and that mysterious way of working and why it is there, this is the amendment for you. Amendment 27, which is in my name and that of my hon. Friend the shadow Minister, is in many ways technical, but it is also very important—I will explain why in my short summary of support for it. I say at the outset that it is a probing amendment because I want the Minister to pay attention to my contribution and to address the issues I raise.
The last levy account, covering 2015-16, was presented to Parliament under the requirements of the Local Government Finance Act 1988. If the Minister wants to look it up, it is dealt with in paragraph 19 of schedule 7B. The business rates retention scheme introduced on 1 April 2013 allowed local authorities to retain 50% of rates collected in their area. Cash flows in respect of that scheme are reported in two White Paper accounts: the main non-domestic rating account and the levy account. The amendment refers to the latter.
In simple terms, the levy account provides transparency of cash flows between local authorities and the Government in respect of the 2013 scheme. A reasonable response would be: “We’re moving away from the 2013 scheme, which provided 50% of rate retention, to 100% rate retention,” but, critically, the levy is basically just a mechanism for bringing money in from areas that pay a tariff, and sending it back out to areas that have depressed business rate bases—it effectively provides the accounting mechanism to allow those payments to take place. If we had 100% retention but also intended to create a safety net to support local authorities that have experienced unforeseen impacts on their business rates bases, the levy account could perform that function, regardless of how much was retained and redistributed locally, which is important if we consider that 326 billing authorities in the country may well have a claim on the levy account. Some will use it only temporarily. For instance, there is a facility for mid-year payments to be made from the levy account and, when the accounts are made up at the end of the financial year, if a local authority has been overpaid, the amount will be recouped and paid back into the levy account.
The levy account has an interesting history, some of which is contentious, if I am honest, to local government friends. Several years ago, a top-slice was taken from the revenue support grant. That meant that less money was distributed to councils in the first place, but at least it provided a safety net. For instance, last year £50 million of additional money from the RSG was sent into the levy account to support councils that had had an unforeseen depression in their tax base.
That raises an important question about where the Bill is going. We have talked about support in principle for rate retention, and for a system of tariffs and top-ups whereby areas that could not retain the money they needed locally would have sufficient money to pay for public services in their area. We have talked about what formula could be used, rural areas and urban deprivation—we have talked about a range of issues. In some ways, that is not for this amendment, which is solely about the mechanism by which safety net payments are provided.
It is fair to say that, during our debates on the Bill, no information has been provided about what mechanism will replace the levy account, which raises a question: if there is a desire for some kind of safety net to support councils that fall on difficult times, how will it be provided if the mechanism is deleted?
Jim McMahon
This has been a theme throughout the Committee’s sittings. We are having a debate in almost complete isolation, without knowing where the Government intend to go on the fair funding formula—as has been discussed, that is absolutely critical and underpins the Bill—and without understanding the sector’s views. We debate issues and make laws to which other people have to adhere, and they have real-life consequences. The local authorities that have to live with the consequences, and that know the impact on the frontline, have responded to that consultation, but we are discussing the Bill without sight of their responses. I am not sure whether that is due to a Trump-esque view—if something does not support someone’s view of the world, it is dismissed as fake polling data or fake news. Is it possible that those consultation returns are being screened for “fake” consultation responses? How long does it take to compile the information submitted by the sector and send it out in a report? Even the raw data—a copy and paste of what had been provided—rather than a summary would at least mean we could scrutinise it and undertake the questioning and answering that should take place.
Mr Thomas
I thank my hon. Friend for his support for my request for at least a summary of the responses on the levy when the Minister replies. Does my hon. Friend not share my view that it would be particularly interesting to hear what contribution the Prime Minister’s authority made, not least as it is one of the local authorities that stands to benefit, in business rate terms, when a third runway is built at Heathrow?
Jim McMahon
I absolutely agree with that point. It has been made a number of times, but the Minister has consistently failed to address it. The Minister may well have been passed the answer by one of his advisers; perhaps he can share that knowledge with us in his response—that would be very helpful.
The important thing about the levy account is that it is not just about the mechanism; it is also about how much money is put in the pot that can be used to support councils with a depressed local business rate base. Critically, that relies on a vote of Parliament. We talked about parliamentary scrutiny of the annual financial settlement that will support local government, and about the referendum limits and how that would be subject to a parliamentary vote. The Government seem determined to make sure that Parliament does not have a role in how local government is funded. This is another example of Back Benchers not having a say on how much money is provided for any kind of safety net.
I am not sure what confidence we are meant to have in the system, when we do not know what local government has said as we are debating and scrutinising the Bill, what the method of redistribution will be, or how much will be provided by way of a safety net—or even whether that mechanism will be inside or outside Government, because in the consultation, there has been a nod to a semi-independent body potentially being established. However, we are of course framing our own view and interpreting the Minister’s limited responses in these debates, rather than seeing that set down on paper.
The scale of the payments from the levy account are quite important. These are not small payments—well, sometimes they are, but the scale of the call on that budget is significant. For 2015-16, the Secretary of State approved payments of £112 million to support local council services. Imagine what £112 million could pay for—how many day care and youth centres that would fund, and how many older people could be looked after in their own home with that. If that money was not there, what would be the human cost of councils being told to sink or swim without having that safety net in place? Some clarity on that from the Minister would be greatly appreciated.
In all this, we are trying to understand what the end will look like. We are aware of what is being taken away, and of how the Secretary of State, and the Minister in this Committee, are reducing the role of Parliament and parliamentary scrutiny; we are less clear on what the end will be. All of us in politics accept that to make good legislation and good decisions, we have to make difficult decisions at times, but we should never go forward with a bad decision based on a lack of information and half-reports. Please say what mechanism will be there to support the levy account. We can then hopefully have a meaningful debate on what the safety net and mechanism will be, and can test whether it is fit for purpose.
Mr Thomas
I rise in support of amendment 27. It is worth touching on a couple of the ways in which the levy rate works. Tariff authorities may be subject to a further levy on growth in business rates income. Each such authority was set a levy rate of between 0% and 50% at the outset of the 50% business rates retention scheme in 2013-14. An authority with a 0% levy rate will keep all its growth in revenue. An authority with a positive rate—over 0%—must pay that percentage of its growth in revenue to the Government. The purpose of the levy is to ensure that authorities with very high business rates tax bases relative to their assessed needs do not benefit disproportionately from the system. As my hon. Friend so eloquently set out, the Bill will remove the Secretary of State’s power to set such a levy. Clearly, our amendment would retain that power.
I have already mentioned the example of Maidenhead’s council, the Royal Borough of Windsor and Maidenhead, which has a 50% rate—the highest rate that it can have. Presumably, this is because the council already benefits from its proximity to Heathrow, and from all the businesses that want to be close to Heathrow to export their goods to markets around the world. We commend Maidenhead on its good fortune, but surely as it benefits from a major piece of infrastructure—Britain’s most crucial hub airport—it has not had to do huge amounts to encourage that growth in business rates income, although I am sure that the council’s leader would point to one or two things it has done to encourage business. However, even Maidenhead would struggle to claim that it has not benefited from being so close to a major airport. I cannot see anyone in this room who is an opponent to a third runway at Heathrow.
Mr Thomas
I apologise to my hon. Friend. As ever, he helpfully corrects me, but the majority of Committee members support a third runway. With a third runway, Maidenhead’s council will presumably benefit from being even more attractive to businesses that want to get their goods out to export markets. It will have done nothing to put in place new conditions for economic growth; it will simply have benefited from a major strategic decision taken by this great House. The irony is that Maidenhead opposes a third runway at Heathrow.
The Chair
Order. I am listening very carefully to the hon. Gentleman, but it is not appropriate for him to continue on the point about Heathrow airport. Will he return precisely to amendment 27, which we are debating?
Mr Thomas
Thank you, Sir David. Hillingdon has a 50% levy rate at the moment. The worry is that in future, it may not have to pay quite so much back into the national pool for redistribution to other local authorities, such as North Yorkshire. We have heard regular and understandable pleas for additional finance from the hon. Member for Thirsk and Malton. One would have thought that he would want Maidenhead’s council to benefit from a third runway, so that some of its growth in business rates revenue could be redistributed to North Yorkshire.
Kevin Hollinrake
It is a pleasure to serve under your chairmanship, Sir David. The hon. Gentleman makes a very good point, but some of that revenue will presumably be redistributed at reset periods, so North Yorkshire would benefit from increased business rates there. The principle behind the measure, and the scrapping of the levy, is to increase the incentive for local authorities to grow their business rates; levies decrease that incentive. Does he welcome the fact that there will be a greater economic imperative without the levies in the system?
Mr Thomas
At the heart of the debate is the question of whether there will be quite the economic imperative that the hon. Gentleman and the hon. Member for North Swindon suggest. I hope that there will be such an imperative, but the evidence from the witnesses was not hugely encouraging on that point, as I set out when I referred to the contribution of the chair of the Federation of Small Businesses.
The hon. Member for Thirsk and Malton made a point about resets, but we do not know how often they will take place. I gently suggest to him that it might be better to think about retaining the levy arrangement, so that his authority and mine can benefit from some of that income a little more quickly. Perhaps he does not know that North Yorkshire has a 0% levy, so it is one of the authorities that does not have to contribute to London authorities such as mine, Wolverhampton or anywhere else. I am sure he is pleased to hear that.
Rob Marris
Is my hon. Friend aware that under the system that the amendment seeks to retain but that the Bill will remove, over the past four years there have been 52 winners—if I may put it that way—and 119 losers, according to the Institute for Fiscal Studies? Surprise, surprise: most of the winners are district councils, and most of the losers are larger councils, including many metropolitan borough councils and unitary authorities.
Mr Thomas
My hon. Friend is right. As he knows, I have expressed concern about the distribution between tiers of authorities and how redistribution mechanisms would work in practice without a levy, but we are none the wiser about redistribution in practice, because the Minister has not been able to tell us about it. Perhaps you, Sir David, can use your influence with him to elicit the summary that has been promised for some time in the future, we know not exactly when. We are told it will be soon-ish, but how long that is, we do not yet know. Perhaps some of the 400-plus responses to the consultation document that the Department produced last year will give us some sense of how the levy will work.
Kevin Hollinrake
The hon. Gentleman made a remark about North Yorkshire not contributing to his local authority, but that is quite right, because his local authority already has greater spending power, so why should it? He also made mention of my hon. Friend the Member for North Swindon and me; we are in concert on economic opportunity, but so is the Select Committee on Communities and Local Government, which heard from many witnesses and took much evidence. The Committee concluded that the business rates reforms
“are, nevertheless, transformative and create a real opportunity for local government; in retaining 100 per cent of business rate revenue, councils will have a direct and strong incentive to promote local growth and economic development.”
Does the hon. Gentleman not agree with the Select Committee and its Chair, his colleague the hon. Member for Sheffield South East (Mr Betts)?
Mr Thomas
I bow to no one in my admiration of the Chair of the Communities and Local Government Committee. I am glad that the hon. Member for Thirsk and Malton mentioned the Select Committee report, because it said some interesting things about the potential volatility of the business rates income and the need for an effective safety net. One wonders how that will work in practice without the levy arrangement that we are discussing. My hon. Friend the Member for Oldham West and Royton is itching to get into the debate on the safety net, and I will not stand in his way when we come to it, but I hope to catch your eye after he has spoken, Sir David, to explore the concerns of the Select Committee a little more.
To return briefly to the levy, Maidenhead pays 50% of its future business rates growth into the levy, but frankly does not have to do much to benefit from economic growth because of its location. If Maidenhead does not serve as a warning to Conservative Members, perhaps the London Borough of Hillingdon will. It, too, will benefit hugely from the construction of a third runway, and will not have to do much to promote economic growth—it will not need to, because of the strategic decision that we have taken. Hillingdon’s council has a levy rate of 50%.
The hon. Member for Thirsk and Malton has used almost all of his interventions in Committee so far to bash London authorities and demand that spending power be redistributed away from London to North Yorkshire. I do not get the sense that he cares about anybody else’s local authority—not even those of Members on his side. One would have thought that he might therefore be sympathetic to our concern that on the face of it, Hillingdon’s council will no longer have to make a significant contribution to the redistribution to others.
Kevin Hollinrake
The hon. Gentleman says that I do not care about other local authorities, yet earlier I quoted York, which has one of the lowest amounts of spending power per head. Windsor and Maidenhead has the lowest, and Trafford the third lowest. There is also Leicestershire, Staffordshire, Northampton, Kirklees, Swindon, Warrington and Medway. I speak on behalf of all these authorities that have approximately 50% of the spending power of the London councils I mentioned. Does he agree that that cannot be right?
Mr Thomas
As you can see, Sir David, the hon. Gentleman is a passionate advocate for redistribution away from London. We have tried to convince him to get underneath the detail of the scale of need in London, but clearly we have been unsuccessful today. A little progress is needed. I have made the point that I wanted to make. I look forward to the Minister’s answer, and the response of my hon. Friend the Member for Oldham West and Royton.
Mr Jones
I thank the hon. Members for Harrow West and for Oldham West and Royton for the amendment, and for the opportunity to set out why we want to remove levy payments. As the hon. Members have explained, the amendment would retain the Government’s ability to make regulations requiring a levy. As we set out when we announced our intention to move to 100% rates retention, we do not believe that imposing a levy on growth is desirable; nor is it necessary for the purposes of funding the safety net. Through rates retention, we want to encourage and incentivise authorities to work with their businesses and communities to deliver economic growth. We want them to use their powers, through the planning system and more widely, to support development and create the conditions in which business can thrive. Where they do so, we want to allow authorities the benefit of all the growth in their business rates that will follow.
Rob Marris
We heard from my hon. Friend the Member for Harrow West that Maidenhead is paying a 50% levy. That suggests that it has done well in growing its business rates—good for it. Can the Minister tell us what places such as Maidenhead have done to grow their business rates base, so that other councils, such as mine, could learn lessons from Maidenhead?
Mr Jones
Certainly. There is good practice happening in local authorities, and I would always recommend the hon. Gentleman’s local authority taking a leaf out of the book of a good Conservative authority that is doing the right thing on growth.
The levy works as a tax on growth, taking up to 50% of any benefit that authorities may have seen. This certainly acts as a disincentive and, for that reason, we have said clearly that we want to remove the Government’s ability to set a levy. Nor do we believe that that the levy is necessary as a way of funding the safety net. To come back to the comments of the hon. Member for Oldham West and Royton, there are other, fairer ways of dealing with the safety net, the most obvious being to take a top-slice at the point at which we set up the scheme and use that to fund any safety net payments needed.
If there is no need for the levy, there is no need for the levy account. Indeed, if such an account was prepared, there would be nothing to report in it. In that sense, this matter is quite simple: we will abolish the levy, and therefore there is no need for the levy account. I hope that the hon. Gentleman will withdraw his amendment.
Jim McMahon
I thank Members who have contributed to the debate. I am left slightly worried that the Minister does not understand the levy mechanism and the function of local government group accounting.
The Department is required to produce group accounts for local government that show the balance of transfers between local authorities and the Department. Whatever mechanism is in place to provide payments to and fro requires an account to be set up, because if an account does not exist, it will not be included in the group accounts and will be off the books, which makes no sense. We could call it a different name, but the function of an account is that it sits somewhere and annually feeds into the group accounts, which give the Chancellor an overview of departmental spend, and that is fundamental to how we account for public money. We could call it a levy account or even the Jones account, for all local authorities care, provided there is an account to be drawn upon.
At the moment, the top-slice is funded by revenue support grant. It was £120 million; it went down to £50 million in 2015-16. The Minister did not say this, but I take it that if the money does not come from a top-slice of revenue support grant, it will come from the £12.5 billion of additional money through 100% business rates retention.
Jim McMahon
I find that contradictory. Either the burden will be on central Government, which means there will be a requirement to find the money from elsewhere in Government, or the money will come from existing budgets within local government, which means local government will take the burden.
Jim McMahon
I accept the point, but the Minister must accept that over the past two financial years, £170 million has been taken from revenue support grant top-slice. That money will need to be provided from somewhere, because at the moment there is a deficit in the levy account of something like £14 million. That shows more money is being drawn down from the account than is being added on top through revenue support grant top-slice or business rate levies from authorities that are exceeding their profiled business rates increases.
The Government cannot have it both ways. The money is either already within local government and is just being re-profiled, or it is coming from elsewhere within Government, in which case it will be a burden on other departmental budgets. We will come on to safety net payments later; this is simply the mechanism by which we make those payments. Either way, we will need group accounts. We have to account for the transfer of funds from one departmental account to local government. I do not intend to press the amendment to a vote; it was a probing one.
Rob Marris
The Minister’s response is disappointing. The amendment would retain the levy. He urges the Committee to reject the amendment and to abolish the levy because, according to him, it is acting as a disincentive to growth. When I asked him for evidence of that at the evidence session, he could not produce any.
I am open to persuasion, but—call me old-fashioned—I like a bit of evidence. When I asked the Minister today what Maidenhead has done well to be in a position where it pays a 50% levy, he could produce no evidence. Since Monday last week, he has had his officials available to produce some evidence. However, he has produced no evidence for his assertion that a measure such as the abolition of the levy will incentivise councils more than they are incentivised already to grow the businesses in their areas, thereby increasing business rates revenue.
Therefore, I am driven to the conclusion—I hope the Minister can dissuade me of this—that his arguments are totally hollow and mere assertions backed up not with evidence, but merely with a hope that the changes promulgated by the Bill, including the abolition of the levy, will produce the intended effects. In the absence of evidence, I find that singularly unconvincing.
Jim McMahon
I agree with my hon. Friend that the evidence base was not provided in our evidence session. We have asked for written evidence, but it has not been forthcoming. It is difficult to scrutinise, given the throwaway comments that have been made.
Kevin Hollinrake
During the opportunities to challenge and ask questions of the witnesses, did any Opposition Member ask that question of them?
Jim McMahon
I thank the hon. Gentleman for that intervention. He was at the hearing when that question was asked. The answer was less than forthcoming, but there was an answer of sorts. The question from my hon. Friend Member for Wolverhampton South West is in Hansard. It is on the record, as a matter of fact. It is also a matter of fact that the answer has not been provided.
Mr Thomas
My hon. Friend’s point is about the lack of evidence for the great assertions by the hon. Members for Thirsk and Malton and for North Swindon, never mind the Minister, that economic incentives will flow afresh. One would have thought that Ministers would have had some sort of economic impact analysis to offer, but there is no Green Paper, no White Paper and no sign of any evidence that this will be the new Jerusalem we have been promised.
Jim McMahon
Sir David, you have been very patient in this debate. To be fair, we had the exchange in our evidence session and we have had a protracted debate during our last couple of sittings. In some ways, we are going around in circles. We have repeatedly asked for the evidence base. We have asked what end we are working towards and what evidence base underpins that approach. Consistently, that has not been forthcoming. It is right, therefore, that Members continue to press the matter, but we need to make progress. We need to be slightly mindful of the time we have already taken and the number of amendments that we need to get through.
Even if the ambition is for 100% business rates retention and there is a view—the evidence base does not support this—that having any kind of clawback facility would inhibit growth, actually, the legislation provides for the levy account to remain in place and to be zeroed. If at some point it required a top-up, because there was not enough money in the levy account to provide the safety net payment, the Minister, without going through the rigmarole of Bill Committee sittings and all the other things we do here, would be able to change that through negotiation and consultation with local government. It strikes me as a complete dereliction. There is not just a lack of evidence—the provision is quite reckless.
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Jim McMahon
I beg to move amendment 32, in schedule 1, page 36, line 2, at end insert—
‘(1A) In sub-paragraph (1)(a), after “year,” insert “on the basis of a safety net payment threshold that is not less than 95% of the authority’s baseline funding level for the relevant year’.
This amendment, together with amendments 33 and 34, would ensure that the threshold at which an authority receives safety funds is a fall in income of not more than 5 per cent.
The Chair
With this it will be convenient to discuss the following:
Amendment 33, in schedule 1, page 36, line 7, at end insert—
‘20A (1) Paragraph 26 (calculation of safety net payments) is amended as follows.
(2) In sub-paragraph (1)(a), after “year,” insert “on the basis of a safety net payment threshold that is not less than 95% of the authority’s baseline funding level for the relevant year,’.
See explanatory statement for amendment 32.
Amendment 34, in schedule 1, page 36, line 8, leave out from start to “omit”.
See explanatory statement for amendment 33.
Jim McMahon
There is a theme running through this group of amendments, as there has been previously. We have talked about the mechanism by which we account for the money coming in being paid out to local authorities. We have talked about the principle of having the levy account in place. The amendment is about the purpose of the safety net payments to local authorities.
The principle of the safety net is fairly clear-cut: it provides an element of protection that is completely in line with the concerns raised by the Select Committee inquiry. That was not a press release or report from nowhere; it was the result of a number of thoughtful, well researched hearings, where the evidence base was scrutinised. The headline was that it is absolutely right, and to be welcomed, that we move towards 100% retention, but serious questions remained about how we redistribute within the system and about what safety net mechanism would be in place to ensure that if a local authority had a shock to its business rate base there would be sufficient funds somewhere for it to draw on.
It is fair to say that, although the Select Committee showed support for the first element, the safety net issue has not been resolved satisfactorily. We have not had details about what system might be in place. We have not been told how much will be provided in the safety net pot to ensure that it is sufficient to provide for the different types of shocks. We have not been told, for instance, by what percentage a business rate base would have to fall before a local authority was eligible for a safety net payment. All those points, which are fundamental to understanding whether a safety net is a true safety net or whether it has gaping holes in it, are critical to the debate. That is why we tabled these amendments.
Mr Thomas
My hon. Friend will remember the intervention from the hon. Member for Thirsk and Malton, in which he prayed in aid the Communities and Local Government Committee report in defence of his case. Has my hon. Friend noted at paragraph 56 of that report the concern of Sharon Gregory, who said that Cambridgeshire and Northamptonshire county councils
“have some very big businesses that represent a large proportion of the business rates base, and there are significant risks around those businesses leaving or failing”?
Surely that underlines his concern on the safety net.
Jim McMahon
I absolutely agree with that point and on the thrust of the challenge to come. I hope that in response the Minister will address that issue and those raised by the Select Committee and the LGA, and in the lesser-spotted consultation response, which hopefully we will get a flavour of later.
When the safety net system was set up, the statement of intent—this was in 2012—was clear in its aims. It said:
“The Rates Retention Scheme will include a safety net to protect local authorities from significant negative shocks to their income by guaranteeing that no authority will see its income from business rates fall beyond a set percentage of its spending baseline.”
That essentially means that central Government accept that there is an inherent cost in providing public services at a local level across the range of 700 or so council services, and local authorities and communities should not be put at risk to such a degree. Let us say that a local supermarket decides to close. In many areas that could be a £1 million a year business rate base taken away from a town. That would have a significant impact on local public services, and the local authorities could call on the safety net.
There was always a facility to say, “A business might leave today, but tomorrow you might attract further investment, and that could make up the difference.” There is a facility in the system to recoup any overpayments above the baseline. The safety net is there for the right reasons and the principles are sound. They are supported by the LGA and, I assume, by the Select Committee. They are supported by individual local authorities, which call on that fund because it absolutely makes sense. Their youth centres, day care centres or support for older people in the community should not be vulnerable to Tesco or Sainsbury’s deciding to up and leave town. That would instinctively be the wrong way to run a fair and balanced community. As I have said, the payments that have been made from that account are not insignificant. In 2015-16, the Secretary of State paid £112 million to local authorities. I will not repeat the point about the types of services that can be provided for that kind of money, but we can imagine that, across a range of 326 local authorities, that would have a significant impact on their business rates.
If I think of my own local authority of Oldham, I consider it to be a double cruelty that the Government are closing central Government departments in my town, such as the HMRC offices and jobcentre offices. The county court is closing soon, the magistrates court has already closed, and the number of police stations has reduced to a third of the number before. The local authority has closed day care centres and youth centres and a range of public buildings just to try to balance the books. Is it not cruel that because of that its business rate base will be affected? Not only has it reduced the number of public services because its revenue support grant has been taken away, but it is potentially having the safety net snatched away that would have protected it from the loss of business rates in those areas.
It is beyond negligent; it is almost vindictive now. The Government are kicking local authorities when they are down and some local authorities are absolutely down on their knees. We have heard about the issues in North Yorkshire. It is right that Members are here to represent their constituents.
Mr Thomas
On that point, does my hon. Friend want to try to stimulate the interest of the hon. Member for Thirsk and Malton in Stockton-on-Tees Borough Council and its concerns about the safety net? He was on the Select Committee when it gave evidence. It said:
“The safety net is set too low with local authorities being required to accommodate very significant reductions in income before triggering it. Based on the current system, Stockton would need to lose approximately £5 million in one year before it is activated”.
Does that not underline my hon. Friend’s concern?
Jim McMahon
It does underline the concern. In the last financial year £112 million was drawn down from the scheme. That was in the context of local authorities still receiving revenue support grant on top of their council tax and business rate income. As we move towards the brave new world—there is a fine line between bravery and stupidity, but let us call it brave for now—whereby councils will be funded solely by council tax and the business rate base that they can generate, councils are even more vulnerable to shocks in the system where business leave and they are forced to deal with the consequences of that loss of income. Without the safety net system in place—
Mr Jones
The whole thrust of the hon. Gentleman’s argument is that the Government are going to get rid of safety net payments. Where has he got that idea from? Does he not think that the business rate retention pilots that are taking place in a number of areas are a good thing for the Government to work out that they have struck a balance to ensure that, when we roll out the full system, it is as right as it can be?
Jim McMahon
I take the Minister’s point entirely. It would be easier if we had a scheme that we could review and scrutinise and ask questions about, based on the scheme that was presented. In the absence of that, we are relying on the Minister sharing every now and again the fount of wisdom from the notes that are passed to him by his advisers, which is one way of doing government, I suppose. Another way of doing government is to consult, to speak to the sector and to understand what is coming back. We know a consultation has been conducted and we look forward to the results of that, but a consultation was also undertaken when the scheme was introduced in 2012. At that time, the Government reviewed the type of safety net that would be needed for it to be fair and balanced. At the time, the percentages that were considered were 7.5% to 10%. In the end, the Government erred on the side of caution and went for the 7.5% level. That was the result of that consultation. It was the result of an assessment of what type of safety net would be robust and provide certainty. So we have been there; we have done that. We have been through that process.
Mr Thomas
It is interesting that the Minister should stand up and pray in his defence the pilot authorities and the way in which they are implementing the safety net scheme, if indeed they are doing so. We could have used that information to inform our contributions, but sadly the Minister is not intending to publish any details of how those pilot authority schemes are going to work until after this Committee has concluded its deliberations.
Jim McMahon
I am going to be charitable. Perhaps I am too soft for my own good. I feel a slight degree of charity towards the Minister given the fairly rough ride that he has had—a rough ride of his own making. I will not prolong that. Labour Members question whether the knowledge is there, even, for the Minister to understand the Bill, whether the diligence has been there to assess the impact that that has had, and whether the capacity is there to bring forward the type of information that would lead to a meaningful debate. I would be far more generous than that and say that perhaps today is just not the Minister’s day. However, we will be here again and we can review the information when it comes. I hope that we will have a better session, the Minister will feel far more empowered, better informed and on the front foot, and we as an Opposition will feel that we are able to hold the Government to account, which is why we are here. We are not here to have circular discussions that take hours and hours of parliamentary time. We are here to get to the root of what the Bill is intended to do and the impact of the Bill. By doing that, we make good laws—we know the impact and we know, collectively, that we are making the right decision, not a bad decision in the absence of that information.
We have heard that there will be some kind of safety net, although we do not know what the criteria or threshold will be. We are discussing the pilots that are taking place, but a number of pilot authorities have not been told what the safety net will be. We are expected, outside of those pilot authorities, to make an assessment—a leap of faith almost—that those pilot authorities will deliver the evidence base required, when they themselves do not know what the new settlement will be, and they are waiting for the Secretary of State to confirm that to them.
A lot of people in this place and in local government are waiting for some clarity. I am pleased that, during the exchanges, we have at least agreed a principle that a safety net is required. However, the real test is not words. The real test is the application of the legislation going through.
I hope that the Minister will answer this. The threshold is 7.5% below the base. Members will know from our amendments that we are suggesting a more favourable rate of 5%. The reason is that, as revenue support grant is being taken away, local authorities are more vulnerable to business rates and it feels as if that is the right balance to strike. I ask for a quick response from the Minister: what will the percentage be?
Mr Jones
It is a pleasure to follow the hon. Gentleman, who is giving me something of an education, or thinks he is giving me something of an education, on this issue, such a placid fellow that he is. I thank him for tabling this amendment and for giving me the opportunity to set out the Government’s approach to the safety net. He seemed to ignore most of the information that had come forward and was almost saying that the Government were not going to put in place a safety net. I agree with him that a safety net is an important element of the system and will certainly become more so—again, agreeing with his analysis—once we are relying on business rates for a larger proportion of councils’ income. Where I must disagree with him is that these amendments are the best way of ensuring that we have the most appropriate safety net in place for the new 100% system. These amendments would hardwire the current arrangements into the system by requiring the safety net to be measured against baseline funding levels. However, that is only one way in which we could construct the safety net under the legislation as drafted. There are others—using different baselines, for example, or providing for different percentage losses for different types of property. Until we have finished our work with the local government sector and put in place all the scheme’s design elements, it is too early to say what form the safety net should take.
Mr Thomas
That is the first bit of clarity about how the pilots are working—I was going to ask what the safety net was in context. I simply praise the Minister for giving just a tiny fraction of information about how the pilots are going to work. It would be nice to have the rest of the information before the end of the Committee.
Mr Jones
Such are his high standards, indeed.
Getting back to the real world, I add that amendment 34, by reversing the Bill’s removal of sub-paragraphs 25(2) and (5) of schedule 7B to the Local Government Finance Act 1988, would make it impossible to deliver changes for which local government has asked. The changes we want to make through the Bill mean that, in future, safety net payments need not be made at the end of a financial year. Instead, as with other payments under the scheme, they can be made at the beginning of the year, based on the estimates, and then reconciled at the end of the year once outturn figures are available.
Authorities asked us to make that change as soon as a legislative opportunity arose. The changes made by the Bill have no material effect on what authorities will receive in safety net payments; they simply change the way in which we account for them. I hope that resolves some of the concern of the hon. Member for Oldham West and Royton.
In conclusion, the amendments, if allowed to stand, would remove the flexibility that we and the local government sector need to design a safety net regime that is fit for the needs of 100% business rate retention. They would reverse a change that local government welcomes and for which it has long called. I hope that, with that explanation, the hon. Gentleman withdraws amendment 32 and does not move amendments 33 and 34.
Rob Marris
I know it is sometimes difficult for Chairs and I wanted to hear what the Minister said to know whether I wanted to speak.
The very helpful Library brief says on page 19:
“It is not yet clear what form, if any, the safety net would take under 100% retention of business rates.”
That was published almost three weeks ago on 19 January. It is singularly disappointing when the Minister comes before a Public Bill Committee of the House of Commons and says, “Oh, I cannot give you any information because the Government want the flexibility.” I understand why Governments want flexibility. When my party was in office, it always wanted flexibility. I kept saying, “I do not think you should have that flexibility in lots of cases.” To use the vernacular, the Minister and his Government ought to show a little more ankle. Otherwise, they are asking us to buy a pig in a poke, which I think is unacceptable in a parliamentary democracy.
We ought to have the information. What is the big rush? This is so that the Government can get the Bill through, with all its flexibility. The amendments would lessen that flexibility, which is why they are good amendments. The Minister has nothing to counterpose that with, except to say, “We’re talking about 97%, but we want the flexibility.” I am sure he wants the flexibility, but that kind of flexibility is not good for councils—not only Wolverhampton City Council, but councils around England—because of the uncertainty.
Rob Marris
In that case, the Minister should not have introduced the Bill at this stage or until he has got his ducks lined up.
Jim McMahon
You have been extremely patient with us, Sir David. We have got to a position where there is agreement, in principle, on a safety net.
We have a sense of what the pilots would bring in terms of 95% baseline protection. However, I challenge the idea of pointing to any pilot and giving the impression it could be rolled out as a national scheme. We know that any pilot can be made to work with the right energy and finance behind it, but having a safety net of that order without new money in place would be very difficult. I would like to see the figures on that, to test what it would mean in practice. When the last review took place and we were looking at a 7.5% threshold, it was very difficult to make a national scheme stand up in a way that encouraged growth and allowed areas to keep an element of what they were developing through their efforts, and that brought money back into a central pot.
We still unfortunately do not have sight of what the finances mean overall, but we have a flavour of what the pilots mean. We have been told that the measure will not be a new burden, but will be accommodated for within local government spend. We know that the only real room is in either the grants given to local authorities or the business rates and the £12.5 billion that has been referred to.
As we have heard, there is a great call on what feels like an ever diminishing resource. We talked about the £7.4 billion revenue support grant that will need to be accommodated. We talked about the £65 million rural services delivery grant, the £3 billion public health grant, the £105 million improved better care fund, the £177 million independent living fund and the £3.4 billion early years grant that will need to be accommodated—not to mention the £3.2 billion of business rates relief payments currently within the system. We still have not had clarity.
Excluding the relief payments, just those grant payments, which could well be deleted as part of full business rates retention, are £14.7 billion. Only £12.5 billion is going back into the pot. If there is going to be a safety net, where will the money come from? A bit more information on that would be extremely useful for us to give proper scrutiny and hold the Government to account. These were probing amendments. We made a bit of progress, although not as much as we would have liked. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Jim McMahon
I beg to move amendment 47, in schedule 1, page 37, line 5, leave out sub-paragraph (3).
This amendment would remove the proposed power of the Secretary of State to force an authority to join a pool. It would retain the current position where every authority covered by a designation must agree to it; and that the designation can be revoked only in limited circumstances, including a request from an authority covered by the designation.
The Chair
With this it will be convenient to discuss amendment 28, in schedule 1, page 37, line 7, at end insert
“only if—
(a) an order to that effect has been made in the form of a statutory instrument and has been approved by a resolution of each House of Parliament, and
(b) the relevant Select Committee has been consulted.”
This amendment would ensure that any revocation of a designated authority must first be approved in the form of a statutory instrument and consulted upon with the relevant Select Committee.
Jim McMahon
We are moving naturally through the principles of a levy account system being maintained, a safety net being provided and, as the Minister referred to, the business rate pooling arrangements that are being piloted in a number of areas.
The principle of pooling is sound. It is one that local government has asked for and one I personally support. We recognise that the development of a business base is not necessarily predicated on local authority boundaries. We have heard the example of Heathrow and the impact there. The same is true in Greater Manchester, where we see the economic area and the businesses developing in that city region acting separately from the local authority boundaries because they are acting as one economic unit. I fully understand the principle behind that and why we would want, on that basis, to have a single budget or business rate pooling across that area.
Where pooling works—this is true of the pilot—it is because, first, there is an understanding of the financial relationship. Sir David, I do not know whether you have taken the opportunity, as I have during one of my nights of insomnia, to go on the DCLG website. People can type in the details of their local authority into the website and assess whether business rate pooling would leave them in a better or worse net position. The idea of that is to give agency to local authorities to determine for themselves what is right for them before they even enter into negotiations with central Government. That is an empowering way of doing that.
Local authorities then speak to areas within a natural pool. Where they have a logical economic centre and want to come together, they can assess what that new settlement would be, and whether they would be in a better or worse position as a result. They will get together; discuss with their neighbouring authorities what works in their locality; agree which local authority will be the lead local authority; and, on that basis, make a bid to the Government to be a pilot authority. In the spirit of localism, that is the right way of doing it. We are allowing a grassroots organisation to take place, where people come together, have the information to hand to make an informed decision, and come to the Government and say, “We think this is the best deal for our community.”
That is inspiring, but unfortunately, the Bill is an absolute shift in the culture and balance of that relationship. Rather than local authorities being able to come together and co-produce, and rather than it being a relationship of equals in which local authorities choose other authorities to join and then present to the Government, the Secretary of State can mandate local authorities to come together, potentially against their wishes, and can mandate who the lead authority will be. The direction of travel is very unsettling.
In any relationship of equals at a local level, coming together to create a business rate pool is usually only one element of a complex relationship of working together in the interests of a locality. I worry that, by imposing one lead authority, potentially against the wishes of other neighbouring authorities, the Government will fundamentally change the balance of trust and the relationship within that locality. That could impact not just the business rate pool and support for it, but other joint work that will be critical for the successful delivery of public services and economic growth in our areas. When the Minister responds, it would be helpful to get a flavour of where he, on behalf of the Secretary of the State, believes that the power could be implemented in future.
Jim McMahon
It is. I worry about scale. The 18 business rate pools reported to have come forward so far have a collective rate base of £159 million above their baseline, so they are net beneficiaries. We can see why they would want to adopt that position and make that application. However, some areas could be disadvantaged as a result of being in a business rate pooling arrangement. Those areas may not want to be part of a business rate pooling arrangement that is forced on them.
We have heard about the 56 additional powers that the Secretary of State is introducing for himself. We are meant to be about localism, and about giving power back to communities and to their directly elected local authorities. That is not the flavour of the Bill—the opposite runs right through the core of every element in it. The Bill is about an empowered Secretary of State, and a complete lack of parliamentary scrutiny, oversight, challenge and a democratic vote.
The Bill is also not even about Government doing deals with local authorities in smoke-filled rooms, which has been the nature of devolution discussions so far, when areas are picked off against each other. That at least required local authorities to consent. Even though it lacked transparency, and even though it lacked a national framework so people knew what they were bidding for at a local level, it at least required that they were consenting parties to that relationship. That will not be the case. Unless the amendments are accepted, the Secretary of State will have absolute power to impose his will on local authorities whether they like it or not, and whether or not it is in their interests and right for their communities, and to hell with consequences for the local relationships that could be affected.
The amendment is fundamental to what we believe devolution and localism to be. I intend to press amendment 47 to a vote, because we feel so strongly about giving our councils agency and independence and a genuine relationship of equals with the Government. If the Government do not accept the amendment, it will be a message not only to the Opposition but to every local authority in the country. The Government will be saying, “What you want is not as important. It’s not for you to determine what’s right for your local area. If we want to do it and feel like doing it, we can impose our will whether you like it or not.” That is a very slippery slope.
Mr Jones
I thank the hon. Gentleman for tabling these amendments on the creation and revocation of a business rate pool.
The intention of the amendments seems twofold: to retain the requirement that each relevant authority must agree before the Secretary of State can designate a pool, and to require that a decision to revoke a pool should be approved by Parliament and subject to consultation with the relevant Select Committee. I will deal with each of those in turn.
As a principle, the Government believe that local authorities can achieve greater impact when working together, and that pools of authorities can benefit from working over wider areas to achieve economic growth. That is why we want to continue pooling arrangements under the new business rates retention system. Business rate pools enable the local authorities within them to be treated as a single entity for the purposes of the system, allowing them to co-ordinate their work and take a coherent set of decisions to help secure economic growth over a wider area. Paragraphs 26 and 27 of schedule 1 provide that the discretion to create, vary and revoke pools lies with the Secretary of State, with a new requirement for a statutory consultation with relevant local authorities on the creation and variation of a pool.
We are introducing those changes because, in the Government’s view, pooling has not worked under the current arrangements as well as it could. The current voluntary approach to pools can incentivise the wrong behaviours, leading to examples where pools across functional economic areas have excluded a single authority due to them being perceived as high risk. That undermines the objectives of pooling and potentially reduces the ability of pooling to secure co-operation and coherent decision making across a sensible economic area.
Amendment 47 would remove the provision enabling the Secretary of State to designate a pool at his discretion. That would, in effect, preserve the current arrangements whereby a pool can be designated only if every authority in the pool area has agreed to it. The risk of a single authority being excluded from sensible pooling arrangements would remain. Removing the requirement that all authorities must agree to being designated as a pool will enable the Secretary of State to ensure that pools are created across functional economic areas that maximise opportunities for growth.
We recognise the ongoing need to work with local authorities on sensible pooling arrangements and have introduced a statutory duty to consult with areas on their pooling arrangements. As I said at the outset, the ultimate decision will rest with the Secretary of State, helping to ensure that all authorities in a functional economic area will engage fully in those discussions.
Rob Marris
The Minister is saying in terms that the Government are going to introduce a centralising measure because sensible pooling has not always worked to date. I understand that concept. He knows what I am going to say. Could he produce some evidence that pooling arrangements hitherto have not worked properly in some areas? I know he is not saying that that is the case everywhere, but can he give us one example to elucidate why the Government think these centralising powers are necessary in what purports to be a localising Bill?
Mr Jones
I will in a moment.
Throughout our deliberations on the Bill, it is apparent that local authorities have asked for fairness within the system. The challenge is whether that fairness is apparent if a local authority is excluded from a pooling arrangement because surrounding local authorities do not want to include it. Clause 3, which the Committee will consider later, provides an additional tool to strengthen the role of pools to help secure economic growth, with rewards being shared across the pool.
Amendment 28 aims to ensure that Parliament has a role in revoking a business rates pool—paragraph 26 of schedule 1 enables the Secretary of State to revoke the designation of a business rates pool. Revoking a business rates pool is a technical matter, working with the authorities involved to consider how each one operates independently. The Government are concerned that requiring every decision about revocation of the business rates pool be taken through each House and made subject to consultation with the Communities and Local Government Committee would take up valuable parliamentary time. The current process for revoking a business rate pool does not require parliamentary approval or consultation with the Select Committee. The Government do not believe that change is needed.
David Mackintosh (Northampton South) (Con)
When I was a council leader, we changed our pooling arrangements. I can testify—and I am sure the Minister will agree—that that is very disruptive for local authorities, particularly when they are trying to plan. It is also disruptive for businesses.
Mr Jones
My hon. Friend makes the exact point I am trying to make—local authorities require certainty. The measures we have put in place over the last year or two on having a longer-term view of council budgets has helped. Within this system, we want multi-year arrangements for local authorities so they know where they are heading. In having more settled business rate pools that make sense in terms of functioning economic areas, we will seek to deliver that certainty and security for local authorities. By definition of what the hon. Member for Oldham West and Royton has said, local authorities need more security and certainty in the new system. Local authorities take on a greater risk challenge if funding is distributed by central Government to them, rather basing local government on locally collected taxes.
Overall, the changes to pooling arrangements will ensure effective business rate pools, with other tools to help drive economic growth. I therefore ask the hon. Member for Oldham West and Royton to withdraw his amendments and commend paragraphs 25 to 31 of schedule 1.
Jim McMahon
As I said earlier, we feel strongly about amendment 47. The Bill would fundamentally change the relationship between local government and the Secretary of State, which we do not believe is in the interests of democracy or localism.
I have the Minister’s response. There is some merit in having a system in place that provides a degree of certainty, but that could be provided, for instance, by a longer notice period—local authorities wishing to leave a pool could give two years’ notice rather than 12 months’ notice if required—which would at least give the degree of planning certainty required. It could well be tied to economic deals done through negotiations with the Government. For instance, if an economic deal lasted five or 10 years, there would be some sense in saying that, during that period, it should be tied to the business rate pool.
However, that is not on offer. What is on offer is: “Take or leave it. The Secretary of State knows best.” Areas will be forced to join the pool. The example given is of a local authority that wants to join a pool but is told that it cannot for whatever reason. I suspect that the number of such examples is very low. It is more likely that, when a local authority does not want to join for whatever reason is right for its community, the Secretary of State will force it to do so to make a wider pool balance out without having a requirement for central Government funds. I suspect that that is more what the measure is about. I am concerned that the balance of power is changing between national level and local level. Further powers are being given to the Secretary of State, and further mandating can be required, but there is less parliamentary scrutiny.
There is also an unhealthy rebalancing of relationships in some local areas. We talk about the Greater Manchester business rate pool as being one to look at, as a pilot—we are doing so very carefully. However, it would allow the Cheshire authorities to obtain 50% of growth before they returned to the pool. As I have said before, there might be an argument for that, given that it sits outside the city deal that has been agreed as part of the devolution deal, but it beggars belief that two authorities within Greater Manchester—Trafford and Stockport—have negotiated as part of that business rate pooling an agreement to keep a third of growth to themselves before it goes into the pool.
We believe that at a national level, we should agree a way of redistributing that it is the same for everybody, but instead there are deals within deals. Those who write the cheques always have the upper hand, and not those who are potentially the receivers. I do not believe that that is in the interests of the communities we are here to serve. I certainly do not believe that it is in the interests of an equal, balanced relationship at a local level. Although amendment 47 is not quite in the spirit of previous amendments we have voted on, I ask the Minister to support amendment 47 to maintain the balance of a healthy relationship.
Question put, That the amendment be made.
Mr Jones
We have spoken at length on proposed amendments to schedule 1. I do not want to take too much of the Committee’s time, but I would like to say a few words about specific parts of the schedule.
Schedule 1 amends section 7B of the Local Government Finance Act 1998. Those amendments are necessary to move from the current 50% business rates retention scheme to a system where local government retains 100% of business rates raised locally. I will take each section in turn.
Paragraphs 2 to 6 of schedule 1 make provision for central Government accounting for non-domestic rating income. Those paragraphs amend the Local Government Finance Act 1988 to update and simplify the central Government accounting requirements for the move to 100% business rates retention.
Rob Marris
I want to ask the Minister about one issue. Under paragraph 33(3) of schedule 1, the words
“calculations following local government finance report”
are substituted by
“determination of payments for a relevant year”.
I hope the Minister can reassure me, because that change rings a certain alarm bell. It removes the word “calculations”, which implies to me the use of evidence—a formula and so on—and substitutes the word “determination”, which I infer could be a somewhat opaque and non-transparent decision on financing, thereby moving us further away from an evidence-based, transparent system to a more flexible and less transparent system. I wonder whether the Minister could elucidate—if not today, at some later point.
Mr Jones
Thank you, Sir David, for allowing me to respond to the hon. Gentleman. As I mentioned in my quite lengthy speech, local government itself does not believe that the measures being introduced here will reduce transparency. That is certainly not our intention in making the change. I hope the hon. Gentleman is reassured by that.
Question put and agreed to.
Schedule 1 accordingly agreed to.
Clause 2
Loss payments
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
New clause 5—Appeals by public bodies—
‘Where public bodies appeal against the ratings value, no external agency may represent or make a financial gain from the appeal.’
This new clause would prevent money being taken away from the public purse through rating appeals.
New clause 6—Backdating of Appeals—
‘Any premises with a rateable value of £500,000 or more will be limited to 6 months backdating following any revaluation arising from an appeal.’
This would limit the duration of backdating in the event of revaluation following an appeal for premises with a value of £500,000 or more to six months.
Jim McMahon
These two probing new clauses are designed to test the appetite of the Government for a look at how the business rate appeals system operates in practice and who it is there to support.
I tabled new clause 5 because I am deeply concerned about the fact that at the moment more than 100 NHS trusts are appealing their business rate liability to their local authority. I know from my own local authority that that means many millions of pounds being put in reserves pending the appeal, just in case it is successful and the trust is entitled to backdate it.
We all accept that when a public sector business rate payer pays business rates, it is effectively money moving around the public sector and transferring from one public sector agency to another. There is no loss or gain to the public sector; it is just churn through the system. What is different is that when an NHS trust appeals its business rate base where an external agent is employed, the external agent will be charging a percentage fee for the successful appeal, and that could add up to many, many millions of pounds. It is very difficult to understand exactly how much it is, but I know from my own local authority that the rating appeal could be about £5 million —that is just for one local authority. There are 100 NHS trusts with appeals in across the country. Even a 5% fee on that could lead to many tens of millions of pounds being taken away from the public sector as a fee to the private agent representing the NHS trust. That is a net loss to the taxpayer.
New clause 5 tests the appetite of the Government for a new approach. We have framed it so as to restrict private agents from acting on behalf of public bodies—I think that has merit and is worthy of discussion—but it could well be that a public arbitration system could deal with the appeal more quickly and remove the uncertainty from the system, and that that would also remove the requirement for a private sector agent to act on behalf of the public sector body. To be clear, this is not about bashing the private sector or the agents who act on behalf of public sector bodies; it is just a pragmatic reflection. If a percentage fee is being taken out of the system, that is a net loss to public services in this country. The Government should step up and provide some level of certainty.
New clause 6 is intended to probe the appetite of the Government for a differential appeal system, depending on the rateable value of the property involved. We know from many local small businesses that the business rate bill is a significant part of their outgoings. Business rates generally come soon after rent and staffing costs. They are significant. If a small business has been assessed at the wrong value and it is successful at appeal, the value of that appeal backdated could be the difference between whether they survive or go to the wall, because their finances are so restricted.
We ought to debate and discuss whether we should differentiate between the small, local business trying to make its way in the world and the big square-footage ratepayers, such as Tesco and other supermarkets, B&Q and the big sheds, where rateable values can easily be more than £500,000 a year—in many areas £1 million a year. When they lodge a national appeal, that can send a shockwave through the whole business rates system across the country.
New clause 6 is a probing amendment to test the Government’s appetite for reducing the backdating period to six months if the rateable value is over £500,000 a year. Local authorities would not have to hold as much in reserves as they do at the moment. It would reduce the risk to council budgets and of course reduce, the amount of money the Government have to put in their levy pot to cover any potential loss of income. More important, it would also—I hope—provide more of a level playing field, where small and medium-sized independent businesses are given a fighting chance, and we do not have one system that disproportionately benefits large supermarkets and warehouses.
That is the essence of the two new clauses. New clause 5 tests the appetite for a different way of assessing public sector appeals. New clause 6 tests the appetite for a system that protects local authorities from large ratepayers, potentially reducing backdating to six months. I recognise that we are pushed for time but I welcome the Minister’s hopefully constructive approach to the consideration of those options.
Peter Aldous (Waveney) (Con)
I was not intending to speak on these measures, but as an ex-chartered surveyor I will say a few words. I commend the hon. Gentleman for the spirit in which he presented the new clauses.
Rating is very complicated for a chartered surveyor to carry out. In many ways, it is abstract from the real world. I concede that there appears to be two types of surveyor who get involved in ratings appeals: there are people who have enormous expertise in these fields, but there are also, I dare say, ambulance chasers chasing opportunities and abusing the good will of businesses. I am uncomfortable with new clause 5 because it would bar public sector organisations from getting the highest quality expertise from those expert surveyors. The way forward would probably be to look to the Royal Institution of Chartered Surveyors to set down a scale fee that fairly reflects the work the surveyors do on a job.
Mr Jones
I am grateful that the new clauses were tabled, as it gives us an opportunity to consider the appeals system and the implications for local government. There is widespread agreement—this comes back to what my hon. Friend the Member for Waveney was just saying—that the current business rates appeals system needs reform. Too many appeals are held up for too long, and that means costs, delays and uncertainty for ratepayers and local authorities. That is why we have brought forward proposals to reform the system of appeals for ratepayers and local government from 1 April 2017.
From 1 April, the new “Check, challenge, appeal” system will reform the appeals process for ratepayers. The new three-stage process will be easier to navigate and will put the emphasis on early engagement and resolution by all parties. Under the new system, businesses will be more confident that their valuations are correct and that they are paying the right amount of business rates. That in turn will support local government by giving authorities greater certainty over their rates income.
We will ensure that local authorities have a role in the “Check, challenge, appeal” process by giving them the statutory right to provide evidence to the valuation officer. We also recognise, however, that we need to go further in respect of the financial implications of appeals for local government. That is why clause 2 creates a power to make loss payments to local authorities. That will allow us to move towards a system under which the risk of appeals is managed more centrally and shared across the sector. We will then be able to reimburse authorities when they suffer appeal losses due to revaluation errors. That reform has been requested by local government.
Nevertheless, we still have to strike a balance between the interests of local government and the need to maintain fairness for ratepayers. I do not believe the new clauses would correctly strike that balance. New clause 5 would prevent public bodies from using agents or representatives in their appeals. Public bodies are subject to the same rules on business rates as any other ratepayers, and I think it is right that, just as with any other ratepayer, they should have access to professional and expert advice. I think that was the point that my hon. Friend the Member for Waveney was making as a chartered surveyor with significant experience. However, I would expect any public body to be using only qualified and professional representatives, such as members of the Royal Institution of Chartered Surveyors or the Institute of Revenues Rating and Valuation. Members of those bodies must comply with a code of practice for their consultancy and ensure that proper standards are met.
New clause 6 would stop appeals having a retrospective effect of more than six months for large properties. That would clearly be unfair. Ratepayers whose appeals have taken longer to resolve—perhaps for reasons entirely outside of their control—would be penalised by the new clause. I assure the hon. Member for Oldham West and Royton that we do act to limit backdating in the system, where it is fair to do so. In 2016, we acted to stop new appeals being backdated to before 1 April 2015. From 1 April 2017, ratepayers will no longer be able to lodge appeals on the current rating list in most circumstances.
I assure hon. Members that, although we do not believe the new clauses are acceptable, we are taking steps to tackle problems with business rate appeals for both ratepayers and local authorities. I therefore ask the hon. Gentleman not to press the new clauses.
Rob Marris
Looking again at the helpful Library brief, it appears that the Government are dragging their feet again. As the hon. Member for Thirsk and Malton no doubt remembers, the Communities and Local Government Committee reported on this issue in June 2016 and found—I have to say I found this figure staggering—that 33% of the rateable value in Sheffield, 40% in the City of London and 34% in Westminster is under appeal. That is a huge amount. For 33% of the rateable value of the city of Sheffield, which I think is the fourth largest city in England, to be under appeal is extraordinary.
On 19 December last year, the Minister in the House of Lords said that the Government are looking at this again, but, as the Library brief pointed out on 19 January, although the Government are looking at the appeal system, it is not yet known how that it going to be done. Here we are seven months after a Select Committee report that highlighted that this is a big problem, and the Government are still faffing around and cannot make up their mind about what they are going to do and what they are going to propose.
I hope that the Minister will stand up and say that I have misunderstood and say, “There is clarity. We know where we are going and what regulations we are going to propose, so we are going to do what lots of Ministers do and publish draft statutory instruments before the conclusion of Committee stage so Members can see where we are going.” But I fear, going by the Minister’s past performance in this Committee, that he is not going to stand up and say that, and that we are going to have continued procrastination and a lack of clarity from the Government about where they want to go in the light of having their much-vaunted flexibility, which I think does a disservice to the Committee.
Jim McMahon
I thank the Minister for his response. I hope we can have a mature, cross-party conversation about the fact that there is a need to modernise the system to take out some of the quirks and unfairnesses within it. If we can do that in a mature way, I am sure there is a will to work in the interests of local government.
On the matter of appeals by public bodies, this is not about taking away chartered surveyors’ power to do the job they are employed to do. It is more about the fact that a number of the appeals are not about the individual circumstances of a particular premise in a particular location, but are more about the principle of whether certain premises should be on the ratings list or attract mandatory relief in the first place. For instance, we talk about having a level playing field for everybody, but schools that are not run by a local authority are automatically entitled to 80% mandatory rate relief, while local authority schools are not. A number of the appeals are going through on that basis.
It is the same with healthcare providers. Healthcare providers outside Government attract 80% mandatory relief, but Government departments, such as hospitals, pay full rates. The appeals that are going through at the moment for NHS trusts are not about individual local circumstances, but about the principle of whether those providers should attract the 80% relief. I should confirm the figure—80 NHS trusts are currently appealing through a private agent. It would make more sense for the Government, rather than allowing that churn through the system, to decide whether or not that is in line with non-Government uses in, for example, health and education; this relates to an amendment that we will discuss later. If they did that, they would take out a significant number of public buildings that are currently clogging up the appeals system, which is already under a lot of pressure. We would save public money and keep money in the public sector. That seems to me, in a time of austerity, to be an efficient use of public service support and public money. Hopefully, we can have a proper conversation about that. In that sense, new clause 5 is a productive and constructive new clause.
I accept that new clause 6, on the backdating of appeals and the rateable value, would create a two-tier system. We would have a system whereby those with rateable values of less than £500,000 would have a more generous backdating provision than those with rateable values above £500,000. Nevertheless, we need to look at what that means in terms of the reserves that local authorities have to put in place.
The number of premises with a rateable value above £500,000 that are currently going through the process equates to £2.7 billion worth of appeals. In respect of appeals, a local authority has to take account of the fact that appeals may be successful, and because those businesses are such large ratepayers the authority cannot take the risk that it could with, say, a corner shop, where it could take up that slack within existing budgets. If a supermarket that pays £1 million a year could have its business rate bill halved through appeal, local authorities must accommodate that money within their reserves, to ensure that there is not an impact on public services.
As I say, £2.7 billion is caught up in that system for properties with a rateable value above £500,000, and that money should be spent on frontline services, and not held in ring-fenced reserve accounts by local authorities. Again, if there is a mature, constructive conversation to be had about how we could release some of that money back to the frontline in a different way, we have a responsibility, on behalf of the people who use public services, to have that conversation.
We have had a good debate and on that basis I will be happy not to press the two new clauses.
Question put and agreed to.
Clause 2 accordingly ordered to stand part of the Bill.
Clause 3
Designation of areas by pools of authorities
Jim McMahon
I beg to move amendment 3, in clause 3, page 3, leave out lines 31 to 45 and insert—
“(a) designate one or more areas (a ‘designated area’) in the pool area (see sub-paragraph (2));
(b) calculate, for each year for which the designation has effect, the non-domestic rating income for the designated area (see sub-paragraph (3));
(c) calculate a proportion of the non-domestic rating income for the designated area;
(d) provide for the non-domestic rating income for the designated area, or that proportion of it, to be disregarded for the purposes of calculations under any of the following provisions—”
This amendment, together with amendments 4 to 18 would remove the role of the Secretary of State in enabling two or more authorities that have been designated as a “pool” under paragraph 45 of Schedule 7B, to designate an area, or areas.
The Chair
With this, it will be convenient to discuss the following:
Amendment 4, in clause 3, page 4, line 16, leave out “The regulations may” and insert
“The pool of authorities may”.
See explanatory statement for amendment 3.
Amendment 5, in clause 3, page 4, line 18, leave out from “adjusted” to end of line 21.
See explanatory statement for amendment 3.
Amendment 6, in clause 3, page 4, line 22, leave out “The regulations” and insert “The pool of authorities”.
See explanatory statement for amendment 3.
Amendment 7, in clause 3, page 4, line 24, leave out “regulations” and insert “provisions”.
See explanatory statement for amendment 3.
Amendment 8, in clause 3, page 4, line 26, leave out “The regulations” and insert “The pool of authorities”.
See explanatory statement for amendment 3.
Amendment 9, in clause 3, page 4, line 26, leave out “make provision”.
See explanatory statement for amendment 3.
Amendment 10, in clause 3, page 4, leave out lines 27 to 30.
See explanatory statement for amendment 3.
Amendment 11, in clause 3, page 4, line 31, at beginning insert “determine”.
See explanatory statement for amendment 3.
Amendment 12, in clause 3, page 4, line 35, leave out “about” and insert “determine”.
See explanatory statement for amendment 3.
Amendment 13, in clause 3, page 4, leave out line 37.
See explanatory statement for amendment 3.
Amendment 14, clause 3, page 4, line 42, leave out lines 41 to 45 and insert—
“(e) revoke any designation made by it and set any conditions that must be met before a designation is revoked;”
See explanatory statement for amendment 3.
Amendment 15, in clause 3, page 4, leave out lines 46 to 50.
See explanatory statement for amendment 3.
Amendment 16, in clause 3, page 5, line 1, leave out lines 1 to 3.
See explanatory statement for amendment 3.
Amendment 17, in clause 3, page 5, line 17, leave out “under the regulations”.
See explanatory statement for amendment 3.
Amendment 18, in clause 3, page 5, leave out lines 31 to 40.
See explanatory statement for amendment 3.
Jim McMahon
I will be quite brief on these amendments, because we have discussed these matters. Even for a local government geek such as myself, it has got to the point where it is a slight endurance trial.
However, we need to reiterate points about the balance of power and control, the relationship between central and local government, and the direction of travel from this Government. I will use this opportunity not to express my own views but to reflect back the views that were shared in our evidence sessions and that were expressed through evidence submitted later.
The London Councils group of local authorities has expressed concerned about the level of control the Secretary of State will have to revoke designations by removing the requirement that all local authorities in the pool agree to the revocation. The chief executive of the District Councils’ Network gave evidence. In its written submission, it said that it believes, as we do, that business rates pools should be determined locally and not by central Government.
This is not just about the Opposition making a point and taking a stand. We are doing that, of course, and we have had that conversation. We have had a vote on that basis. This is really to appeal to the Minister to listen to the concerns of London Councils, the LGA, the District Councils’ Network and many, many local authorities across the country that have expressed concern about the centralising nature of that designation provision and asked that it be reviewed.
Mr Jones
I am grateful for the opportunity to discuss the Government’s proposals to allow for local growth zones. The Government support the introduction of clause 3, which would insert into part 9 of schedule 7B to the Local Government Finance Act 1988 a power for the Secretary of State to allow local authorities within pools to designate an area or areas. Within these areas, local authorities will be able to retain a proportion of business rates income outside the rates retention system for a specified number of years.
The effect of local growth zones will be similar to that of enterprise zones, providing local areas with an additional tool that can be used to help to drive local growth. The difference here is that regulations made under new paragraph 38A, which will be inserted into the 1988 Act by clause 3, gives the responsibility to local authorities to set up and define the local growth zone, within the parameters agreed with the Secretary of State. The Government consider that pools of authorities are best placed to use the power by taking a shared view across a larger functional economic area about the best way to achieve growth for the benefit of all the authorities in the pool.
Jim McMahon
We have not settled the balance of the relationship between central Government and local authorities that may or may not want to form a business rate pooling arrangement. The Minister’s response was not satisfactory from our point of view. It is not satisfactory for local government either. I do not intend to press the amendment to a Division, but the Secretary of State will have to convince local government that devolution, economic growth, the reform of public services and business rate pooling are genuinely about the community coming together and determining for itself what its future will be. At the moment, the jury is out. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 3 ordered to stand part of the Bill.
Clause 4
Determination of principles for determining whether council tax excessive
Mr Thomas
I beg to move amendment 20, in clause 4, page 6, line 41, at end insert—
“(c) must include conclusions from the assessment of needs that has been carried out in respect of the local authority area; and
(d) must include details of efficiency savings made by the local authority.”
This amendment would require the report published by the Secretary of State on the set of principles to include conclusions from an assessment of needs carried out for the local authority area and details of efficiency savings undertaken by the local authority.
It is a great pleasure to move this probing amendment. It is inspired in part by the example of Surrey County Council and, perhaps surprisingly, some words of wisdom from the previous Prime Minister, who famously described local government as
“officially the most efficient part of the public sector.”
That is one of the few things he said as leader of the Conservative party that I am tempted to agree with. The Conservative party has a tendency—Ministers have been doing it again today in the run-up to the housing White Paper—to blame all the ills of the world on local councils.
Amendment 20 is merely an attempt to make clear, not only to Ministers but to those who watch and read our proceedings, that there is a more complex picture about the scale of the challenges facing local government that should be taken into account, whereby those residents make an assessment as to whether the council tax ask they are expected to pay—if, indeed, it goes above the threshold—is excessive or not.
Surely there is a case for recognition of some assessment of need. Surely there is also for recognition of the scale of efficiency savings that councils have sought down the years—they ought to be taken into account. My council, Harrow, has led the way in seeking to become a commercial council. It has worked with organisations such as IBM on new social care apps that have dramatically improved the quality of the marketplace, to use the language of Conservative Members, for private social care providers at a local level. They are commercialising the app that they have developed and generating significant revenues for the local authority. The product they have offered is innovative, increases efficiency and leads to a better quality of service. Sadly, we do not hear enough examples like that. It is in that spirit that I move amendment 20. Much has been made of the £5.8 billion funding gap that the LGA says will be present by 2020. Again, that is a further demonstration of the need for and demand on local authority services. Surely that should be taken into account.
If there ever was a decision by a county council that was well-timed, it is surely the decision of Surrey County Council today not to go ahead with its 15% referendum. The council leader apparently reported to his fellow councillors that he has had lengthy conversations with the Government and has received various reassurances—he would not say what those were, funnily enough. As a result, he has recommended to his council that the referendum should not go ahead, which it has accepted. I suspect that the tireless campaigning of my friend Robert Evans, the one Labour councillor in Surrey, has intimidated the Conservative leader into backing down. If that is not the case, one has to praise the political skill of the leader of Surrey County Council—if the cheque is in the post to him, as it sounds as though it is—for his act of brinkmanship.
What Conservative councils will take from Surrey’s experience, if indeed the cheque does eventually arrive, is that all they need to do is threaten big council tax increases and the Government will bend to their will. If at some future point my friend Robert Evans were to become the leader of Surrey County Council—I suspect that prospect is not too far off—and propose a 15% council tax referendum, it would be seized on by the Minister, and various nonsense about the profligacy of Labour councils would be repeated ad infinitum on the Floor of the House and in Committees left, right and centre.
Surrey County Council has exposed the weakness of Ministers’ arguments around the threshold. Nevertheless, it will perhaps be interesting to hear the Minister take this opportunity to acknowledge the scale of the funding gap that the LGA has identified and praise local authorities such as Harrow Council for the work it has done to offer more efficient services.
Rob Marris
I wish my hon. Friend good luck with this amendment. Essentially, amendment 20 asks the Government to collate evidence and act upon it. Given what we have heard in the Committee so far, I will be suitably and happily astounded if the Government accept the amendment and the concept that evidence is important.
Mr Jones
I thank the hon. Member for Harrow West for his explanation of the intention and effect of amendment 20, which would require a referendum principles report made by the Secretary of State to include conclusions from an assessment of needs as well as details of efficiency savings for local authority areas.
I appreciate the intention behind the amendment, but I do not agree that it would be appropriate to include the suggested information in a principles report. Council tax referendum principles exist for a very specific purpose: to protect council tax payers by defining an excessive increase, so that they can make a final direct decision. It is open to authorities to set large increases and put them to a local referendum if they feel they are necessary to support local services.
Jim McMahon
I wonder whether, in the spirit of an equal, balanced relationship, the Secretary of State would be inclined to grant a national referendum on the projected 25% council tax increase.
Mr Jones
As I have said many times in this Committee, in real terms council tax is currently 9% lower than it was in 2010. I do not intend to take any lectures from the hon. Gentleman, bearing in mind that council tax doubled between 1997 and 2010 when his party were in power. I am not too sure that I will be blown off course by that advice.
The referendum principles report is not intended to provide an analysis of local authority need, its success in achieving efficiencies or an account of any other matter. It is a technical instrument to set the parameters by which a referendum might be triggered. As Members will be aware, the Bill creates a new requirement to consult representatives of local government before principles are set. That will allow the sector to make representations about their circumstances and needs before the Secretary of State makes his or her final decisions, whatever the future holds. That will be more useful to local authorities than prescribing the content of a referendum principles report.
Mr Thomas
I made clear that this was a probing amendment. The Minister could have given some sense to local government that he understood the scale of funding difficulties it faces by 2020. He chose not to. He could have praised councils such as Harrow that have led the way in terms of a more efficient offer, but he chose not to. I do not intend to make a thing of it. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Mr Thomas
I beg to move amendment 21, in clause 4, page 6, line 45, at end insert—
“(1C) A report under this section must be approved by a resolution of the House of Commons.”
This amendment would require any report on the principles relating to the tax excessive threshold, and therefore principles around circumstances in which a referendum must be held, to be approved by the House of Commons.
The Chair
With this it will be convenient to discuss amendment 22, in clause 4, page 7, line 45, at end insert—
“(3ZA) A report made under this section in relation to any authority must be approved by a resolution of the House of Commons.”
This amendment would require the House of Commons to approve any report relating to alternative notional amounts for tax excessive thresholds made by the Secretary of State in relation to any authority.
Mr Thomas
Let me be brief, because we have had quite a trip around the issue of scrutiny of local government finance. Amendments 21 and 22 simply provide the House of Commons with the opportunity to scrutinise local authority finance. The Minister, as we know, does not want the scrutiny of a local government finance settlement, so perhaps he and Government Members might be willing to support the idea that new council tax excessive thresholds should have to be approved by the House of Commons. That is the spirit of the amendments.
Mr Jones
The amendments would require council tax referendum principles and alternative notional amount reports made by the Secretary of State to be approved by the House of Commons. I appreciate the hon. Gentleman’s wish to retain the current practice of requiring the reports to be laid for approval. However, I believe that it is not necessary in a new era where we seek to offer certainty and where there will no longer be a local government finance settlement handing out resources following the approval of the House.
Mr Thomas
I did not suggest that I might withdraw the amendment, although I sought to be brief, as we have already had a trip around the issues. The Minister’s further reassurance that he will consult local authorities is welcome, but he should have to consult the House of Commons as well. In that spirit, I intend to ask the Committee to divide on the amendment.
Question put, That the amendment be made.
Mr Jones
The clause aligns the process for setting council tax referendum principles with reforms to the wider local government finance system under schedule 1 to the Bill. It will enable the Government to offer local authorities far more certainty about their future financial position by setting referendum principles for multiple years.
Chapter 4ZA of the Local Government Finance Act 1992 allows the Secretary of State to determine a set of principles for each financial year, which local authorities in England must use to determine whether their council tax increase is excessive. Under existing legislation, the principles must be set out in a report and approved by the House of Commons by the time that it approves the annual local government finance report. Where no principles are set, the Secretary of State must lay a report before the House explaining why.
The Government defining an “excessive increase” has been part of the council tax system for decades. As I said to the hon. Member for Oldham West and Royton, council tax in real terms has been 9% lower than it was in 2010-11; it will still be lower in real terms in 2019-20, but only if Government continue to work with local authorities and maintain a referendum threshold, as we promised in our 2015 manifesto.
Local authorities must determine each year whether they have set an excessive increase as soon as reasonably practical after the principles have been approved. Where an authority’s functions or structure have changed, the Secretary of State may set an alternative notional amount to enable a like-for-like comparison to be made with the council tax set in the previous financial year. That must also be set out in a report and be approved by the House of Commons.
The clause amends sections 52ZB to 52ZE of the 1992 Act. The provisions introduced by clause 4(2) mean that when setting council tax for the first year to which the principles report applies, local authorities must determine whether it is excessive as soon as reasonably practicable after the report is made. In other years, they must make the determination as soon as reasonably practicable after they have made their council tax calculations.
Subsection (3) changes the processes of determining council tax referendum principles and alternative notional amounts. In particular, it allows the Secretary of State to set the principles over multiple years, providing councils, police and crime commissioners, fire authorities and the Greater London Authority with welcome clarity about their council tax income.
The Secretary of State is required by subsection (6) to finalise the principles before the beginning of the first financial year to which they apply. The provisions introduced by subsection (8) mean that he must also send a copy of that report to each billing and major precepting authority, and publish it in an appropriate format, to bring it to the attention of other authorities that may be affected. Separate reports may be made for different categories of authority for the same year.
Mr Thomas
Has the Minister been privy to any conversations within the Department for Communities and Local Government, or across Whitehall more generally, about Surrey County Council’s proposed 15% referendum, and what the Government might have said to the leader of Surrey County Council to persuade him not to go ahead with that referendum?
Mr Jones
That probably takes me slightly wider than the scope of the Bill. I think that the hon. Gentleman is presupposing the discussions that happened and the outcome of the situation. It is more likely that Mr Robert Evans had more of an effect, as he said was the case; perhaps he will be the next leader of Surrey County Council, although that is about as likely as the right hon. Member for Islington North (Jeremy Corbyn) becoming the next Prime Minister, which many of us believe is not very likely.
Moving on, clause 4(8) also allows referendum principles to be amended by making a further report to replace a previous one. That must be done prior to the start of the first financial year to which the new principles apply. Finally, subsection (13) means that authorities subject to a proposed alternative notional amount must be consulted and receive a copy of the final report, which must be made prior to the start of the financial year in which it will have effect.
In conclusion, this measure will enable Government to provide local authorities with greater certainty about their future council tax income, and complements other provisions in this Bill.
Question put and agreed to.
Clause 4 accordingly ordered to stand part of the Bill.
Clause 5
Power to specify indexation rate for non-domestic rating multipliers
Question proposed, That the clause stand part of the Bill.
Mr Thomas
In passing, I thank the Minister for his praise for the campaigning efforts of Robert Evans, and his support for Mr Evans’s re-election campaign.
I do not intend to encourage the Committee to object to the clause standing part of the Bill, but I want to mention some of the unintended consequences of the former Chancellor’s suggestion that in 2021, the retail prices index be replaced by the consumer prices index when it comes to uprating business rates. As we have said in earlier debates, that will potentially cost local councils some £370 million in 2020-21 alone. Ministers have given no indication of the cost in future years, but those outside Whitehall and this place who know their local authority finances have calculated that over 10 years, as a result of the decision, there could be a £3.3 billion windfall for the business community and a £3.3 billion loss to the people of England who want good services to be provided.
Kevin Hollinrake
I refer the Committee to my entry in the Register of Members’ Financial Interests. Do not the people of England rely on the success of businesses to pay taxes and to fund local and central Government? Anything that can reduce the burden on business should be welcomed.
Mr Thomas
I am all for reducing the burden on business, but one does like to think that the benefit will be used for investment in future economic growth, not used to pay the rest of the tax bill or squirrelled away through some tax avoidance scheme. My purpose in speaking in the clause 5 stand part debate is to encourage the hon. Gentleman, among others, to consider the perhaps unintended consequence of the former Chancellor’s decision, which is the impact it would have on services for North Yorkshire residents and—since I appreciate that he cares a little for those in other areas—on public services throughout England.
As I said, £3.3 billion could be lost over 10 years. The hon. Members for Thirsk and Malton, and for Northampton South, will have paid much attention to the evidence that Guy Ware, director of finance at London Councils, gave to the Communities and Local Government Committee. He suggested that over 20 years, the cumulative loss to local government finance—in other words, the cumulative gain to businesses that pay business rates—would be £78 billion. The Library suggests a degree of caution about using such figures so far in advance, but the point is that while businesses will benefit, which is clearly a good thing, local authority finances will take a further hit. The effect of that on the provision of public services in Harrow, North Yorkshire, Oldham or Nuneaton is surely a concern that this great House should reflect on a little further.
I asked the Local Government Association what local authority services £370 million might buy. The association suggested that I look at the universal infant free schools meals grant to local authorities, which is some £334 million. Councils are planning to spend some £550 million on Sure Start children’s centres, and they are spending £376 million on mental health support for over-65s. That gives some indication of the public services funding that may be lost as a result of what I suspect are the unintended, un-thought-through consequences of the former Chancellor’s decision. I say gently that it makes even more of a case for some sort of regular opportunity to scrutinise local government finance on the Floor of the House, so that measures that may be good for one part of the country do not have serious unintended consequences for other parts. It is in that spirit that I took this opportunity to raise concerns about clause 5.
Rob Marris
I echo my hon. Friend’s concerns. It is simplistic to suggest that business rates are merely a burden on business; they are also a benefit. They help. I say that as someone who has been a partner in a business that had 1,000 people in it. Not having potholes, and having street lighting, less litter and free wi-fi in town centres all help businesses, but they are paid for by local authorities, who will have less money.
Mr Jones
The Government have committed to changing the indexation measure used in the calculation of business rates—currently the retail prices index—to bring it into line with the main measure of inflation, which is currently the consumer prices index. The clause therefore amends schedule 7 to the Local Government Finance Act 1988 and introduces a new power for the Treasury to alter through regulations the inflation measure used in the calculation of non-domestic rating multipliers. The measure was part of the £6.7 billion rates reduction package announced in the 2016 Budget. It represents a rate cut every year from 2020. It will be worth £370 million in 2020-21 alone, and the benefit will grow significantly thereafter. Those savings would help businesses to grow and support local economies.
To pick up on the point made by the hon. Member for Wolverhampton South West, the clause provides the flexibility to set the appropriate measure of inflation through regulations. However, any changes would be subject to House of Commons approval; I hope that gives him some reassurance. We are working with local authorities on the reforms to business rates to allow the sector to keep 100% of their rates. We will also consider how future changes to the indexation rate impact on the reforms, and we will respond to ensure that the financial sustainability of local government is not adversely affected.
Mr Jones
As I said to the Committee, we are certainly considering how future changes to the indexation rate will impact on the reforms that we are making. We have been clear that we will respond to ensure that the financial sustainability of local government is not adversely affected as a result of the change to the indexation rate on the business rate multiplier. I hope that the clause stands part of the Bill.
Question put and agreed to.
Clause 5 accordingly ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(Jackie Doyle-Price.)
Pension Schemes Bill [ Lords ] (First sitting)
(7 years, 9 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Committee divided: - Ayes: 6 / Noes: 9 - Question accordingly negatived.
The Chair
Before we begin line-by-line consideration, I have a few preliminary announcements. First, please switch electronic devices to silent. Tea and coffee are not allowed during sittings. Today, we will first consider the programme motion on the amendment paper; we will then consider a motion to enable the reporting of written evidence for publication. In view of the time available, I hope we can take these matters formally, without debate. I call the Minister to move the programme motion standing in his name.
Ordered,
That—
(1) the Committee shall (in addition to its first meeting at 9.25am on Tuesday 7 February meet—
(a) at 2.00pm on Tuesday 7 February;
(b) at 11.30am and 2.00pm on Thursday 9 February;
(c) at 9.25am and 2.00pm on Tuesday 21 February;
(2) the proceedings shall be taken in the following order: Clauses 1 to 32; Schedule 1; Clauses 33 to 38; Schedule 2; Clause 39; Schedule 3; Clauses 40 to 46; new Clauses; new Schedules; remaining proceedings on the Bill;
(3) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 5.00pm on Tuesday 21 February.—(Richard Harrington.)
Resolved,
That, subject to the decision of the Chair, any written evidence received by the Committee shall be reported to the House for publication.—(Richard Harrington.)
The Chair
We now begin line-by-line consideration of the Bill. The selection list for today’s sitting is available in the room and on the website, showing how the selected amendments have been grouped together for debate. Amendments grouped together are generally on the same or a similar issue. A Member who has put their name to the leading amendment in the group is called first; other Members are then free to catch my eye to speak on all or any of the amendments within that group. A Member may speak more than once in a single debate.
At the end of a debate on a group of amendments I shall call the Member who moved the leading amendment once again. Before they sit down, they will need to indicate whether they wish to withdraw the amendment or to seek a decision. If any Member wishes to press any other amendments or a new clause in a group to a vote, they need to let me know. I shall work on the assumption that the Minister wishes the Committee to reach a decision on all Government amendments if they are tabled.
Please note that decisions on amendments do not take place in the order they are debated, but in the order they appear on the amendment paper. In other words, debate occurs according to the selection and grouping lists; decisions are taken when we come to the clause that the amendment affects. I shall use my discretion to decide whether to allow a separate stand part debate on individual clauses and schedules following the debates on the relevant amendments. I hope that explanation is helpful.
Clause 1
Master Trust schemes: definition
Alex Cunningham (Stockton North) (Lab)
I beg to move amendment 22, in clause 1, page 1, line 9, leave out paragraphs (b) and (c).
To include in the scope of schemes included under the definition of Master Trust single employer trusts and those with connected employers.
The Chair
With this it will be convenient to discuss the following:
Amendment 32, in clause 1, page 1, line 12, at end insert—
‘(1A) The definition of a Master Trust Scheme shall include such schemes that provide benefits to members who are self-employed in addition to those who are employed by others.”
This amendment will ensure that master trust schemes that also allow self-employed members to join are within cover by the regulation introduced by this Bill.
Amendment 23, in clause 1, page 1, line 13, leave out subsection (2).
To clarify the protection provided under this Bill for non-money purchase benefits.
Alex Cunningham
It is a pleasure to serve under your chairmanship, Mr Rosindell, and I am sure it will continue to be so throughout this Committee stage.
Before I get into detail of Labour’s first tabled amendments, 22 and 23, it might be helpful if I set out how we plan to approach Committee stage. As I said on Second Reading, we broadly support what the Bill seeks to do, but we have serious concerns about what the Bill does not seek to do, the issues in the pensions landscape that it fails to address, and the significant sections of policy detail pushed into secondary legislation.
I note that my new clause 5, which is designed to introduce pension credit for women born in the 1950s and whose retirement age has been accelerated, has not been selected. I say only that it is lamentable that the Bill is not broader. I am also concerned about the dependency on secondary legislation because the Government are not yet in a position to share the detail of their intentions. I know that not everything can be in the Bill, but the Constitution Committee wrote to the Government expressing strong concern about the lack of information provided in primary legislation. I hope that the Government will take the Select Committee’s caution seriously and that we can ensure that in this case the primary legislation properly sets out the Government’s intentions.
Amendment 22 raises the question why single-employer occupational schemes are excluded from the scope of the Bill and why connected employers are therefore effectively treated as a separate entity. As it stands, the Bill’s provisions regulate neither single nor connected employer arrangements. We appreciate that a line must be drawn somewhere in attempting to develop a suitable regulatory framework in the face of a wide array of occupational pension arrangements. The amendment offers the Government the opportunity to clarify the bounds of their new regulatory environment and to justify their decision to draw the boundaries where they lie in the Bill. We want the parameters of the regulatory framework to be clear.
We accept that the master trust regime is focused on schemes with particular risks, but does there not have to be consistency across the piece? The definition of a master trust covers an array of different arrangements and there is nothing simple about it—getting my head around it has taken me some time. It can cover schemes set up by unregulated businesses as well as those set up by regulated businesses, such as insurance companies or investment managers. It can also cover what are described as “white label” master trusts, which are set up by a pension providers, with commercial or non-commercial partners being allowed to brand their sections of the trust. Others may have partnering arrangements with large employers whereby each employer gets its own section of the master trust but does not make any profit from it. Schemes that are included can be industrywide, can include two or more unassociated companies, and can be in the university, charitable and religious sectors. Given the broad range of different situations, on what basis do the Government believe that it is appropriate to draw the line to exclude single unconnected employer arrangements?
The probing amendment would also delete from the definition of a master trust the exclusion of those schemes that are to be used only by connected employers. In the debate in the other place, I believe the Minister clarified that when a single group employer takes on a non-associated one and it is intended that all will participate in the scheme, the scheme will then fall under the regime. Will the Government confirm that that remains the case?
It would also be good to have further clarification of what the position would be when a joint venture has run its course and the scheme reverts to being used only by connected employers. In that instance, how do the Government justify the juxtaposition of a connected group of employers being outside the scope of the Bill whereas another connected group of similar size but with just one small associated employer would presumably be inside it? The distinguishing line is very thin.
Do the Government envisage circumstances in which clause 41 would be used to bring within the scope of the Bill a single employer occupational pension scheme? Clearly, the Bill provides that power to the Secretary of State. In fact, the power set out in the Bill is very broad, so I look forward to the Minister’s response on those issues.
I note that in amendment 32, the hon. Member for Amber Valley has sought to address the lack of access for self-employed people. I picked up that theme in new clause 4, which addresses both that and other groups currently excluded from master trust scheme membership. I look forward to the hon. Gentleman’s speech.
Amendment 23 is a probing amendment to elicit clarification regarding what happens to non-money purchase benefits in master trusts. Clause 1(1)(a), taken together with other clauses, means that the Bill applies only to money purchase benefits provided through a master trust and excludes non-money purchase benefits. As I am sure the Minister is aware, the exclusion of non-money purchase benefits would mean that members’ benefits provided by those schemes, including retirement products, are excluded from key protections in the Bill. That does not seem fair or sensible, given the Bill’s intention to provide stronger protection for scheme members.
Master trusts currently provide a range of services both to employers under auto-enrolment and to individuals exercising pension freedoms. Those can include annuities, guaranteed drawdown and investment products, which include some form of guaranteed rate of return. One example could be when annuity payments are paid to the member while the annuity supporting those payments may be held as an asset of the scheme, rather than in the name of the member. Pension freedoms are beginning to transform the market radically for guaranteed income products, but pension savers will still have an appetite for some form of guaranteed product. The Bill will not apply to non-money purchase benefits, so it is unclear what happens to those benefits and, importantly, the assets backing them when a master trust fails.
In the other place, my noble Friend Baroness Drake raised an example of a trust that allows members to add in other savings and assets such as ISAs and property used for funding retirement. Everybody I meet acknowledges Baroness Drake to be a pensions expert in every sense. She believes that of the approximately 100 master trusts, only 59 are being used for auto-enrolment, with others having developed out of the pension freedom reforms.
Regulation should anticipate that master trusts will expand further into the decumulation market of retirement products. With that in mind, the exclusion of non-money purchase benefits from the primary legislation raises a number of questions. It is not clear what happens to the treatment of all non-money purchase benefits and the assets backing them in the event of a wind-up or other triggering event occurring. Will those members’ benefits be protected against funding the costs of a triggering event? How and where will they be transferred on exit?
In the other place, the Minister suggested that there is already extensive regulation to ensure that members’ non-money purchase benefits are protected. He called further regulation in this regard “unnecessary and disproportionate”. It seems odd that in this instance the Minister seems intent on minimising duplication, yet the Government continue to require duplication of regulation in some cases around the separate legal entity. The boundary line of the legislation appears a little murkier.
We note that in Government amendment 20, Ministers have acknowledged the lack of clarity around money purchase benefits and non-money purchase benefits raised by my noble Friend Baroness Drake, but we are a little disappointed that the amendment does not seek to provide greater protection to non-money purchase benefits under mixed schemes. Instead, it merely clarifies that the Bill protects only money purchase benefits within a mixed scheme. That is deeply disappointing for us for the reasons I have just outlined. I therefore request that the Government confirm absolutely that members of master trusts providing them with non-money purchase benefits face no additional risk as a result of that gap.
Will all retirement products with an element of guarantee be covered by the Pension Protection Fund regime? Master trusts are not regulated by the Financial Conduct Authority, so where does the saver look for protection? Secondly, the continuity strategy required under clause 13 in the event of a wind-up will have to set out how the interests of members of a scheme in receipt of money purchase benefits are to be protected in a triggering event. Currently, it will not have to set out how members in receipt of non-money purchase benefits will be protected. Such a requirement would at least clarify what range of member benefits were in the master trust.
Will the master trust be required to set out how members with non-money purchase benefits will also be protected if a triggering event occurs? I am sure that the Minister will recognise these very genuine concerns and I look forward to his response.
Nigel Mills (Amber Valley) (Con)
It is a pleasure to serve under your chairmanship, Mr Rosindell, and to follow the shadow Minister. My remarks will be in a similar spirit to his, trying to probe the Government on how exactly they see master trusts being used, how they see the pensions landscape and how the two will mesh.
Amendment 32, which stands in my name, relates to how we deal with self-employed people who may end up in a master trust. That starts out as a technical question—as the Minister may know, I like to ask technical questions of legislation to see whether he has read it all and can trace it all through, because these things can be chased around. Under the definition in the Bill, a master trust must be an occupational pension scheme, which takes us back to the Pension Schemes Act 1993. An occupational pension scheme has to provide benefits in respect of earners with a qualifying service in an employment—such schemes do not provide benefits to earners who are self-employed in that situation. Therefore, on a high-level reading, if a scheme is providing benefits for people who are self-employed, technically it should not be an occupational pension scheme.
I assume that the answer to that particularly technical point will be that if in a master trust there are 5 million people who are employed and there are 10,000 who are self-employed, it does not get suddenly blasted out of being an occupational pension scheme and out of the regulations and drop back into the personal pension scheme regulations. I assume that the National Employment Savings Trust, which I think already markets itself to the self-employed, will not somehow have a change in its regulatory position by serving a few self-employed people.
It is not hard to foresee that the landscape might change, and it is pretty clear that we would quite like the landscape to change quite dramatically. We have a big problem with the lack of pension provision among people who are self-employed and, sadly, that problem is going the wrong way. Auto-enrolment has enrolled millions more employed people than ever before in a pension, but over the course of this century the number of people who are self-employed and actively in a pension scheme has decreased from about 1.2 million in 2002-03 to 380,000—and that is as the number of people who are self-employed has risen to more than 3.5 million. That is going completely the wrong way. Far more people are self-employed, yet far fewer of them are saving in a pension. That is not a healthy situation for them and their prospects in retirement, and it is not a particularly healthy position for us, considering how people will be able to look after themselves when they reach that age.
It is pretty clear that we need to find solutions that encourage more self-employed people to save into a pension and to take the various tax advantages that that provides. Hopefully, when the Government conduct their auto-enrolment review later in the year, one issue they will look at is whether we can extend, tweak or amend auto-enrolment to get to those many millions of people who are self-employed. Let us be honest: probably quite a large number of them would like to be employed or think they are employed—or perhaps we think they are legally, in substance, employed, yet their non-employer is somehow tweaking the rules to treat them as self-employed. How do we get those people to realise that pension savings is important to them? How do we get them into a simple scheme that is easy to administer?
It looks like auto-enrolment master trusts are the obvious vehicle that could cope with the scale of several million more people, who are probably generally on relatively low earnings, joining a pension scheme. They have the infrastructure and it is not hard to see how self-employed people could self-manage such schemes via online portals. It looks like, as a matter of policy, we would quite like to encourage all the big master trusts out there to start taking people who are self-employed. I suspect we would like to find a way.
Ian Blackford (Ross, Skye and Lochaber) (SNP)
The hon. Gentleman is making some important points that I fully subscribe to. As much as I welcome the Bill and its overall thrust, is this not perhaps a little bit of a missed opportunity? We could have made sure that the review of auto-enrolment came alongside it, which would have informed our present debate on how we deal with self-employed people, and indeed those under the earnings threshold. We want people to be investing in pensions for the long term.
Nigel Mills
I am grateful to the hon. Gentleman, and I can see the attraction of that. Given that we have effectively auto-enrolled millions of people into master trusts, I am not sure I would support a delay in the regulations coming into effect. We need the powers in the Bill available to ensure that the people we have strongly encouraged into the schemes have all the protections we think they ought to have. I suspect that the review of auto-enrolment will be long, and in some ways it will probably be difficult to work out the right balance to strike in increasing the level of savings without encouraging people to leave the schemes completely. I am not sure that waiting for a resolution of that issue would be a sensible idea.
May I raise another technical point about when a master trust scheme ends up with a large proportion of self-employed members, up to 10%, 20% or whatever percentage of the scheme? Will it have to change its regulatory position and move from being an occupational pension scheme to a personal pension scheme or some other sort? I accept that there is a lot of regulation of such schemes, which may not be the end of the world, but perhaps the Minister will set out how the Government are tackling the big self-employed pension gap, where many fewer people save much smaller amounts and end up with much smaller pension pots as they approach retirement. As our employment markets change, that will be a significant challenge for us as we try to make pensions effective for everyone in the country. I look forward to the Minister’s remarks.
The Parliamentary Under-Secretary of State for Pensions (Richard Harrington)
It is a pleasure to serve under your chairmanship, Mr Rosindell. I thank you for the clarification of the rules concerning hot beverages, with which I am happy to comply.
The attitude that the Opposition, the Scottish National party and all of us have taken towards the Bill is to discuss it widely among ourselves and to agree as much as we can, which is positive. Our disagreements are honourable, and no one is playing politics or at opposition for the sake of it. I wanted to make that clear, Mr Rosindell, because I have served on Bill Committees, as I am sure you have, where that has not been the case.
The Opposition amendments and those of my hon. Friend the Member for Amber Valley were tabled in the correct spirit. We had considered all the points in advance of the Bill being introduced and therefore in advance of the House of Lords proceedings and Second Reading in the Commons. Master trusts have been around for a long time, but they have grown exponentially in number over the past two years. The legislation is therefore a response not to a fundamental problem with master trusts, but to their exponential growth, pushed by auto-enrolment, and the industry seeing them as an area with a less stringent regulatory regime than other parts of the pension system. For example, insurance companies and personal pensions are regulated by the FCA under long-standing rules, and the non-master trust system is very different, because those trusts have one clear sponsoring employer and there are lots of rules and regulations under the Pensions Regulator.
The legislation is therefore meant to fill a gap. We are not filling the gap because of a disaster or problems that have arisen; we are trying to see what problems might arise. That has been the scope of discussions between the Government, Opposition and individuals, which has included some positive opposition in the other place. I hope that that will be true for most of our proceedings.
Opposition amendments 22 and 23 and the amendment of my hon. Friend the Member for Amber Valley seek to change the Bill’s definition of a master trust. Amendment 22 would extend the definition to all schemes that offer money purchase benefits, which would include schemes used only by a single employer or by employers connected to each other. The proposal would extend the scope of the definition significantly and, therefore, of the authorisation regime disproportionately.
As the debate in the other place indicated, there is general acknowledgment that further regulation of master trusts is desirable and necessary. As I explained in my opening remarks, master trusts have developed into structures that are often very different from traditional occupational pension schemes offered by single employers or the more traditional group of connected corporate employers. They offer compelling benefits to employers and members. They spur competition in the market and allow for economies of scale, providing value for money. They are also an efficient solution for smaller employers for whom setting up an individual pension scheme for employees would be difficult, onerous, impractical and expensive.
We accept, however, that those qualities also bring about new risks. As I explained, those risks are less likely to be present in single employer or connected corporate defined contribution schemes. The authorisation regime is intended to address those risks. For example, in a single employer scheme—a traditional trust scheme—the employer is usually closely involved in the running of the scheme and has an active relationship with the trustees. In a master trust, the employer’s participation is often largely limited to paying the employer contribution, which is probably the most important part. I do not take that lightly, but the responsibility for the running and administration of the trust is clearly different from a single trust for a single employer. Additionally, in a single employer scheme, the employers determine the terms of the scheme, whereas in a master trust it is done for them, with the person or organisation setting up the scheme doing it.
Those differences highlight why the purpose of the Bill is to require authorisation and provide member protection in respect of master trusts. The risks are specific to this kind of scheme and it is therefore important that the definition reflects such schemes and does not extend beyond them. The clause establishes the proper scope of the Bill and ensures that its regulation is proportionate to the issues arising.
Amendment 23 was clearly explained by the hon. Member for Stockton North. It would amend clause 1(2), which provides that the Bill’s provisions apply to a master trust scheme only in so far as it provides money purchase benefits. That would mean that the provisions of the Bill would apply in relation to the scheme as a whole, and not just in relation to the parts of it that apply to money purchase benefits. Most master trusts will only provide money purchase benefits—that is the purpose of the vast majority of them—but it is fair to say that a number will provide money purchase and non-money purchase benefits. I agree with him that master trusts can do that legally and properly. It is not the norm but some do.
As I have already set out, the authorisation regime is intended specifically to address certain risks that apply to members in master trusts that relate to the structure and funding of such schemes. In particular, the Bill is focused on the risk around money purchase benefits, and we have been open about that. In answer to the hon. Gentleman, the Bill is focused in that way because there is already extensive regulation in relation to occupational pension schemes providing non-money purchase benefits—regulation already exists. Applying the authorisation regime to them would create duplication of regulation. He warned us about duplication, but the amendment would create duplication of regulation and add unnecessary costs and burdens to the running of those schemes, with little purpose in terms of protecting members, so far as we can see.
In addition, authorisation requirements are intentionally targeted at the risks relating to money purchase benefits. Conflict and confusion might arise if those requirements are applied across the board. For example, the provisions requiring the transfer of member benefits and wind-up of a scheme might have a detrimental impact on members if applied in relation to non-money purchase benefits. It is important that the members of schemes with mixed benefits have the same standard of protection as members of schemes that only have money purchase benefits. That is why the authorisation regime applies to the money purchase aspect of such schemes. Extending authorisation to types of benefits for which it is not designed and where the risks do not arise in the same way would not be appropriate.
To answer a question asked by the hon. Member for Stockton North, I can confirm that the Government intend to include decumulation schemes—the decumulation products that he mentioned in his speech—in clause 41.
Alex Cunningham
I am particularly keen to understand further what the Minister means by the same protections being in place for non-money purchase benefits as for money purchase benefits.
Richard Harrington
As I explained before, the two are covered by separate regulation and separate rules. I do not see how combining the two together under the same regime would help to give protection.
Julian Knight (Solihull) (Con)
Is not the truth that the two types of regulation will slot alongside each other? There will be a symbiotic relationship between money purchase and defined benefit.
Richard Harrington
My hon. Friend makes a good point. That is very common in other systems of regulation, sometimes to the chagrin of employers and people involved, but for many companies in other financial fields there are different systems of regulation for the different products they offer. That is not uncommon. As to what we must avoid, the hon. Member for Stockton North will accept that Governments must try to think how things work in practice, which is not to say that he has not considered it. However, we must have workshops of interested parties and consult widely. How things work in practice is important.
The end product for all hon. Members is predominantly consumer protection—the Bill is a consumer protection Bill. We have different views, but we are discussing the extent of consumer protection provided. I and my officials have considered Opposition amendments respectfully. They are not spurious and have been thought through. In fact, many were quite properly put to us—it is a democratic system—by groups such as the Association of British Insurers. They are not created out of thin air. However, we have had to think about whether in practice they will add to consumer protection. That is the test. Alternatively, will they just increase the regulatory burden? We have also been lobbied about that—again, quite legitimately—by those concerned. It is the Government’s job to try to come up with something in the middle.
My hon. Friend the Member for Amber Valley, who tabled amendment 32, discussed self-employed people, and attempted to ensure that I have in fact read the Bill. I do not think I should have the arrogance to stand here if I had not, but it is perfectly proper that he should ask. I certainly accept that my hon. Friend, given his years of experience and attention to detail, has read it. I shall try to answer his general and specific points.
On the question of the role of self-employed people, not just in the master trust schemes but generally, my hon. Friend is correct to identify that the number of self-employed people has grown exponentially in the past 10 to 20 years, even more than in the days of the Turner commission, of which Baroness Drake was a member. She has been most helpful with the Bill. I acknowledge her role and that of Lord McKenzie in helping both the Opposition and the Government very constructively.
The commission perceived self-employed people as those with their own business, who, by implication, would have an accountant or, at least, an adviser or someone similar. My hon. Friend was saying that, with the big growth in self-employment over the period, the people in question are typically not very high earners. Like him, I make no comment as to whether they should be self-employed—the fact is that legally they are. They do not have an accountant and the things necessary for someone who is running a business and employing people despite being self-employed. They are at the moment outwith the auto-enrolment scheme. I know we are here to discuss that from a regulatory point of view but, as politicians, we also want those people to have pensions, because the House agrees that that is a good thing.
I want to answer the hon. Member, who is going to be cross with me again, for Loch—
Richard Harrington
Have a little patience—I was going to say the hon. Member for Ross, Skye and Lochaber. Watford is much easier to pronounce, but I accept that he has a wonderful constituency that is very lucky to have him representing it. I have got it now.
The hon. Gentleman’s point was about why the review is different in timing and scope to the Bill. The main reason is statutory. We were obliged by statute to have the review in 2017, which means it cannot report until the end of 2017. In fact, 2017 is too early because we do not have enough figures to see people’s behaviour or habits since auto-enrolment came in. We are doing the review—it is being announced and will report—but we could not consider holding up this regulation until it came out.
Alex Cunningham
I share the Minister’s sentiment on our approach to this Bill and welcome the discussions we have had offline. Our main arguments about pensions are on other areas of policy, and certainly not this one.
I will briefly comment on the speech by the hon. Member for Amber Valley. There are ways to address the issues of auto-enrolment for the self-employed. Many people in the industry have shown me models, most of which Her Majesty’s Revenue and Customs would have a role in delivering. The Minister accepted that the hon. Gentleman’s amendment was not spurious; when we get to new clause 4, he and his colleagues might see the need to support it and bring it into the Bill to avoid any further delay in addressing the needs of such groups.
The Minister has addressed the points thoroughly, but anomalies remain. I referred to one group of connected employers outside the scope of the Bill, yet a similar group with just one associated employer would be included. We need more consideration from the Government on that. I am also concerned about the protection for members in single employer schemes. All the responsibility seems to lie with the employer. Where is the protection for the member? I have already alluded to the reliance on secondary legislation. I am concerned that there has to be secondary legislation.
Richard Harrington
I forgot to mention the hon. Gentleman’s point about secondary legislation; if I may, I would like to use this opportunity to do so. I apologise for forgetting it; it was in my head, but other things were as well. There is a lot of secondary legislation in the Bill, because we want two things. First, we want to consult extensively with the industry, following publication of the Bill, on certain technical matters to do with how things will work. Secondly—this is very relevant—we have seen how things have changed in the past couple of years; master trusts have basically morphed from one thing to another. I am not saying that there is anything wrong with that; that is how industries develop, particularly in the area of financial services, which is very fast-moving. We want to retain the flexibility to change nuanced things as the industry changes, so that we are not finding further loopholes that we have to wait years for primary legislation to address. As hon. Members will be aware, the protections built into the regulations include the fact that in the first instance they will be affirmative, so there will be plenty of time for them to be discussed properly and correctly.
Alex Cunningham
I accept that explanation from the Minister. There are other areas destined for secondary legislation that we will seek to put into primary legislation and that it is probably more important to press him on. He has a tough job—the money purchase benefits and non-money purchase benefits in particular need further consideration—but I accept where he is coming from. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Richard Harrington
I beg to move amendment 1, in clause 1, page 1, line 17, leave out “and” and insert “to”.
This amendment is consequential on amendment 20.
Richard Harrington
Amendments 1 and 20 will prevent what would have been an unintended effect of the Bill, for which I apologise. I am grateful to the other place for its scrutiny of the Bill, and particularly to Lord McKenzie—I have complimented him so many times in this sitting that I shall take my gratitude to him as read for the rest of our proceedings, but I really must thank him for bringing this matter to our attention. The amendments, which we indicated in the other place that we would table, will fix the issue that he pointed out. Without them, where a scheme has a mix of money purchase benefits and non-money purchase benefits, a funder would not be able to conduct activities in relation to the non-money purchase benefits. That was clearly not our intention, but it was the effect of the interaction of clauses 1(2) and 11. Amendments 1 and 20 will amend clauses 1 and 40 respectively to fix that.
Clause 1(2) provides that where a master trust scheme provides both money purchase benefits and non-money purchase benefits, the Bill’s provisions will apply only to the money purchase benefits. Clause 11 requires the scheme funder to be set up as a separate legal entity that is defined, broadly, as a legal person whose only activities are in relation to the master trust. As a result of clause 1(2), for a scheme with mixed benefits, the reference to the master trust in clause 11 would cover only the money purchase elements, which could mean that schemes or scheme funders would have to be restructured for reasons that we did not intend.
Amendment 20 will therefore add a further exception to the principle that the provisions of the Bill apply only to money purchase benefits, in addition to those already provided by clause 40, which we will consider later. The reference in clause 11(3) to the master trust will relate to the scheme as a whole, not just to the money purchase benefits. That will ensure that the scheme funder can engage in activities in relation to any part of the scheme.
Amendment 1 will make a minor consequential amendment to clause 1(2) to reflect the amendment to clause 40. The combined effect of the amendments will be to ensure that clause 11(3) works as intended for mixed benefits schemes.
Alex Cunningham
I inadvertently addressed the amendment in my first speech. We accept and welcome Government amendment 20, but we have not forgotten the issues that I raised earlier.
Amendment 1 agreed to.
Clause 1, as amended, ordered to stand part of the Bill.
Clause 2
Relevant public service pension schemes
Question proposed, That the clause stand part of the Bill.
Richard Harrington
Clause 2 defines a relevant public service pension scheme for the purpose of clause 1, which excludes relevant public service pension schemes from the definition of master trust. Clause 2 flows from clause 1.
The reasons that we require an authorisation regime in respect of master trusts include: the risks stemming from remoteness from the employer, which is one of the points I mentioned about the difference between an ordinary single employer trust and a master trust; potential for conflicts of interest; and the ease of set-up. The type of public service pension schemes that fall within that definition already have specific requirements and arrangements that mitigate those risks. For that reason, they are not included within the scope of the master trust authorisation regime.
Question put and agreed to.
Clause 2 accordingly ordered to stand part of the Bill.
Clause 3
Prohibition on operating a scheme unless authorised
Question proposed, That the clause stand part of the Bill.
Richard Harrington
The success of auto-enrolment, which various Government and Opposition Members have already discussed, means that more people are saving into a private pension, and as I have explained, many of those are saving into master trust pension schemes. Master trust schemes are regulated by the Pensions Regulator and occupational pensions legislation. However, as I explained, that legislation was developed mainly with single employer pension schemes in mind. Master trust schemes have different structures and dynamics, so the Bill introduces a new authorisation regime for them. The market has grown very quickly, and we now have to respond to ensure that that part of the pension market develops in the right way.
The authorisation regime has been designed to address the specific risks that arise in master trust structures. The criteria for becoming authorised were developed in discussion with the industry, and the risks that they address include the kinds of risks that the FCA regulation addresses with regard to group personal pension schemes, which I mentioned before. At the moment, master trusts are outwith that kind of regulation, but master trust schemes have some similarities with those schemes.
The requirement to become authorised creates a barrier to entry to the master trust market, so rather than us waiting for things to go wrong, the interests of scheme members will be protected in a proactive manner, because new master trust schemes will be prohibited from taking on members until they have satisfied the regulator that they meet essential quality standards. Existing schemes will have to become authorised to continue operating in the market. New schemes will have to be newly authorised.
Introducing a requirement for authorisation is a proportionate response to the rapid development of master trusts, given the types of risks inherent in the structure of the schemes. Clause 3 prohibits a person—a “person” being an entity—from operating a master trust scheme, unless that scheme is authorised by the regulator, and so is the core and foundation of the whole authorisation regime.
The clause also sets out the consequences of breaking the prohibition. It is important that those consequences are clear and firm. If the regulator becomes aware that a scheme is operating without authorisation, clause 3 requires it to issue a notice to the trustees of that scheme, explaining that the scheme is not authorised. Such a notification—I am sure we will discuss the effects of this later—is a triggering event that requires the scheme’s trustees to transfer the scheme’s members out and wind up the scheme. The risk of being shut down by the regulator is a strong deterrent that will ensure that the authorisation regime is taken seriously. The clause also gives the regulator the power to issue a civil penalty if the prohibition has been broken. This will act as an additional deterrent to anyone who may seek to operate a master trust scheme without authorisation.
Alex Cunningham
I beg to move amendment 24, in clause 4, page 3, line 14, at end insert—
“() the scheme’s policies relating to systems and processes requirements as set out in regulations under section 12”.
The application to the Pensions Regulator must include a member engagement strategy.
The Chair
With this it will be convenient to discuss amendment 25, in clause 4, page 3, line 15, at end insert—
“() the scheme’s member engagement strategy.”
The application to the Pensions Regulator must include a member engagement strategy.
Alex Cunningham
The mantra for this Bill should be: “Members at the centre of everything we do.” Communication and engagement is vital for trust in the system. It is good for business and good for members. Effective communication and engagement is an essential component in helping to implement improvement. Across all industries, transparency has never been more important to a successful business model, regardless of size. When it comes to employee engagement, this particular business practice is proven to be essential on a global scale, and what is seen as an essential tool for all manner of other business and industry areas, I see as equally essential for the pensions industry.
My noble Friend Lord McKenzie of Luton in the other House put the case very clearly and compellingly for master trusts to be required to have a full and effective member engagement strategy as part of the qualifying requirements for authorisation by the Pensions Regulator to operate as a master trust. In response to my noble Friend on Report, Lord Young of Cookham, replying on behalf of the Government, said:
“I can also confirm that the Government would intend—subject, of course, to consultation—to use the regulations under Clause 11 to ensure that the regulator specifically considers a scheme’s systems and processes in relation to these important communication matters when deciding whether the scheme is run effectively.”—[Official Report, House of Lords, 19 December 2016; Vol. 777, c. 1487.]
He went on to speak of wider communications, including how the review of auto-enrolment would include the engagement of individuals with workplace pension savings.
In an earlier written statement to the Commons, the Minister said that the review would include
“how engagement with individuals can be improved so that savers have a stronger sense of personal ownership and are better enabled to maximise savings.”—[Official Report, 12 December 2016; Vol. 618, c. 38WS.]
That is all very grand, but there were no new clauses or amendments addressing the issue specifically when the Bill left the Lords, nor since. We could save time and add value to the communications process by requiring a member engagement strategy in the Bill.
Some will say that most people have no real interest in pensions, and that we could be placing all manner of costs on the industry for the few who do take pensions seriously. We should never discount the few who may be interested. Recent research by the accounting firm Price Bailey has revealed some interesting statistics in its 2016 report on public interest and awareness of workplace pension scheme arrangements and retirement options. A sample of 2,000 stakeholders were interviewed across the English regions, with a good split between male and female respondents, white-collar and blue-collar occupations and income bands. Nearly 75% of those interviewed had a total household income, before taxes, of £55,000 a year or less. I wish the people in my constituency had an average income of £55,000 a year. It is encouraging to note that only one person in nine—11%—said that they were not interested in pensions. That seems to lay the lie.
It is also encouraging that more than half—55%— of pension scheme members said that they take an active, regular interest in their pension savings and retirement planning, and I do not think we will be very surprised that within the 55 to 65 age bracket the proportion rises to about two thirds, with some 66% of people taking a real interest in their pension—I wonder why. The highest levels of engagement were among males, those with higher incomes—more than £55,000 a year—those in white-collar occupations and active scheme members.
Labour Members believe that the role of trustees is crucial in providing retirement education and helping to raise levels of member engagement. Regular communication, whether written, online or in person, is key to achieving that, with different techniques for different audiences. It is important that employers consider that when communicating with current and potential scheme members. We urge master trust employers and trustees to consider carefully their strategy for scheme member engagement. It should be made a legal requirement for them to produce and execute such a strategy. Putting some thought and effort into that now will undoubtedly prove beneficial to scheme members in the long run, and it need not be a tremendous financial burden on the industry, given that we are in a digital age. Nowadays, there is no excuse for failing to communicate effectively. Using social media to communicate means expanding a multi-channel communication strategy to encompass new channels. It used to be the counter, the telephone and, later, the website, but now we have the Twitter hashtag and the Facebook page—just some of the channels open for communication today.
Real engagement, however, is something else. It is about figuring out where people are already having conversations about which an organisation needs to be aware. It is about bringing information and dialogue to places where people want that dialogue to happen—their Facebook groups, their Twitter streams and the master trust intranet networks. Good communication and engagement over members’ money and pension drawdown are prerequisites for a successful master trust.
Our amendments seek to ensure that as part of the defined-contribution code of practice, there is a requirement for the authorisation process principally to ensure that the application to the Pensions Regulator includes a member engagement strategy and a communication strategy. The Pensions Regulator’s code of practice for DC pension schemes, published in July 2016, sets out the standards that pension trustees need to meet to comply with legislation. The code, which applies to all schemes offering money purchase benefits, is supported by a series of “how to” guides that provide more detail about how trustees can meet the standards in practice.
The Pensions Regulator has also produced a tool to help trustees to assess their scheme against the standards in the code so that they can identify areas requiring improvement. The DC code sets out a number of areas in which an understanding of members is key, particularly those of gauging members’ views to inform the design of investment strategies and the assessment of value for members. The regulator suggests:
“Member nominated trustees in particular may be able to provide feedback, as might union representatives, other employee representatives or existing staff forums.”
It is because of the valuable role that scheme members can play that we have tabled the amendments on scheme member trustees. We need to improve the Bill to make it more scheme member-friendly. The members are, after all, our main concern. I will return to member trustees later. It seems only sensible to require the master trust to demonstrate its engagement and communication strategies to the Pensions Regulator, who has an obligation to ensure that the trust complies with the DC code of conduct.
The Bill sets out a requirement for the latest accounts, business plan and continuity strategy, yet it has nothing on issues that would ensure that the scheme met the required standards on member engagement and communication. There is no point authorising a master trust if it has poor communication and engagement with its members. The chances of members engaging with the issues that affect them can be greatly improved by communicating with them in the most effective way. That is the thrust of our amendments. We need to see members at the very heart of the process.
Master trusts will grow over time to cover millions of members and billions of pounds of assets under management. They will underpin the very success of the auto-enrolment policy and rebuild a long-term pension-saving system. The principle of an obligation on master trusts to have a clear strategy for engaging with scheme members should not be left to ministerial discretion or future consultation. We want to ensure that master trusts are at the leading edge of communication and engagement, and hope that the Minister will not just remain open to the idea, but will do something about it in this Bill. I look forward to his comments.
Ian Blackford
It is a pleasure to serve under your chairmanship, Mr Rosindell. I will be brief. Those of us who want to encourage pension saving, as we all do in this room, should encourage as much member engagement as is possible. That is the right thing to do to ensure that we have as much transparency as possible. It is perhaps relevant not just to this amendment, but to others, that the issue of members being trustees is important. We must recognise that we are talking about assets belonging to the plan holders and take into account the fact that a number of master trusts are also profit making. It is important that that process of transparency is open to members of the scheme and that there is full engagement by members, with members being part of the board of trustees and having effective training. We happily support that.
Craig Mackinlay (South Thanet) (Con)
I am delighted to serve under your chairmanship, Mr Rosindell. I will probably say something more about my opposition to member trustees, which would be a step very much in the wrong direction, and I fear that the amendment tabled by the hon. Member for Stockton North would do that, but in a different way.
I agree entirely that the regulations under clause 12 will be subject to the Secretary of State’s involvement in laying out those regulations in due course, and under clause 13 the continuity strategy—what that might mean and what regulations we may expect are fairly well laid out—but I am afraid that, to my mind, “member engagement strategy” is wording that is rather too loose. If we encouraged such a strategy, I would like to see in any amendment what that might involve and an expectation of what we may see in regulations from the Secretary of State. I would not want a perfectly good scheme to fail because of an interpretation that might mean lots of different things to different people. My member engagement strategy might be rather different from that of the hon. Gentleman, so I will not support the amendment.
Richard Harrington
I would like to make a general point, which the hon. Member for Ross, Skye and Lochaber also made and which was agreed by everyone: we are all in favour of more people getting involved in their pension scheme. For many years, it became clear, particularly under defined-benefit schemes, that people had other things to think about for most of their life and that they thought their employer would take care of their pension, whether in the public sector or in a defined-benefit scheme. It was not that they could not care less, but they thought that as long as they paid their bit they did not have much to worry about.
The general point—it is not specifically a regulatory point for the Bill—is that the general policy of this Government, the previous one and, I am sure, all future Governments will be to make people far more aware of their pensions because they are predominantly defined- contribution schemes. People must know and be able to calculate their pension, but perhaps the old boring statement sent out every so often is not the way to do that. We hope that apps and other systems will mean people are a lot more aware of it.
The general point of people being a lot more knowledgeable about their pension arrangements is taken as read and my responsibility and role is to help to promote that through communications, advertising, technological changes and so on. However, that is separate from the regulatory point. It underlines what everyone in this room really wants.
On the regulatory point in the amendments tabled by the hon. Member for Stockton North, I share his view of the theoretical constituents in the Price Bailey report. I do not think many of my constituents have £55,000 a year either, but the report makes some good points. We are here to discuss the amendments specifically. You are being patient, Mr Rosindell, but I wanted to make that more general point.
Julian Knight
I am in clear agreement here: although the engagement strategy sounds worthy and laudable in many respects, that phrase is open to interpretation. All I can see it doing is creating a whole new industry—extra costs—and opening up the potential for legal challenges down the line, in a way similar to what happened with Equitable Life. As the Minister will remember, the Government issued certain brochures through the Financial Services Authority that became the basis of action further down the line.
Richard Harrington
My hon. Friend makes a good point and I agree with him. It is important, though, that the regulator has enough information to be able to assess whether schemes have adequate systems and processes. The regulator can require the information; it needs to make the assessment. It is in the interests of any applicant to give the regulator the information it requires to make the assessment. The regulator is very active in this: it is two way, not just one way. The regulator may require different things from very big schemes that are well established than from small, newer schemes. That is what regulators do, and they have to have that discretion.
It should also be noted that clause 4 contains a regulation-making power to allow the Secretary of State—that is, the Government—to set out further information that is to be included in an application. That is why we gave a specific commitment to use the regulations under clause 12 to ensure that those matters are taken into account when considering a system’s application for authorisation. If you will allow, Mr Rosindell, I would like to repeat that commitment. The Bill allows the regulator to take into account the systems and processes relating to communications and engagement when assessing the adequacy of a scheme’s systems and processes more broadly.
Alex Cunningham
I am concerned that auto-enrolled into pension schemes are millions of people who have no communications whatever from the organisations handling their money. What is the Minister saying the regulations cover that will ensure those people are communicated with?
Richard Harrington
That is up to the regulator. If the hon. Gentleman bears with me, I will get to that particular point. If he is not then satisfied, I will willingly give way.
Member engagement is a challenge in pensions both legally—that is, what should people know?—and in terms of getting them engaged in a general sense. It would be unacceptable to have a hugely expensive exercise writing tens of thousands of letters that may or may not be read, but which would confuse people. However, we accept that it is important that the members get the right communications.
A situation such as the hon. Gentleman mentioned, in which members get absolutely nothing, which the regulator would find unacceptable, would not be at all acceptable for two reasons. The first is the general point that I mentioned about getting people engaged and understanding their pension and everything that goes with it. We have all received these communications. Probably, the hon. Member for Ross, Skye and Lochaber will have always looked at his pension statements, but a lot of us have received them—very comprehensive ones, in many cases—and just put them at the bottom of the desk drawer, in the hope of reading them sometime. I hope that the hon. Gentleman is not offended by that comment; it was meant to be complimentary.
Ian Blackford
I shudder to think that the Minister would ever offend me, at least willingly. The regulator has a very important role to play—I think we all understand that—but there is also the fact that the trustees are responsible to the scheme members, and it is important that we ensure that trustees recognise the responsibilities they have. No one is talking about bringing in a cumbersome system that will be costly. This is about ensuring that the members have that relationship with the trustees. It is important that the trustees are answerable to the scheme members, not least because of the profit-making capability that some trusts have.
Richard Harrington
The hon. Gentleman is right, and this is not just a question of communication as in a formality—communication if there is a problem. We will be speaking to those points later. This is a point about communication and making sure that people know what they have, in the same way as a bank communicates, now mainly by the internet, so that people—
Richard Harrington
I will finish answering the previous intervention and then of course I will happily give way. The two points about communications are correct, and after the hon. Lady has intervened, I will do my best to go into the other point.
Carolyn Harris
The Minister, in a private conversation, said that I would find it difficult to mention this subject, but he has kindly given me an opening. We have to learn lessons from the experience of the WASPI women—the Women Against State Pension Inequality Campaign—and we cannot go forward and experience the same inability to engage as we are experiencing now, so this scheme must ensure that communication is sufficient to attract all people.
Richard Harrington
I smile, but not out of disrespect for the hon. Lady—quite the contrary. I knew that she would manage to bring in her favourite subject and I am grateful for the indulgence of the Chair in not declaring it out of scope, because she makes a relevant point. I nearly said “you”, Mr Rosindell. You would probably make it as well, if you were invited to speak on the subject.
The communication point that the hon. Lady raises has to do with the state pension. Generally, things have moved on dramatically—not just from a regulatory point of view, but with communication generally. We just have to look at the state pension side—before you rule us out of scope, Mr Rosindell. Millions of people look on the internet every year to see what the position is with their state pension. The same will apply—to bring us within scope—to private pensions. The younger generation of people do not just wait for something to come. They are aware the whole time; they see the information on their pay packet. My younger son started work after graduation in September. They sign up for the pension, it is explained and they are interested. They think it is years away, obviously, but they are interested. That is why I do not take the communication point lightly, and I will do my best now to talk in more detail about it.
We have mentioned the automatic enrolment review. That is critical—this is not just a way of sidetracking the point—because it will consider how individuals engage with their workplace pension scheme and how that can be developed so that members are better able to understand and maximise their savings. That is probably the most relevant change that we have to try to bring about—we as a Government are going to do this, but I am sure that any Government would—to get people really involved. We have appointed an external advisory board, including members that represent consumer interests as well as pension provider representation. We will lay a report before Parliament before the end of 2017. The relevant point, to bring us back to the Bill—you have been very patient, Mr Rosindell—is that it will take into account these findings. We will take them into account when considering the regulations under clause 12—that is the relevant clause—which I referred to a moment ago.
Nigel Mills
I did try to warn the Minister about this sort of question. The very first line of this clause says:
“The trustees of a Master Trust scheme may apply to the Pensions Regulator for authorisation.”
Will he explain why that does not say “must apply”? We do not envisage any master trusts that are not obliged to register. Is it because they can form themselves, and before they start operating they have to apply, or does he expect them to be formed only after they have been authorised?
Richard Harrington
Master trusts may apply. Exactly. My hon. Friend’s point is correct, but if they wish to be in a master trust in the market, they must apply. If they do not, they may say, “We’ve looked at this regulation, we call ourselves a master trust now, which we are, but the regulatory hurdles are not for us so we’ll leave the market.” We had to leave the flexibility in, and maybe many will. I do not know. Maybe entities will say, “It’s not for us, we are going to do it another way,” given the regulations, an extra burden of regulation or a different type of regulation, but if they are to be a master trust—if they are to continue as one—the “may” effectively becomes a “must”, because they have to apply and regulate. We had to leave the possibility in. It may not happen, but I think some of the smaller ones will find that it is not for them. I hope I have answered that question satisfactorily. I hope, too, that I have said enough to reassure the Committee. The Government sympathise with the intention of the amendment. We take member engagement seriously. There is no simple answer.
The Bill is about protecting those people saving in master trust schemes by addressing the key risks that arise in this type of scheme. While member engagement is important, I do not believe that the Opposition have made an effective case that these issues constitute a key risk that needs to be addressed through setting out explicit requirements in primary legislation. That is the critical point. We will consider the area further as we go through the AE review, and we will develop and consult on the regulations under clause 12. As I have explained generally on the regulations, there will be time for both Houses to go through them. On that basis, I kindly invite the hon. Member for Stockton North to withdraw his amendment.
Alex Cunningham
First, I congratulate my hon. Friend the Member for Swansea East on her particular skill in introducing the word “WASPI” to each and every debate that I have ever been involved in. I pay tribute to her for the tremendous work that she does. She chairs the WASPI all-party parliamentary group. I know that it is at the centre of her heart, and the Minister was probably just waiting for the word to come up today. I congratulate her on all the work that she does.
It is the members’ money, and they should be told what is happening with it and how it is being invested. They should also have an opportunity, as the Minister says, for two-way communication, and be able to influence that as well. The hon. Members for South Thanet and for Solihull agree that we should have good communication. They talked about loose wording, but communication is central to everything that we do in society these days. We have seen how failure to communicate has perhaps resulted in some of the things that have happened in recent times, such as the decision for us to leave the EU. Did we actually communicate the real messages, the proper messages? It is important in relation to pensions that we communicate the full message to the people whose money we are dealing with.
We will debate trustees later in our consideration of the Bill, but my attitude is, why should there not be member trustees when it is the members who bear all the risk when it comes to these investments?
The Minister talked of the various regulations that could be put in place and used the phrase, “That is up to the regulator.” It is not good enough to leave those matters to the regulator. We need to provide guidance for the regulator.
The Minister is fond of his secondary legislation. I suggest that within that secondary legislation he could lay down some guidance, which the regulator could then use on the issue. The Opposition feel strongly about communications. For that reason, I will press amendment 24 to a vote.
Richard Harrington
The clause allows the trustees of a master trust scheme to apply to the Pensions Regulator for authorisation and sets out details about the content of applications and the application process. The clause provides that an application must include certain key information: the scheme’s latest accounts, the latest accounts of each scheme funder, the scheme’s business plan and the scheme’s continuity strategy. That information must be provided so that the regulator can assess whether it is satisfied that the scheme meets the authorisation criteria, which we will discuss when we deal with later clauses. The clause also allows the regulator to take any other information into account when considering an application.
As I have said, the master trusts market is still developing and we believe that it will develop further as it responds to the new requirements in the Bill, so the clause allows the Secretary of State to make regulations setting out further information that must be included in an application so that changes can be accounted for and the application process remains robust. The Government also intend to charge schemes a one-off application fee, which will be payable to the regulator at the point of application. It might be necessary to vary that fee, depending on factors such as the number of schemes that apply for authorisation and the resources required to process applications, so the clause allows the Secretary of State to retain flexibility by specifying that detail in regulations.
There must be a clause to allow applications for authorisation to be made, so I ask the Committee to support the clause.
Question put and agreed to.
Clause 4 accordingly ordered to stand part of the Bill.
Clause 5
Decision on application
Question proposed, That the clause stand part of the Bill.
Richard Harrington
The clause sets out the procedure that the regulator must follow when it receives an application for authorisation from a master trust scheme. I draw the Committee’s attention to the precise wording of subsection (1), which states that the regulator
“must decide whether it is satisfied that the scheme meets the authorisation criteria.”
That is important, because it places the emphasis on the scheme seeking authorisation to demonstrate that it meets the required standards. If the regulator is not satisfied that it does, it will not grant authorisation.
It is important to ensure that a well run, high-quality scheme is not unduly held up by the requirement to become authorised, so the clause requires the regulator to make a decision on an application within six months of receiving it. That is important in other areas of regulation; I know from my constituency work that many other industries complain that regulators take too long and hold them up when they want to comply. The six months is therefore a very good thing.
The clause is vital because it introduces the authorisation criteria. They are: first, that the persons involved in the scheme are fit and proper persons; secondly, that the scheme is financially sustainable; thirdly, that each scheme funder meets certain requirements; fourthly, that the systems and processes used in running the scheme are sufficient to ensure it is run effectively; and finally, that the scheme has an adequate continuity strategy. As I said previously, the criteria were designed to address the key risks for these types of scheme. They relate to the risks that members of other types of pension scheme are already protected from. The criteria are set out in further detail later in the Bill, and I am happy to discuss them when we come to those clauses.
Question put and agreed to.
Clause 5 accordingly ordered to stand part of the Bill.
Clause 6
Referral to Tribunal of refusal to grant authorisation
Question proposed, That the clause stand part of the Bill.
Richard Harrington
The clause provides for the appeal rights if the Pensions Regulator refuses to grant authorisation, which I mentioned in the context of the previous clause, to a master trust scheme. The decision to refuse an application for authorisation, and thus to prevent a master trust scheme from operating in the market, is clearly a decision that the regulator cannot take lightly. It is right that the people who are directly affected by such a decision have recourse to appeal against it, should they wish to do so.
Question put and agreed to.
Clause 6 accordingly ordered to stand part of the Bill.
Clause 7
Fit and proper persons requirement
Question proposed, That the clause stand part of the Bill.
Richard Harrington
The clause introduces the first of the five authorisation criteria that I mentioned previously. It means that, when authorising a master trust scheme, the Pensions Regulator must be satisfied that those involved in the scheme are fit and proper persons. The structure of the master trust scheme means that it is no longer the members’ employers who set up the scheme or appoint the trustees. That changes the key relationship and the influences on the running of the scheme. Some master trusts are set up as a commercial enterprise and resemble something more akin to a conventional financial services product, but without being subject to the same regulatory requirements. It is therefore only right that we introduce the requirement of being fit and proper—fitness and propriety—in respect of those setting up and running master trusts.
The clause lists the key people whom the regulator must assess as fit and proper to act in their capacity in relation to the scheme. They include the trustees, the scheme funder and the scheme strategist. That list can be extended under regulations. Again, we do not want a situation in which an entity can create another entity without our being able to opine on whether they are fit and proper people to do it.
The clause also gives the regulator the power to assess a person who promotes or markets the scheme. Regulations can specify further individuals acting in a particular capacity whom the regulator may assess to determine whether they are fit and proper for that role.
Craig Mackinlay
On the point about the person who promotes or markets the scheme, a lone employer or an employer thinking about his options, whether it be the National Employers Saving Trust or another master trust, may ask his independent financial adviser to consider which scheme is suitable for his business. How would the Pensions Regulator get involved with subsection(3)(a)—
“a person who promotes or markets the scheme”?
The subsection includes the word “may”. I am concerned that we may be putting regulatory requirements on IFAs who are already duly authorised under the FCA and may be caught under this clause. Was that the Minister’s intention?
Richard Harrington
No, I confirm that that was not the Minister’s intention at all. As we get through the regulations for this Bill, it is precisely that kind of case that we need to take into consideration, and there may be others. An IFA, of course, would be regulated and deemed to be a fit and proper person by the FCA. I am not very familiar with those rules, because they are outside my area of responsibility, but I think that they are pretty stringent and that they might be directly comparable to those under the Pensions Regulator. However, it is a fair point. In fact, most companies in the position to which my hon. Friend refers usually have to go to a professional adviser to be able to make that decision, because they have neither the time nor the experience to make the decision themselves, unless they are a very large company with suitable employees.
The regulation-making powers are needed to respond to developments in the market where the structures of master trusts might evolve to include other functions. There is a regulation-making power that enables regulations to specify matters that the regulator must take into account when assessing whether someone is a fit and proper person. As with other provisions in the Bill, we intend to work closely with industry, regulators and Her Majesty’s Revenue and Customs in developing these regulations, as well as conducting formal consultation.
The clause also gives the regulator a discretion to take into account other matters as it considers appropriate when carrying out the fit and proper person test, including matters related to a person connected to the person being assessed. That will give the regulator the flexibility to ensure that it can be fully satisfied that the criteria for a fit and proper person have been met and not avoided on technicalities.
The fit and proper person criteria are a key part of the new regime for master trusts. They relate to the competence and propriety of those responsible for the pension savings of thousands workers.
Nigel Mills
Will the Minister confirm that he expects this to be a high bar; that he wants people to be able to show that they are knowledgeable, competent and have the training to be a trustee and run a pension scheme, and not just that they can pass a check that they have no criminal convictions for fraud? They have to show positively that they can run these pension schemes well, not just that there is no historical evidence that they cannot.
Richard Harrington
I can absolutely confirm that for my hon. Friend. I hope that he will agree that the fit and proper person test is quite well established across different regulatory regimes. By definition, it has to allow a certain subjectivity, because otherwise it becomes the low-level box-ticking that he fears. Having discussed this with the Pensions Regulator—both the chief executive and other people—I know that this would never happen under its regime. I hope that most people would not regard the fit and proper person test as the kind of thing to which my hon. Friend refers, but he makes a sensible point.
Question put and agreed to.
Clause 7 accordingly ordered to stand part of the Bill.
Clause 8
Financial sustainability requirement
Ian Blackford
I beg to move amendment 33, in clause 8, page 5, line 39, after “scheme” insert “or scheme funder”.
The financial sustainability of the scheme funder must be taken into account when assessing a Master Trust scheme’s financial sustainability.
Amendment 33, which stands in my name and that of my hon. Friend the Member for Paisley and Renfrewshire South, seeks to ensure that the financial stability of the scheme fund is taken into account when the regulator is assessing the financial stability of the scheme funder. A number of insurance companies have told us that they already hold a very significant amount of capital under the European regulatory framework for insurance solvency. In this case, it seems unnecessary for insurers to be required to hold separate or additional capital on top of this in order to meet their new obligations as master trust providers under the Bill.
It would be helpful to know more from the Government on the restrictions on the use of member funds to meet costs, which need to be more clearly defined. We have also heard from the Association of Pension Lawyers, which has called for clarity on the policy intentions behind the clause and for the detail to be fleshed out. It would be appropriate for the Government to take the opportunity to do that today.
Richard Harrington
The amendment proposes a change in the requirements for the financial sustainability of the master trust in clause 8. The clause, in conjunction with other provisions in the Bill, requires that the Pensions Regulator must be satisfied that the master trust has sufficient financial resources. The amendment proposes that it is the scheme or scheme funder that must have those resources, rather than the master trust. I absolutely sympathise with what I think is the intent behind the amendment—security for members—but I differ with the hon. Gentleman because I believe that the clause already achieves that end. The amendment is therefore unnecessary. I will explain why.
Clause 8 already sets out the two elements of the financial sustainability requirement: schemes must have a sound business strategy and sufficient financial resources to meet both their operating costs and costs following a triggering event, such as those of winding up in the event of scheme closure. The financial sustainability requirement is intended to mitigate the risk of a master trust being set up with inadequate planning and insufficient financial resources—that is its whole purpose. When the regulator assesses whether the scheme meets the requirement, it must take into account certain matters that will be specified in regulations, and our intention is that the regulations will include how the resources to cover the costs mentioned by the hon. Gentleman must be held. The scheme therefore includes a scheme funder.
We are considering options for the regulations and will consult on them. Among those we will want to explore are holding the resources in escrow or as a guarantee, or other robust financial commitments. What the regulator will expect will differ greatly depending on the size of the company, varying from a massive multinational undertaking to a comparatively small one. It might involve a solicitor’s client account or an escrow system. We want to consult on the options to get them absolutely right.
Also, we can use the regulations to specify whether the resources could be held either by the scheme or elsewhere, such as with the funder. However, if they are held elsewhere, our intention is that there must be clear commitment and availability of the funds in a range of circumstances. We would not want the money to be held by the funder rather than by the scheme if there were not sufficient protections or commitments in the event of the funder’s insolvency; the money must be readily available to do the job in whatever circumstances. There are different circumstances and that is the kind of item that regulators consider in other areas of financial regulation.
It is absolutely fair to say that the key risk for members is the financial sustainability of the scheme, so we have focused the requirement on the scheme, but the Bill and the regulation-making powers enable a variety of ways for the scheme to meet the requirements. That approach will allow us to take account of the variety of arrangements already in place in the market, and enable future innovation.
The key outcome we want to achieve, and therefore what we have reflected in the Bill, is that it is the scheme that must have the resources available to it. The scheme’s business plan and accounts and the scheme funder’s accounts will form the basis of the regulator’s assessment. The scheme funder’s accounts will provide the regulator with information about the funder’s solvency and the security of any commitment to provide funds to the scheme.
The clause also provides the Secretary of State with a power to prescribe matters that the regulator must take into account when assessing the scheme’s financial sustainability. Such matters may include, for example, the risk of the scheme funder’s insolvency; whether the scheme funder is subject to any prudential capital requirements imposed by a different regulator, which we have discussed for insurance companies and other types of company; and the terms and repayment periods of any loan funding relied on to meet the scheme’s running costs.
To conclude, clause 8 requires the regulator to be satisfied that the master trust has sufficient resources to meet the financial sustainability requirement. The scheme funder’s financial position and its financial arrangements with the master trust will form a key part of the regulator’s assessment. I therefore urge the hon. Gentleman to withdraw his amendment.
Ian Blackford
I will not detain the Committee longer than absolutely necessary. I am relatively satisfied with the Minister’s response, particularly in the light of ongoing consultation, and on that basis I will not press the amendment to a vote just now. However, there are obviously some remaining concerns about insurance companies, particularly under the obligations, and I would like those to be highlighted today. We will move on for now. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 8 ordered to stand part of the Bill.
Clause 9
Scheme funder of last resort
Question proposed, That the clause stand part of the Bill.
Richard Harrington
The clause was introduced by the Opposition in the other place. It is intended to require the Government to make provision for a scheme funder of last resort, which would take effect if a master trust had insufficient resources to meet the costs of complying with duties arising from a triggering event and the costs of continuing to run the scheme for a further prescribed period.
Since the clause’s introduction, I have reflected a lot on how it would work. I have had formal and informal discussions with Members of the other place and have met officials, in the presence of the Opposition spokesman, the hon. Member for Stockton North, to discuss this subject. I have concluded that it is unnecessary to place such an additional requirement on the Government, and I will do my best to persuade the Committee of that view.
I think that we all agree that the Bill’s primary purpose is, quite simply, to bring in safeguards and controls for employers and employees who have opted to save through a master trust pension scheme. The Bill includes new powers for the Pensions Regulator, which will be responsible for the effective operation of a new authorisation and monitoring regime for master trusts. Schemes that do not meet or maintain the specified standards simply will not be allowed to operate. We have just discussed two of the authorisation criteria; as I explained, clause 7 sets out the requirements that those involved in a scheme must meet to be considered fit and proper persons, and clause 8 describes the financial sustainability requirements that will apply to master trusts. The remaining criteria—the business plan requirement, the scheme funder requirements, the systems and processes requirements and the continuity strategy requirement—are dealt with by clauses 10 to 13.
The Bill’s later clauses define the events that, when experienced by a scheme, will trigger a series of specified actions and additional requirements that must be undertaken by the scheme and the regulator. The nature of such events may mean that a scheme is operating under increased risk. Those additional requirements will ensure that increased scrutiny and controls are put in place until the new risk has been dealt with and nullified, or the scheme is wound up in an orderly manner and the interests of employers and members are successfully transferred out to a new scheme.
In addition to the new regulatory framework, the regulator is working closely with individual master trust schemes. That work provides us with insight into the scale of current risk, which the clause has been designed to guard against, and may be followed by the publication of new supporting data by the regulator. In addition, the indications are that market forces are operating effectively prior to the new regulatory regime coming into force. For example, some master trusts have left the market and transferred their members without issue.
As I have explained in previous debates, it is very attractive for existing successful master trusts—the vast majority of them—to take on members from smaller master trusts that might appear to be failing in their administration, since that allows them to add members without adding very much to their costs. I realise that is commercial rather than structural, but I believe that will happen, as it has in other regulated areas of financial services. New, larger schemes are also now entering the market. Such schemes are on a sound financial footing and will actively seek to increase their market share. All that further supports our belief that the risk of scheme members being left stranded is absolutely minimal.
Hon. Members might continue to be concerned that, were a master trust to fail, the members of that scheme might be left stranded. I perfectly understand their thinking, but we consider the risk to be negligible. However, we recognise that we cannot completely rule it out, which is also recognised by the pensions industry. We are currently working with the Pensions and Lifetime Savings Association, which is exploring establishing a panel of “white knights.” That panel would aim to guarantee that, if a master trust was required by the regulator to leave the market, the affected master trust scheme members would be transferred to a new scheme. That happens all the time in other regulated fields of the financial services market.
I believe, after consideration, that as drafted clause 9 does not work as intended. If I may expand on that, a couple of illustrations might help. The clause does not contain a power, such as a regulation-making power, enabling the Secretary of State to make further provisions relating to the scheme. That would include provisions relating to the scheme’s procedure and operations. The clause provides that the Secretary of State should consider only the resources held by a master trust and not the scheme funder.
Given the imprecise nature of the clause, I am concerned that it could lead to perverse behaviour, with schemes shifting funds about, knowing that the taxpayer will pick up the bill. We are also concerned that, given the clause’s lack of clarity regarding funding of a Government-backed scheme of last resort, stable master trust schemes might be concerned that they are at risk of paying for failing master trusts and, as a result, opt to leave the market. For the reasons outlined, I call for the clause not to stand part of the Bill.
Alex Cunningham
I had hoped that I would not need to prepare a speech on this matter, other than to welcome clause 9, but I am disappointed that we find ourselves defending a new clause added to the Bill by our colleagues in the other place, particularly as the Minister has opted to take it out altogether, with limited alternative provision to protect the members of master trusts who are failed by their trustees.
I am grateful to the Minister for the time he has taken to discuss these matters one to one with me and with colleagues in the other place. There remains tremendous uncertainty about exactly what happens if the worst comes to the worst and there is no organisation to pick up the pieces, whether that be a small trust that fails to make the grade under the legislation, or a large trust that could fail in years to come.
The Minister referred to his panel of “white knights.” I was trying to envisage a group of white knights on large chargers heading through the City to help people out.
Richard Harrington
I should reiterate that it is not my panel of white knights; it is that of the Pensions and Lifetime Savings Association, which is a large and well respected trade body, as the hon. Gentleman certainly knows.
Alex Cunningham
I accept that correction. I am sure the Minister would look grand dressed as a white knight. The fact is that no white knight actually exists.
The clause has a key purpose to protect the pensions pots of ordinary people from being raided in the event of a master trust failing. That is something that would certainly not be the fault of the workers up and down the country who are faithfully paying into a pot; a pot that, although welcome at retirement, is likely to be relatively small. If the Government succeed in removing the clause from the Bill, they will be responsible for not providing a safety net if a master trust fails and workers end up losing their hard-earned cash.
It is not enough for the Government to argue that a failing scheme will always be successfully transferred. They instead must ensure that a funder of last resort is identified in the Bill. The Government argue that there is no need for a funder of last resort because the procedures laid out in the Bill will prevent it from reaching that far. Industry experts across the board insist that a funder of last resort or equivalent is needed. The chair of the Standard Life master trust has called for the Government to be the funder of last resort
“because it’s their policy foul-ups that have allowed the proliferation of unsustainable master trusts”.
I do not know if there has been a foul-up or not. I believe that the growth in master trusts and in auto-enrolment is actually a very positive thing. The chair also commented that Government funding was unlikely and that a levy on the employers should be imposed instead, as it is the employers who have chosen the master trust and therefore they should bear more risk. That could make them think twice about getting involved with less than honourable trusts.
Julian Knight
The hon. Gentleman is making some interesting points. Surely the point of the legislation is to ensure that, on start-up and on an ongoing basis, the fund and the pension scheme are sustainable. That is the job of the Pensions Regulator. He also mentioned the return of the entire capital. Even in the Pension Protection Fund, it is still only 90% return on capital.
Alex Cunningham
Yes, it is the responsibility of the regulator to ensure that whatever trusts are set up are stable and ready to go. My point is that, as we have seen, whether we are talking about defined-benefit schemes just looking at the failure of the banks in recent years, there is always an opportunity for catastrophic failure in our master trusts, with perhaps 1 million or 2 million members. I am not convinced that there is provision to protect their interests. Lord Freud referred to this clause as a sledgehammer to crack a nut, considering all the mitigations against the risk that are already in the Bill, but what if those mitigations are not enough?
Again, will the Minister provide the Committee, and people all over this country, with a 100% assurance that the Bill without this clause is enough to protect members? Will he guarantee that no master trust will be in a situation whereby it has failed and has insufficient resources to meet costs? I believe—he has already said it, and I have said it as well—that he cannot guarantee that 100%, which is why the clause needs to stand part of the Bill. By seeking to remove it, the Government continue to go back to the argument that there are enough conditions in the Bill without the clause, such as the Pensions Regulator needing to be satisfied that the master trust has sufficient financial resources to comply with its continuity strategy. There are too many unknown factors out there in master trust world for us to know that for certain.
How can we encourage ordinary, hard-working people to save for retirement and put their trust in a scheme that their company bosses have picked for them when the Government are consciously acting against the clause that could be the safety net? We have seen all manner of pension schemes get into trouble and pensioners have been the losers, so we need systems to be much more robust. Workers need to be confident and assured that the money they have faithfully put aside is given the greatest possible protection.
Another mitigation in the Bill that the Government use to support their argument that the clause is not needed is the regulation of our record management, which will be regularly monitored.
Yvonne Fovargue (Makerfield) (Lab)
If the clause is not needed, why not put it in to give people that extra confidence? People have an historically low opinion of financial institutions, trusts and banks, so surely any extra insurance that will encourage people to have confidence is worth putting in.
Alex Cunningham
My hon. Friend is correct. People want to know that everything is 100% safe. I know that the Minister said that we can never guarantee 100% safety, but we are talking about some of our society’s most financially vulnerable people who are investing relatively small amounts of money in their master trust. They are not going to get a tremendous pension—nothing like what a Member of Parliament receives—but they want to know that their small pot will actually mean something for them. That is why we must have those protections.
We were talking about regularly monitored business. How regular—every three months, every two years, every five years?—and what type of monitoring? Can the Government say for certain that, by the time the regulator has identified a problem with record management, it will still be within the timeframe to resolve the issue without a funder of last resort?
The Government argue that the Bill already achieves what clause 9 is trying to achieve, but I must question the real reason why they do not want it in the Bill. If they support the idea of master trusts having regulations in place to avoid a disastrous situation if one failed, why will they not just support the clause? If they are so sure that it would never reach the stage of needing a funder of last resort, what is their opposition to including the clause just to ensure that, in a worst-case scenario when things do not go to plan, there is extra protection in place? Unless, of course, they are ideologically opposed to the concept of a funder of last resort. It would be a safety net; a guarantee from the Government that they will need to do everything in their power to protect workers’ retirement funds. If that is the case, I am disappointed that the Government do not believe that it is their duty to step in when business fails and that they would leave innocent people paying the price.
One argument that the Government Lords kept repeating was that, in the event of regulatory failure and a trust not having the means to finance a wind-up, it will not be members that will have to pay the price, but the Government have yet to tell us who it will be. When a number of master trusts and pension experts are calling for there to be a funder of last resort, why are the Government not listening? We have heard a lot of words in the other place and here today, but we have seen not action. Verbal assurance is not good enough when we are talking about people’s livelihoods in older age. We need action and robust legislation to ensure that we take every precaution. In the absence of greater clarity about the Government’s insistence that the Bill already addresses areas raised in this debate, it is vital that clause 9 is not removed. We should be covering every base in order to say confidently that we have taken every possible measure to protect members’ money 100%.
Ian Blackford
I think we all understand that the pension pots themselves are not at risk from the mechanisms we are talking about; it is about the funding of the master trusts. My appeal to the Government is that we have to find a solution to this that will give trust to those who are investing, so that they know that the master trusts themselves will be secure, whether that is from the definition of a funder of last resort, or from particular powers that the regulator has to make sure that, in the event of a trust failure, those assets can be managed in the interests of the fund holder. There is an element of risk—albeit a relatively small one—and we have to try to see whether we can close that down. In the absence of another solution, the Government should think about this clause remaining part of the Bill for now.
Pension Schemes Bill [ Lords ] (Second sitting)
(7 years, 9 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Committee divided: - Ayes: 4 / Noes: 9 - Question accordingly negatived.
The Parliamentary Under-Secretary of State for Pensions (Richard Harrington)
It is a pleasure to serve under your chairmanship today, Ms Buck. This morning seems a long time ago, but when we adjourned I had just risen to confirm to the hon. Member for Ross, Skye and Lochaber that members’ savings are not at risk. The hon. Member for Stockton North might have given the impression of mixing up members’ savings and the funders of the scheme. Though I am sure he knows this, I want to be clear. There are various protections around the savings invested—in trust law, in occupational pensions law and through the regulation of investment managers.
Ian Blackford (Ross, Skye and Lochaber) (SNP)
It is a pleasure to serve under your chairmanship, Ms Buck. When the Minister rose at the end of this morning’s sitting, I had actually concluded, so I will now resume my seat.
Richard Harrington
The hon. Member for Stockton North made various points, and I would like to briefly rebut them. I have already made my first point, in response to the hon. Member for Ross, Skye and Lochaber. The Bill adds to the protections by prohibiting increased or additional charges that could be levied on members for the cost of winding up or transfer during a triggering event period, so members’ savings are safe. As was discussed extensively in the other place, the clause addresses the situation where the scheme does not have sufficient funds to pay for the transfer of accrued rights or the wind-up of the scheme during a triggering event period. The Bill provides that a master trust scheme must have resources available to pay for those costs.
The hon. Member for Stockton North asked me a clear question: how frequently will the Pensions Regulator monitor this? To be clear, the supervisory measures allowed for in clauses 14 to 20 state clearly that the regulator is under a duty to authorise these schemes. That is a new approach for the regulator, which will be working with all the master trusts, both before and after authorisation. The regulatory regime is therefore an active process, which rightly focuses the most attention on the highest risk schemes, while maintaining regular contact with all master trusts in the market. It is based on a case management approach, which is not random or ad hoc because it is underpinned by the existing reporting and regulatory framework and activities. Those in turn are strengthened by the new supervisory return and significant events negotiation requirements, which the hon. Gentleman will be familiar with.
The hon. Gentleman seemed to imply that the Government have not made any provision to pick up the pieces if a scheme fails. I maintain that that is not the case. The triggering event regime outlined in the Bill means that the regulator will be closely involved with how the scheme proceeds to resolve its difficulty or close—it has to do one of the two. The regulator already has powers that can be used to support a failing scheme. A good example is the power to appoint a trustee to get into a scheme and act as a trustee—so it can impose a trustee on a scheme and help to sort it out.
The hon. Gentleman also suggested that if the risk is so minimal, the clause does no harm as a back-up measure. He used the sledgehammer and nut analogy, which I think Lord Freud used in the House of Lords, so it is a cross-party analogy. If it is a nut, it might be a small nut, but what is going to happen to the nut? That is not said in a very Hansard-like way, but I think we know what it means. I would say that that underestimates the impact of having an unspecified government intervention of this nature.
Alex Cunningham (Stockton North) (Lab)
I accept the point the Minister is outlining, but the possibility remains. We know what our financial industries are like. We have seen failure after failure in pension schemes, in the markets and the banks. What happens in the event of a major fraud in a master trust and there is nobody left to pick up the pieces?
Richard Harrington
I will deal with that point a little later. First, let me explain why having unspecified Government intervention is not good.
First, such intervention gives rise to moral hazard. Elsewhere in pensions and regulatory regimes where lifeboats exist, there are measures against moral hazard. We do not want a situation where people can be reckless because they know they can rely on the Government, and setting up ways to get out of their obligations because they know that the Government will pick up the pieces.
Alex Cunningham
The Minister has used the word “unspecified” several times, but he has the opportunity in regulations to consult the industry on how it would set up a funder of last resort. That is what we want. We do not expect him to say, “Right, the Government will underwrite this.” We are saying that there should be a consultation exercise to ensure that a funder of last resort can be put in place so that this very small nut that needs to be cracked can be dealt with.
Richard Harrington
I apologise if I put words into the hon. Gentleman’s mouth. It is currently unspecified; I agree it could be specified with compensation. The core point and, excuse the pun, the kernel of the nut is that it would still be a Government scheme, with moral hazard.
Secondly, the hon. Gentleman has probably heard significant players in the master trust industry voice serious concerns to us about clause 9. They believe that it could give rise to a rush to exit the market by otherwise successful schemes thinking, for example, that, not unusually in this field, they would have to pay a significant levy over not very much. The hon. Gentleman’s points are all valid in their way but Government have to make a judgment. That is why there is a respectable disagreement over clause 9. We have all thought about it carefully.
I believe the Bill strikes a delicate balance between prevention and self-regulation and Government intervention —something that is very hard to do. The clause would disrupt that balance and confuse the regulatory approach. I do not believe that it is a harmless catch-all. I accept the point, as shown by the banking crisis, Equitable Life and other incidents, that such things happen—I would not say it was because it was a Labour Government during the banking crisis or another Government with Equitable Life that those issues arose. It is not possible to give absolute guarantees, but we can reduce risk to the lowest possible level and that is what the Bill aims to do.
In our view, the risk level is already very low for this type of master trust scheme. That is backed up by the Pensions Regulator’s current information about the very small number of schemes that are in trouble. That will be published but is not quite ready. To create a Government-backed scheme would perversely create a moral hazard, as I have explained.
Ian Blackford
I am trying to find a helpful way out of this because I can understand why there is a disagreement. We can all accept that the risk we are talking about is to the master trust itself, not to the underlying assets; that is understood. I can understand the Government’s position on giving a commitment to this, but might there not be another approach? The Pensions Regulator would take the responsibility after a triggering event and it would have the power to step in. We have the power for the regulator to appoint a trustee; perhaps the regulator might have powers in extreme cases to intervene in the short term to ensure that there is a smooth transition. I know that is not directly within the clause but there might be another way to effect this where we can give guarantees.
Richard Harrington
I thank the hon. Gentleman for his positive intervention. The regulator has a huge number of powers, and the Bill gives a lot of powers that I think would prevent the problem he is talking about.
The hon. Member for Stockton North is forgetting— I understand why—the general rule that the fraud compensation scheme, which applies in many fields, does and will apply to master trusts. I therefore reject his point about fraud. I am not saying fraud could not happen, but there is already a mechanism in place to deal with that.
In our view, therefore, the risk level is already very low. We are against creating a Government-backed scheme because we think it would create a moral hazard. Schemes are currently working to ensure their systems are robust and we do not want them to feel comfortable that there is an entity that will always bail them out. That would not give comfort to scheme members. Indeed, for the Government to say we feel the risk is large enough to warrant a funder of last resort would create uncertainty—in effect, creating the very problem that the Opposition honourably are saying they are trying to avoid.
Question put, That the clause stand part of the Bill.
Richard Harrington
Clause 10 requires the scheme strategist of a master trust to prepare and maintain a scheme business plan as part of the financial sustainability criterion that I mentioned. Through the business plan, the regulator will be able to monitor the adequacy of the financial resources available to the scheme. The plan is submitted to the Pensions Regulator with the application for authorisation, and is thereafter reviewed and, if appropriate, revised annually and following any significant change, in agreement with the key parties involved in operating the scheme. The clause also contains a power that enables the Secretary of State to prescribe further detailed requirements in regulations.
The scheme strategist is the person responsible for making business decisions relating to the commercial activities of the scheme and is therefore best placed, we believe, to prepare and maintain the business plan. In some cases, they may also be the scheme funder or a trustee. The scheme’s future viability may depend on its success in competing with other providers. In the early days, as with the setting up of a business, it is likely to pay out more in expenses than it generates in income, so it needs to plan how it will meet those costs and satisfy the regulator.
The business plan will mitigate the risk of a master trust failing because of inadequate financing or planning. It will be one of the main sources of information on which the regulator will base its assessment of the scheme’s financial sustainability. For instance, it will provide key information on the reasonableness of the assumptions underpinning the scheme’s business strategy; the adequacy of the financial resources available; and the adequacy and security of the financial resources required to cover the costs that would arise in the event of scheme failure, such as winding-up costs and the cost of securing the transfer of members to another scheme without increasing the administration charge to members.
The detailed requirements will be set out in secondary legislation. That will enable the Secretary of State to consult the regulator and other key stakeholders to ensure that the business plan contains relevant information and also builds on best practice. The plan and any supporting information or documents must be submitted by the scheme strategists together with the application for authorisation and, thereafter, within three months of any revisions or changes and at the regulator’s request. Many master trusts have business plans in place to provide that kind of information. They are intended to support risk-focused financial supervision, so that the regulator can identify and intervene in schemes that are at risk as a result of inadequate financial planning. I urge that clause 10 should stand part of the Bill.
Question put and agreed to.
Clause 10 accordingly ordered to stand part of the Bill.
Clause 11
Scheme funder requirements
Richard Harrington
I beg to move amendment 3, in clause 11, page 7, line 7, leave out subsections (2) and (3) and insert—
“(2) The first requirement is that the scheme funder is a body corporate or a partnership that is a legal person under the law by which it governed.
(3) The second requirement is that the scheme funder only carries out activities that relate directly to Master Trust schemes in relation to which it is a scheme funder or prospective scheme funder.
(3A) The Secretary of State may make regulations providing for exceptions from the second requirement.
(3B) The regulations may include provision excepting a scheme funder from the second requirement—
(a) where the scheme funder meets additional requirements specified in the regulations (such as requirements relating to a scheme funder’s financial position, its financial arrangements with the Master Trust scheme in question or its business activities);
(b) where the scheme funder applies to the Regulator and provides the Regulator with information specified in the regulations, or such other information as the Regulator may require in order to satisfy the Regulator that the Master Trust scheme is financially sustainable.”.
This amendment gives a power to the Secretary of State to make regulations providing for exceptions to the requirement that a scheme funder must only carry out activities directly relating to the Master Trust scheme (or schemes) for which it is a scheme funder.
The Chair
With this it will be convenient to discuss the following:
Amendment 26, in clause 11, page 7, line 7, at end insert—
“(i) This should not apply to insurance companies regulated by the Financial Conduct Authority”.
This amendment would not require Master Trusts to be separate legal entities from any business where that business is regulation by the Financial Conduct Authority.
Amendment 34, in clause 11, page 7, line 11, leave out subsection (b) and insert—
“(b) either the only activities carried out by the body corporate or partnership are activities that relate directly to the Master Trust scheme, or if the body corporate or partnership carries out activities other than those defined as “restricted activities”.”
This amendment allows for exceptions to the requirement that a scheme funder must only carry out activities directly relating to the Master Trust Scheme for which it is a Scheme Funder.
Government amendment 4.
Amendment 35, in clause 11, page 7, line 21, at end insert—
“(7) The Secretary of State may by regulation define “restricted activities”, these regulations must set out activities that a scheme funder cannot engage in to minimise risk of losses or liabilities which might deplete or divert its financial resources.”
This amendment makes provision for the Secretary of State to define “restricted activities” by regulation, including a list of specific activities restricted, in order minimise risk of loss by Master Trust Scheme Funders.
Richard Harrington
Clause 11 requires a scheme funder to be a legal person who carries out only activities that directly relate to the master trust. The policy intention is to ensure that the financial position of scheme funders, and their financial arrangements with master trusts, are transparent and clear to the regulator. That will enable the regulator to make an assessment of the scheme’s financial sustainability when deciding whether to authorise the master trust, and will support the regulator’s ongoing financial supervision of the scheme, post-authorisation.
In debate in the other place, and in representations received from stakeholders, the concern was raised that the scheme funder requirements would lead to costly corporate restructuring and so might undermine the supporting of master trusts through the other lines of business that some master trust providers carry out. The Government amendments would make two changes to the scheme funder requirements in clause 11 that we believe address this issue. The first would allow an entity to be a scheme funder and, therefore, carry out activities in relation to more than one master trust, and also carry out activities, such as due diligence, where it is considering becoming the scheme funder of a new master trust scheme. The second would provide a power for the Secretary of State to create exceptions to the requirement for the scheme funder’s activities to be limited to the master trust. Scheme funders who meet the requirements that are to be prescribed in regulations will be able to carry out activities unrelated to master trusts—for example, providing shared services to other schemes.
We hope that this easement will minimise disruption to existing corporate structures and shared service arrangements. In addition, enabling scheme funders to carry out activities in relation to more than one master trust may facilitate consolidation in the market by making it easier for a scheme funder to rescue a failing master trust.
The first regulations made under the power under clause 11(3A) are to be subject to the affirmative procedure; subsequent regulations will be subject to the negative procedure. That is obviously to provide the necessary scrutiny in the first instance after the consultation. Given the importance of scheme funders to the financial sustainability of master trusts, and the potential impact on scheme funders of the requirements in clause 11, we recognise that the regulations first exercising the power to set out exceptions to the requirement should be subject to parliamentary scrutiny and debate.
Alex Cunningham
I am delighted to serve under your chairmanship, Ms Buck, albeit with a frog in my throat. Our concern with this clause regards the strict nature of requiring a master trust to be a separate legal entity, which could have numerous consequences across the board. Since the contents of the Bill have become known, I have tried to meet as many parties and groups as possible that have an interest in the Bill, to hear their perspectives, thoughts and concerns. This clause came up often. I note that the Minister has tabled amendments to it, which I welcome as a first step towards recognising that the original clause was not fit for purpose.
Amendment 3 widens the definition of the two legal characteristics that a scheme funder must meet in order for a master trust to be authorised by the Pensions Regulator. It gives the Secretary of State greater discretion in exempting a scheme from the second requirement. However, the amendment does not make clear what policy considerations will apply to how that discretion is applied. Will the Minister confirm that insurance companies regulated by the Financial Conduct Authority with master trusts will be exempt from the second requirement, giving members access to the full resources of the insurance company, which will carry full liability for costs in the event of a master trust scheme failure? Our amendment 26 seeks to clarify just that—namely, that if an organisation is already regulated by the Financial Conduct Authority, which is incredibly thorough with its regulation, it does not need to register as a separate legal entity as well.
As the Minister said, my colleagues in the Lords raised concerns about the clause, proposing instead that the scheme funder be approved by the Pensions Regulator, but that was rejected with the argument that it would be more difficult for the regulator to obtain transparency on the financial position of the funder and its financial arrangements with the master trust. Instead, colleagues tabled a motion requiring the scheme funder to be constituted and to carry out its activities in a manner that enables its financial position, and the financial arrangements between it and the master trust, to be transparent to the regulator. However, that was withdrawn on the assurance that the Government would be considering that later in the legislative stages.
So here we are, with an amendment from both the Opposition and the Government on how to ensure that we are not unnecessarily enforcing regulation on companies that are already bound by strict regulation elsewhere. The difference here is that the Government’s amendment is on the vague side. The second requirement for the scheme funder that the Government have proposed is that it carries out only activities that relate directly to master trust schemes of which it is a scheme funder or prospective scheme funder. The line in amendment 3 following on from the second requirement gives the Secretary of State the power to
“make regulations providing for exceptions from the second requirement.”
That needs more detail and clarity. What possible exceptions do the Government have in mind? Has the Minister yet considered what these exceptions may be?
We need stability, and to provide stability for the numerous businesses and companies that rely on us to provide effective laws governing their livelihoods and, particularly in relation to master trusts, the livelihoods of millions of people in this country. This is not largely a matter that we disagree on—I think we share the same aims—but I want to be able to provide more assurance to the companies watching today that we will not seek to bear down on them with extra costs and paperwork when they are already abiding by regulation from the Financial Conduct Authority.
Although the Government’s amendment does not give me enough specifics about the type of exceptions that they would give the Secretary of State the power to decide, I welcome their approach and their acknowledgement that it is counterproductive to place extra requirements on companies that already follow the rules diligently. We had a particular concern that forcing a restructuring on master trust schemes could weaken the position of the funder, which is especially important when one considers the debate on the issue of the funder of last resort. We need larger companies to be in a position to pick up failing master trusts, and should ensure that they are well equipped to do that.
I welcome the amendment from the Scottish National party Members, which would also allow exceptions to the requirement that a scheme funder carries out only activities directly relating to the scheme for which it is a funder. I am optimistic that we will leave here today having made positive progress on this matter, as we largely seem to agree on the principle of exceptions.
Amendment 26 would except insurers that operate under stringent Financial Conduct Authority regulation. Where insurers with master trusts operate under both sets of regulation, it must be ensured that unnecessary duplication or overlapping of the requirements is avoided. In particular, insurers should not have to reserve even more additional funds to meet the requirements set out for master trusts, as they already hold the resources needed for this purpose under other regulatory regimes. Members of master trust schemes used for automatic enrolment should meet high solvency and reporting standards, but these organisations have already met standards set under other frameworks, such as that of the FCA. We believe that it is not necessary to expect large companies with significant capital to be required to hold additional capital on top of that in order to meet the new obligations in the Bill.
Can the Minister provide assurance right now that insurance companies that are already under strict regulation by the Financial Conduct Authority will be exempt from the separate legal entity clause, and will he provide clarity on when we can expect to see the Secretary of State’s regulations? The scheme funder requirements in the Bill will bring no additional benefit to the many people in master trust schemes operated by insurers, which are already well protected. Additional requirements on FCA-regulated insurance companies will lead to significant additional costs. I hope that the Government can address my concerns, and that they will outline exactly what regulations the Secretary of State will look to implement.
Ian Blackford
The Minister’s amendment of 31 January —Government amendment 3—gives the Secretary of State power to make regulations providing for exceptions to the requirement that a scheme funder must carry out only activities directly relating to the master trust. We do not know what conditions will attach to the exceptions, or even if the Secretary of State will exercise that power. An indication of the Government’s intentions would be helpful. However, the indication that there will be some discretion is positive. I would welcome clarification from the Government on how and when the regulatory powers outlined in the amendment will apply, and in what circumstances they might be used.
Will the Government confirm whether they plan to consult with the insurance industry before defining “information” and “additional requirements”? Zurich has said that the approach taken by the shadow Pensions Minister in amendment 26 and the SNP’s amendment give greater certainty, which would be preferable. As far as Labour’s amendment 26 is concerned, we share the concerns about the unnecessary duplication of requirements for insurers, which already operate under stringent regulatory standards. Our amendments 34 and 35 would have a similar effect to amendment 26, as they state that the requirement need not apply to firms whose activities are already restricted by virtue of existing regulation.
The Prudential Regulation Authority’s rules mean that insurers’ activities are restricted. This will mean that the activities of the scheme funder not directly related to the master trust are transparent and do not threaten the solvency and sustainability of the master trust. Amendment 35 makes provision for the Secretary of State to define “restricted activities” in regulations, including through a list of specific activities restricted in order to minimise risk of loss by master trust scheme funders.
Richard Harrington
This is a very good and laudable example of Government and Opposition Members trying to achieve the same objective. I have already heard many of the arguments used today by the Opposition; the Association of British Insurers and others have made similar arguments. As I have often said before, this is not black and white. It is not as though one argument makes absolute sense and the other is absolutely stupid; that is not the case at all. The argument is legitimate. We have had to think about this following representations, and following the Lords debate. However, I do not think that the amendments would achieve the level of transparency needed for the regulator’s financial assessment of the scheme.
Amendment 26 would disapply the requirement on an FCA-regulated insurance company that is also a scheme funder of the trust to set up a legal entity. The amendment would hamper the regulator’s assessment of the final sustainability of the scheme. The matters overseen by the FCA in relation to the prudential and financial conduct of the insurance provider are not the only aim behind the clause; they are aims, but not the only aims, and are not the only aspect that the regulator needs to take into account in the assessment.
The hon. Member for Stockton North asked me to clarify quite a few points. He asked whether the FCA-regulated companies will be exempt. They will be exempt if they meet the prescribed requirements in the regulations. He asked how we will get to the regulations. We will consult on them; we are not simply going to make them up. They are not something that the Secretary of State will dream up in his office. I promise that they will be comprehensive. The intent is to ensure that there is no duplication of regulation; that is why we have created the extra flexibility of the Secretary of State’s discretion.
The Chair
Will the Opposition confirm whether they wish to press their amendments to a vote?
Alex Cunningham
It is amazing the amount of consensus that we are managing to achieve today, but I still return to duplication. The Minister is saying that measures will be in place through regulation to ensure that we do not have the duplication I am concerned about. It all boils down to these invisible regulations.
I am grateful to the Minister for providing clarity on the areas that will be covered by the consultation on the future regulations. The industry is concerned that they are a considerable time off. He said it is not long until 2018, but the cliché is that a week is a long time in politics. It is important to send clear signals to the industry, particularly to those who are likely to be or could have been compelled to have the additional administrative burden on them, to make it clear to them that this will not be required because they should be able to read much of that in the document that goes out for consultation.
Amendment 3 agreed to.
Amendment made: 4, in clause 11, page 7, line 20, leave out subsection (6) and insert—
‘( ) The first regulations that are made under subsection (3A) are subject to affirmative resolution procedure.
( ) Any subsequent regulations under subsection (3A), and regulations under subsection (4), are subject to negative resolution procedure.”.—(Richard Harrington.)
This amendment makes provision about the Parliamentary procedure for the new regulation-making power provided for in amendment 3. The power will be subject to the affirmative procedure when first exercised, and to the negative procedure on any subsequent exercise.
Clause 11, as amended, ordered to stand part of the Bill.
Clause 12
Systems and processes requirements
Alex Cunningham
I beg to move amendment 27, in clause 12, page 7, line 43, at end insert—
“() A minimum requirement of annual reporting of administration, fund management costs and transaction costs for each asset class, drawdown product and for active and passive asset management strategies.”.
This amendment would introduce annual reporting requirements for Master Trusts.
In his speech to the TUC last week, the Minister spoke about the consensus there may be in Parliament about pensions policy. In some areas, he is right, but he and I know that we are in very different positions on matters such as the future of the state pension and how it can be applied to different people in different circumstances—the Women Against State Pension Inequality Campaign has been mentioned in that context. One area where the Minister and I agree and which affects the Bill and clause 12 is the need for maximum transparency in the pensions market, revealing to members of pension schemes, including master trusts, exactly what fees they are being charged and for what. In his speech to the TUC, the Minister said:
“We have to get transparency. It’s not an option to do nothing. I’d like to thank the many people in this room that have worked for it.”
The amendment would give the Minister and his Government the opportunity to demonstrate that consensus does exist, to prove their credentials on transparency and to ensure that members of master trusts have access to an annual report of administration, fund management costs and transaction costs, so that they can see exactly how the fees are broken down and what they are actually paying for. It would also help to satisfy the Financial Conduct Authority’s desire to reveal all costs, which it believes will result in competition and potentially better performance for members.
No Member of this House would go into a marketplace to buy anything without seeing the cost clearly displayed, whether that be a large white goods item or just a new shirt or blouse. Similarly, we must ensure that each member who is auto-enrolled into a master trust can establish what each investment choice and drawdown product costs. Anything short of that betrays millions of citizens. We have a duty to ensure that a reporting line is opened between the master trust and its members if we are to achieve what Opposition Members and, I believe, the Minister want to achieve.
I know there may be some resistance from those in the industry to some of those ideas, even though most have tried to convince me over the past few months that I have been shadow Pensions Minister that they are open to greater transparency, are trying to deliver on it and will do so much better in the coming months. However, I think we need to help them by laying down a marker in the Bill that will set a standard of the Government’s expectation.
In the upper Chamber debate, Lord Freud said
“We clearly need to ensure that trustees of occupational schemes and the independent governance committees of workplace personal pension providers have complete, consistent and standardised cost and charges information before they can report it to members; at this point, they do not… We want pension scheme members to have sight of all ?costs and charges, regardless of how they are incurred, and to give members the confidence that there are no other hidden costs and charges.”—[Official Report, House of Lords, 19 December 2016; Vol. 777, c. 1527.]
There is that consensus again. I could not have put it better myself, although the noble Lord could have done more to make it a reality in the Bill.
Rather than wait for the final outcome of the consultation exercise on pension fund cost collection promised by the Secretary of State, the amendment would being master trusts into line with those in the Netherlands, where there is a statutory requirement for trustees to report to their members on three cost headings: administration, investment management and transactions. We need data that enable clear analysis of costs incurred and can be applied ex post to the gross returns delivered by workplace pensions. Then we can get to the real gross return that has been generated on the assets and assess how much of that real gross return has slipped from the saver to the financial services sector. By understanding that slippage in its entirety, we can begin to understand what money has been paid for whatever value has been generated.
Some good things are already happening in the pensions world, but much more needs to be done to progress the transparency agenda. The only area of asset management that is ready to be analysed is the funds used by the local government pension scheme. They are about to be analysed by the scheme advisory board, to ensure they are delivering best value for sponsors and members alike. The architecture to get the data, analyse it and present it is being discussed with a view to being built, and will form a platform from which other projects, including the value-for-money analysis needed for all workplace pensions, can be delivered.
I believe the Minister is a fan of this work too, so I hope that he and his Government recognise that the easiest and most efficient way to ensure that data for master trusts are collected is to adopt the LGPS cost template. After all, it has been sanctioned by the Department for Communities and Local Government and the data points agreed with Investment Association members, who in the main will be the same suppliers of asset management to the LGPS.
What an opportunity we have before us to herald the day that every person auto-enrolled into a master trust is given the opportunity to understand what pension system they are going into, how much it costs and how much they will get—even if in a defined-contribution scheme that is more estimation than fact. To do otherwise than give them that advantage is a clear breach of fiduciary duty owed to scheme members. We are all aware that the average size of a pot for a person in a master trust is very small, but the principle of driving best value is probably all the more important.
I asked for a simple example of what changes in costs could mean for a member of a pension scheme, and the Unison guide—perhaps I should declare that I am a member of Unison—to defined-contribution costs provided the following example. A total annual contribution of £10,000 might be made up of £4,000 of personal contribution, £4,000 of matched contribution by the corporate sponsor and £2,000 of tax top-up. If we make that level of contribution constant over 40 years, use a 5% gross performance figure, which is the market rate of return over the longer term, and vary the costs of the industry from 0% to 2%, then at nil percentage cost the final size of the pension pot is £1,268,000. At 0.75% costs, the final size of the pension pot is £1,051,000. At 2% costs, the final size of the pension pot is £777,000. That is a huge difference.
The FCA’s “Asset Management Market Study Interim Report” said:
“The evidence suggests there is weak price competition in a number of areas of the asset management industry. This has a material impact on the investment returns of investors through their payments for asset management services.”
The example I just gave probably demonstrates that. One of the FCA’s conclusions was that there should be a requirement for increased transparency and standardisation of costs and charges information for institutional investors. The Minister’s affirmative one-word answer to my question on the Floor of the House about whether the Government had agreed to implement the FCA’s recommendations in full was very welcome. Today, we have the opportunity to deliver in part some of what is desired through the Bill.
It is a fundamental market failure that no pension fund can currently understand its cost basis. It follows that if there is no understanding of costs, the investment strategy cannot be fully evaluated. Members cannot make the accurate choices needed to improve their investment performance without that knowledge. If a member is incurring costs above 0.75%, we know that will have a considerable impact on the value of pension pots both in accumulation and in decumulation. That is why we must ensure that reporting to members includes the accumulation and drawdown phases.
Since the Government introduced the drawdown option in their new pension freedoms, all the attention has been on whether members will be wise with their money. No real attention has been paid to the costs associated with the option, and probably even less attention to the potential long-term effects of a decision to access a lump sum at a much earlier stage in a person’s life. The aim is to keep options open and increase income through investment growth, but if investments do not go the way the member would hope, or if their pension pot is depleted by opaque charges, the income will be reduced all the more in the longer term. The risk and the responsibility rest with the member. Charges for ongoing administration and investment management will be deducted from their account, which is all the more reason transparency and low charges are important. Members of this House should therefore see that the efficient management of members’ funds is critical in ensuring that we do not create a pension crisis that our citizens are forced to endure in their retirement.
I will turn to the FCA’s excellent interim report in a bit more detail. The UK’s asset management industry is massive: it manages £6.9 trillion of assets. I am not sure whether a trillion is a billion billions? I think it is a billion billions.
Richard Harrington
I am not an expert, but I think it is different in the United States from here—like most things.
Alex Cunningham
The Minister tempts me, but I will move on. The UK’s asset management industry manages more than £1 trillion for individual investors in the UK and £3 trillion on behalf of UK pension funds and other institutional investors that is invested by that management industry. The service offered to investors comprises a search for return, risk management and administration, although it is the investor who bears virtually all the risk.
More than three quarters of UK households with occupational or personal pensions use such services, including the more than 10.2 million people saving for their retirement through pension schemes. Very few of us are not touched by this sector, although most people have probably never heard of it; more important, they will have little idea how much of their hard-earned cash goes into the industry. The FCA’s report confirms that asset management firms
“have consistently earned substantial profits…with an average profit of 36%. These margins are even higher if the profit sharing element of staff remuneration is included.”
Ian Blackford
On a point of order, Ms Buck. We are all keen to get through the Bill. I am sitting here listening to the hon. Gentleman and wondering what relevance what he says has to the amendment. Quite frankly, it seems to have very little relevance.
Alex Cunningham
I am disappointed that the hon. Gentleman is not following my argument, but perhaps he will as I move to my conclusion.
As I was saying, charges for active investments have remained stable, unlike charges for passive investments, which have been falling. The FCA suggests that that reflects competitive pressures and the unwillingness of funds in the active fund market to undercut each other, and it says that weak pressure on prices can lead to weak cost control. The FCA report is particularly scathing about the role of investment consultants: with 60% of that market controlled by three firms, the FCA is considering a market investigation reference to the Competition and Markets Authority. The report concludes with a number of very welcome interim proposals on remedies, not least on transparency and all-in fees, but this is a hugely powerful and profitable sector and it will be lobbying hard to water down any action.
The Secretary of State confirmed that the Government will consult on hidden costs and charges later this year. On Second Reading, he said:
“Transparency is a key area. Hidden costs and charges often erode savers’ pensions. We are committed to giving members sight of all the costs that affect their pension savings… We plan to consult later in the year on the publication and onward disclosure of information about costs and charges to members. In addition to the Bill, other things are clearly required to give greater confidence in the pensions system.”—[Official Report, 30 January 2017; Vol. 620, c. 756.]
I asked in that same debate why it is necessary to start consulting people when we should simply be saying that we want to know what all the costs are in the entire investment chain. I said that, yes, I agree with consultation—but surely we are getting to the end of the tunnel on that.
The FCA is currently holding two separate consultations on cost transparency. The first is in response to the watchdog’s interim report on its asset management market study and calls for an all-in fee approach to quoting charges. The second, which closed to responses on 4 January, could require asset managers to disclose aggregate costs and then provide a further breakdown on request. That is good news and surely statutory bodies such as independent governance committees, the Local Government Pension Scheme advisory board and the Pensions Regulator are quite capable of making sure that whatever comes out of the FCA’s consultations is enforced. The only beneficiaries of further consultations are the asset managers, who will have won yet more years of grace in which they can operate under the radar.
The Investment Association has questioned the data and metrics the FCA used to come to its conclusions that active funds do not on average provide better value than passive funds. I am concerned that, despite making all the right noises and promising full transparency, the Investment Association has set out to kick the consultation process down the long road by persuading the Department for Work and Pensions that it needs to discover exactly what the FCA has spent the past two years discovering.
If we are to have another consultation, it will be in the teeth of all the evidence gathered so far, at enormous expense to Government and to the private sector, and will serve employers and workers very badly. Perhaps it is time for the DWP to stop consulting and start turning the current consultations into enforceable legislation. It should learn from its colleagues at DCLG, who, as I said earlier, have endorsed the work of the LGPS advisory board. DCLG’s own programme of fund consolidation included advice that the newly forming asset pools should prove to them that active fund management should be no more expensive than passive.
Craig Mackinlay (South Thanet) (Con)
I do not want to stop the hon. Gentleman when he is in full flow—we are very much enjoying his oration about the effects of compounding and charges. Surely, as we have more master trusts and the auto-enrolment market gets bigger and bigger, it will be a natural feature of that market that people will be more interested and aware of the charging structure. My personal view is that the concerns that the hon. Gentleman raises will come out as the market expands and evolves, and more and more of these trusts come forward. Much as I have enjoyed what he has to say, I have a feeling that that will be the natural progression of things in the market.
Alex Cunningham
Although I am grateful to the hon. Gentleman for his intervention, it is perhaps a typical response from a Conservative politician: just leave everything to the market. In my opinion, we should not leave everything to the market.
When offering investment funds to employers and members, master trusts need to prove the value of the investment post-charges and that active strategies are no more costly than passive. They should remember that the transaction cost issue, badly delivered in 2013, is up for review in 2017 and forms part of the auto-enrolment review.
The People’s Pension, the not-for-profit master trust launched by construction sector financial provider, B&CE, with 1.7 million members, is NEST’s closest private sector rival.
Ian Blackford
Could the hon. Gentleman recap and clarify what he just said—that active fund management is no more expensive than passive fund management?
Alex Cunningham
That is exactly what I said earlier in my speech. Some of the people who have briefed me have said that that is very much the case.
NOW: Pensions, the master trust backed by Denmark’s ATP, also introduced employer charges at the beginning of 2016, alongside a 0.3% management fee and a £1.50 administration fee. Morten Nilsson, the scheme’s chief executive, argued that the cost was a necessity if NOW: wished to continue serving as a scheme of last resort for any employer.
We all agree about the issues. Everyone now acknowledges that something must be done, and done with urgency, and the Secretary of State appears to be on board. The auto-enrolment process must not be jeopardised by hidden cost scandals that emerge down the line, when it is revealed that valuable small pots could have been so much more valuable. Our aim is to ensure that master trusts are obliged to report to members. We should set that out for employers that are considering using a master trust. That is the underlying reason for the amendment, which I commend to the Committee.
The Chair
Before I call any other Members or the Minister, let me say that I am minded not to have a broad debate on stand part, because we have already covered a lot of the ground. Perhaps the Minister in particular will reflect on that before he speaks.
Ian Blackford
I will be brief. I want to pick up that issue of active versus passive fund management, because if anyone thinks that an active fund manager will not have higher costs than a passive fund manager, I am afraid that they have betrayed that they know nothing about the fund management industry. Put simply, anyone engaged in active fund management will have to deploy research and fund management skills; someone investing as a passive fund manager is exactly that, a passive fund manager.
Richard Harrington
Itching though I am to rebut some of the general points on transparency, I will do my best to stick to the amendment. As a point of clarification, however, the bit of the FCA review that the hon. Members for Stockton North and for Ross, Skye and Lochaber mentioned in fact makes the point not that active fund managers have more costs, but that over a period of time there is not much difference in returns. That is a totally different matter, but I think that was the point intended—I, too, read the report.
A final matter, given your instructions, Ms Buck, is to point out to the Committee that 1 trillion is 1 million million. A keen if somewhat nerdish Government Member—I am not sure who—came up with that information, of which I was not aware. I hope that the Opposition spokesperson will at least look at Hansard to see what 1 trillion is, since he missed all that.
I will not rebut the general transparency point, although I am itching to do so. However, I confirm to the Committee that I do in fact read The Guardian. That was the allegation made by the hon. Member for Stockton North. I will, however, refer only to the transparency bit of the amendment.
The amendment would insert a new subsection making it clear that regulations about the processes used to run the scheme may include a provision regarding a minimum requirement of annual reporting of administration, fund management and transaction costs. On the face of it, that takes into consideration a lot of the transparency points made by the Investment Association one way and the various lobby groups to which we have all spoken the other way—as the hon. Gentleman mentioned. The Government are taking action on that. The FCA report is an interim one and lots of things are in process. I am committed to transparency, but the question is what is relevant to the Bill.
The objective of the clause is to ensure that schemes are run effectively. It contains powers to make regulations that will specify what aspects of the scheme’s systems and processes the regulator must take into account in deciding whether they are sufficient to ensure that the scheme is run effectively. Examples of what such regulations may cover are listed in the Bill. The list already includes processes relating to transactions and investment decisions. We have been clear that the examples given are not exhaustive and that regulations may include other matters relevant to systems and processes. A guiding principle in setting the scope for the authorisation regime has been ensuring that master trust regulation is proportionate.
I should point out that existing legislative requirements already require trustees of occupational pension schemes offering money purchase benefits, including master trust schemes, to make an annual statement. The hon. Gentleman did not mention that: they are already required to make an annual statement regarding governance, which is known as the chair’s statement. It is appended to the scheme’s annual report and accounts.
The Government have an obligation under section 113 of the Pension Schemes Act 1993, as amended, to make regulations requiring transaction costs and administration charges of money purchase schemes to be published. We intend to consult, because the subject is very complex, and we are not, as the hon. Gentleman asserted, kicking it down the line. It is not that the Department for Work and Pensions does not want to do it. We intend to consult this year about how this information is published and proactively reported to pension scheme members.
Alex Cunningham
The challenge from the hon. Member for Ross, Skye and Lochaber is one I need to take back to those who advise me, to get an even greater understanding. I thought we would hear a few words of support from him on transparency, on which the Minister and I certainly agree.
I appreciate the Minister’s response. As he says, this is quite complex. I do not believe for one minute that the Government do not want to carry out the consultation exercise, but people out there in the industry are very keen that the Government get on with this, as are members. Members are keen to understand the costs and what they will be told about what their investments are costing them. I will reflect on the Minister’s answers in full, but in the light of what he said, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 12 ordered to stand part of the Bill.
Clause 13
Continuity strategy requirement
Question proposed, That the clause stand part of the Bill.
Richard Harrington
As I explained, there are criteria that a master trust must meet to be authorised by the regulator, one of which is that the scheme has an adequate continuity strategy. The clause sets out the requirements for that continuity strategy. It must set out how the interests of scheme members will be protected if the scheme experiences a triggering event—that is, an event that could put the scheme’s future at risk.
The aim behind the clause and the related measures is to ensure continuity of pension saving for the members of the scheme when that scheme experiences an event that could put its future at risk. That also benefits employers using the scheme, particularly those using it to meet their automatic enrolment legal obligations. An adequate continuity strategy would demonstrate that careful consideration had been given to what the scheme would do if it were at risk of failing. That should make the closure of master trusts more orderly and managed, which is good for members and employers. We all agree that chaotic and unplanned closures would likely be detrimental to them.
The reasons for and circumstances that could lead to a master trust failing may be different from more traditional occupational schemes. The risks for members and employers are different. That is of particular significance because master trusts tend to have a relatively high number of employers and members, and therefore tend to be less engaged than when an employer has a single scheme for their own employees.
That means that winding up a master trust may involve a lot of work and take a lot of time, and be complicated, difficult and expensive. Regulations under the clause will set out what the strategy should include and what actions the scheme will take to manage and protect the assets. The Government believe it essential that master trusts have adequate continuity strategies.
Nigel Mills (Amber Valley) (Con)
I have a quick question. Subsection (9) says that the strategy must be sent to the regulator within three months of being revised. Given that that must mean the strategy has been revised and finalised, why would we not want the regulator to get sight of it much quicker, in case there is something in it we are concerned about?
Richard Harrington
I believe the three months was reached after discussion with the regulator, taking the worst case into consideration. That is a long stop—it would generally be quicker than that—but it came out of discussions with the regulator.
We believe it is essential that master trusts have those continuity strategies and I hope clause 13 will stand part of the Bill.
Question put and agreed to.
Clause 13 accordingly ordered to stand part of the Bill.
Clause 14
List of authorised schemes
Question proposed, That the clause stand part of the Bill.
Richard Harrington
I am confused. I am proposing that clauses 14 to 20 stand part. Is that correct?
Richard Harrington
I am sorry, I just wanted to make sure. I thought that was the case.
The clauses make provision for a new supervisory regime for master trust schemes. One of the great strengths of the authorisation regime is that its requirements are ongoing. An authorised master trust will have to ensure that the Pensions Regulator remains satisfied, and is not just satisfied at the beginning, that it continues to meet the authorisation criteria to continue operating in the market. The clauses ensure that the regulator receives and can request the information it will need to be satisfied that the authorised schemes continue to meet the authorisation criteria, and it can withdraw the authorisation if that ceases to be the case. I believe they are very sensible clauses.
Clause 14 requires the regulator to maintain and publish a list of authorised master trust schemes. This provision will help employers looking for a scheme for automatic enrolment purposes and ensure that there is transparency about which master trusts have achieved authorisation. Clause 15 requires the trustees and scheme funders of authorised master trusts to send the scheme accounts and the scheme funder’s annual accounts to the regulator annually. This information is necessary for the regulator’s ongoing financial supervision of the scheme. We believe that it will play a key role in the regulator’s consideration of the reasonableness and accuracy of the estimates set out in the business plan, which I mentioned before, and about the running costs, sources of income and profit and loss in relation to the master trust’s activities.
The clause will also require each master trust scheme funder to provide its accounts to the regulator on an annual basis. Those accounts are also required as part of the authorisation application at the beginning, but the clause ensures that they have to do it on an ongoing basis. Taken together, that will enable the regulator to risk-assess the solvency of scheme funders and the strength and enforceability of their commitment to providing funds for the master trust.
Nigel Mills
I have another boring techie question, I am afraid. The clause specifies that the scheme funder’s accounts must be provided within nine months of the end of the financial year, but for the actual master trust scheme accounts it says
“no later than two months after they are obtained by the trustees.”
Is there some other provision that creates a backstop date when the trustees have to get those accounts or could we be waiting, in theory, forever to get the actual accounts for the scheme? I guess there must be a provision somewhere.
Richard Harrington
If I may, I will return to that point. I am a little confused by it, although I am not saying that my hon. Friend is trying to confuse me. If I may, I will continue in full flow and will do my best to answer it by the end of my comments or apologise to him.
The measure will enable the regulator’s assessment of the financial sustainability of the master trust to take that information into account, to the extent that it effects the financial position of the scheme. The combination of the information from the scheme accounts, the scheme funder’s accounts, the business plan and supporting documents will support the regulator’s ongoing financial supervision of a master trust.
Clause 16 provides that the regulator may, by notice in writing, require the trustees of an authorised master trust scheme to submit a supervisory return. The Government recognise that the requirement means additional work for trustees. Therefore, the clause provides that a supervisory return can be requested only once in any 12-month period at most, and that trustees are given at least 28 days to compile and submit the return. It may be appropriate for the Government to specify the information that can be requested through such a return. The clause allows the Secretary of State to make regulations to that effect.
Clause 17 provides that the regulator must be notified in writing if significant events occur in relation to an authorised master trust scheme. Those events will be defined through regulations. I will briefly explain what the Government intend to capture by the term “significant events” and give an example.
We intend that the list of significant events will capture events that could affect the ability of an authorised master trust scheme to continue meeting the authorisation criteria. I should like to be clear that the occurrence of a significant event in a master trust scheme will not necessarily have an impact on the ability of that scheme to meet the authorisation criteria, but it may have such an effect. For example, the scheme may have a change of trustee. As the fitness and propriety of a trustee is linked to the authorisation criteria, the regulator must be informed of such a change so that the new trustee may be assessed against the relevant standards—the regulator may well do that, and that would not affect the scheme’s authorisation status. Equally, there could be an impact. The clause sets out who will be subject to the reporting duty, and again the regulator can issue a civil penalty for failure to comply.
On clauses 18 and 19, for the first time, the regulator will have the function of authorising a pension scheme before the scheme can operate in the market, as I mentioned. The implications of the decisions that the regulator will have to make are major, and we must be satisfied that we have given the regulator the tools it requires to ensure that such decisions are fully informed. It is therefore important for the Bill to make provisions that allow the regulator to gather the information it needs about the master trust schemes. The clauses will ensure that the regulator can use all the information-gathering powers effectively in relation to master trusts and the new authorisation regime.
Clause 20 gives the regulator the ability to withdraw a scheme’s authorisation if it stops being satisfied that it meets the authorisation criteria. The clause is fundamental to the Bill; without it, there would be no consequence for a scheme that becomes authorised and then lets standards slip, or if events occur that materially impact whether the regulator remains satisfied that the authorisation criteria have been met.
The regulator seeks to support and assist those involved in running pension schemes before it comes to sanction them, but if a scheme no longer satisfies the regulator, the regulator must have the power to withdraw authorisation from the scheme. We will come to discuss the consequences of a decision to deauthorise a master trust scheme in due course, because such provisions are made later in the Bill. The clause simply provides a necessary power so that the regulator can make such a decision. Without that, the authorisation regime would be reduced to little more than a one-off check at the beginning and would not work to protect the interests of master trust pension schemes.
I will think about the point made by hon. Friend the Member for Amber Valley and either write to him overnight or bring a response to the next sitting. I apologise, but my mind has been on these matters and I will have to think about his point, which was a very good one.
Question put and agreed to.
Clause 14 accordingly ordered to stand part of the Bill.
Clauses 15 to 20 ordered to stand part of the Bill.
Clause 21
Triggering event: duties of trustees
Question proposed, That the clause stand part of the Bill.
Richard Harrington
Clauses 21 and 22 are the first in a series that extends what happens when a master trust experiences a triggering event, which I mentioned earlier. To remind members of the Committee, a triggering event could put a master trust scheme at future risk. The aim of the next series of clauses is to increase the level of oversight by the regulator during the triggering event period and to mitigate the risk to members and employers.
The provisions also intend to cover the way in which the situation is resolved, ensuring that it is supportive of a member’s continued saving in a pension scheme and of an employer’s automatic enrolment duties. The measures take account of the fact that there is likely to be a lower level of employer engagement in or influence over the running of the scheme, and the complexity of addressing the situation when there are multiple employers who also have automatic enrolment duties to fulfil.
Craig Mackinlay
I seek just one clarification from the Minister. Earlier today we agreed to Government amendment 3, which defined a scheme funder as
“a body corporate or a partnership that is a legal person”.
However, item 5 in the table of triggering events listed in clause 22(6) interprets a scheme funder slightly differently, as
“a person or body of a kind that meets requirements prescribed under…the Pensions Act 2004”.
I am concerned that we have agreed to an amendment that exempts individual persons, but there seems to be a slightly different interpretation of what the scheme funder is in the table of triggering events. It may just be an oversight, but some clarification would be helpful.
Richard Harrington
I will get back to my hon. Friend on that very technical point, but I do not believe that there is any intention for the definition to be different.
Question put and agreed to.
Clause 21 accordingly ordered to stand part of the Bill.
Clause 22 ordered to stand part of the Bill.
Clause 23
Notification requirements
Alex Cunningham
I beg to move amendment 28, in clause 23, page 16, line 19, after “employers” insert “and members”.
This amendment would mean that members must be told of any triggering events, not just the employers.
The Chair
With this it will be convenient to discuss amendment 29, in clause 26, page 19, line 10, at end insert
“and Trustees should then notify members to this effect”.
This requires Trustees of the Master Trust to notify members once TPR is satisfied that the triggering event has been resolved.
Alex Cunningham
I will continue to champion the members of master trusts this afternoon. The amendment would simply ensure that when triggering events happen, and if and when they are resolved, information on them flows right through the communication chain. As I said when I spoke on member engagement, it is important to understand that we need to put the member at the heart of the process. If members find out only at second hand about such events, which affect their hard-earned cash, it is bound to result in lower levels of trust—never mind all the anxiety and everything that goes with it. I pose the question: how would hon. Members feel if no one told them that there was an issue with their pension pot? I know that is rare for Members of Parliament, but if they had a separate pension pot and were not given that information, would they not be concerned? They would not be best chuffed, and they would want to know why they were not being informed.
Trust is vital, and it is at very low levels both in financial services and, more importantly, in us who make the law. How can we look our constituents in the eye if they ask us, “Why did you not put me first? It’s my money. It’s my retirement at risk”? There are those who claim that there are problems with reaching vast numbers of people, but this is the 21st century and it is not necessary to fell trees to make paper to send out hundreds of thousands of letters. It is a simple of chain of events, and if it can go to employers I believe it should also go to members.
Richard Harrington
Amendment 28 would require the trustees of a master trust that experiences a triggering event to notify all the members that the event has occurred and of other matters to be set out in regulations. The explanatory note to amendment 29 says that the intent is to require trustees to notify members once the regulator is satisfied that the triggering event has been resolved, but the effect of the amendment is a bit wider. It would require the trustees to inform members of the regulator’s decision—in other words, whether it is satisfied that the event had been resolved or not.
Clause 23 requires key people associated with the master trust to notify the Pensions Regulator if the scheme experiences a triggering event. Clause 26 sets out the framework for a scheme pursuing continuity option 2—in other words, the trustees aim to resolve the triggering event. The resolution is the important part of it. Once the trustees believe they have resolved the event, they submit evidence to that effect to the regulator. Having considered the evidence, the regulator notifies the trustees of whether it is satisfied that the event has been resolved. Our aim is for events to be resolved where possible. The scheme can then continue and members can keep saving in it. We have not required the trustees to notify members.
As the hon. Gentleman said, at the point that the triggering event happens, the trustees may be in discussions with the regulator and may not have reached a conclusion about whether the scheme will continue to operate or whether it will be wound up.
Alex Cunningham
I accept that the triggering is the actual start of the process, and that there may well be discussions. At what point does the Minister think the members ought to be told that a triggering event has in fact taken place and that their scheme is in some doubt?
Richard Harrington
To rebut that point—I emphasised the words “resolve” and “resolution”—we believe that the majority of triggering events will end up with a very satisfactory resolution. Remember, many members do not take an active decision to join; they join through their employer. They are not actively engaged in the scheme; their employer is the conduit, so providing incomplete information to members would cause undue distress and risk unintended consequences, such as members opting out of the scheme and stopping saving in a pension, when a resolution to the triggering event could very easily be agreed with the trustees or, indeed, opposed by the regulator.
If a scheme resolves its triggering event and continues to operate, I do not see why members should see any change. It is exactly the same for them: their pension saving will not be disrupted. I would not want them to be unduly alarmed or confused. The intervention of the regulator during the triggering event period, and the additional controls that are put in place during that period, will help to ensure the scheme gets back on track.
If the scheme is going to wind up—I believe this is the relevant point—members will be informed well ahead of anything directly impacting on them, and will be given the information and options.
Alex Cunningham
If the members are going to be told about the wind-up, where in the regulations is the requirement for the master trust to inform them?
Richard Harrington
The regulations have not yet been published, but the hon. Gentleman makes a valid point.
The aim behind these clauses is to ensure that members continue to save into a pension because they do not believe that the sky is falling in—the entire system is intended to ensure that that is not the case. To that end, members are not informed at such an early stage as is proposed in amendment 28, because of the adverse implications that could have and the absence of any practical advantage for members. What advantage would that provide to members, given that the matter will be resolved? There does not appear to be an obvious benefit.
However, I recognise how important it is that members are informed well ahead of something happening that might have a direct impact on them and—I think this is the core of the hon. Gentleman’s point—disrupt their pension saving. I am confident that the measures included in the Bill, and those proposed for inclusion in regulations, will achieve that outcome. I therefore ask the hon. Gentleman to withdraw his amendment.
Alex Cunningham
I am particularly interested to know what proposals there might be in regulations to ensure that the member is told, whether at the winding-up stage or when it first has an impact on them, and how that will be defined. I hope that the Minister will respond to that point before I sit down. I accept that it is particularly important that members are engaged throughout the process. Unfortunately, the Minister does not agree with me on that point. I believe that there is no more key a person in this chain than the member, but I accept that they should be informed when it is a significant thing affecting their lives. The Minister might like to intervene to explain what proposal there will be in regulations to ensure that members are informed when there is a material impact on their pension pot. Otherwise, at this stage I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 23 ordered to stand part of the Bill.
Clause 24
Continuity options
Question proposed, That the clause stand part of the Bill.
Richard Harrington
The clause sets out the two continuity options that must be pursued by the trustees when there has been a triggering event. Option 1 requires the scheme to transfer out all members’ accrued rights and benefits and then wind up. Option 2 is for the scheme to resolve the triggering event to the satisfaction of the Pensions Regulator. Trustees will have a choice under the regulator’s authority, and once the regulator has decided to withdraw authorisation, that is final, or there is a notification that the scheme is not authorised and then they have to pursue continuity option 1.
Our aim is that members should continue to save despite the master trust of which they are a member experiencing a triggering event. Therefore, where the scheme is able to resolve its issues, it should do so. However, where the issue could lead to the failure and closure of the scheme, the members should be transferred out, under the auspices of the regulator, hopefully to continue to save with as little disruption as possible.
If authorisation is withdrawn or refused by the regulator, or there is a notification that the scheme is not authorised, members will have to be transferred out and the scheme wound up. Irrespective of the option, we want the process to be as smooth and as managed as possible. The mismanagement of an issue or an unmanaged closure of a scheme would be bad for members and could be detrimental to confidence and lead to members opting out of pension saving, which is the last thing we all want.
Where a master trust experiences an event that could lead to its failure, there needs to be greater planning and control and more safeguards for members and employers. It is important that the scheme has done detailed planning so that what happens following a triggering event is thought through and organised and the process is orderly and managed. That should help to ensure ongoing automatic enrolment without disruption.
Richard Harrington
I beg to move amendment 5, in clause 25, page 17, line 21, leave out “Master Trust” and insert “pension”.
This amendment and amendment 8 enable trustees pursuing continuity option 1 to propose a transfer of members’ accrued rights and benefits to a pension scheme that is not a Master Trust scheme, as long as the alternative scheme has characteristics specified in regulations, and any additional requirements in the regulations are met.
Richard Harrington
The amendments, which apply to clauses 25 and 34, continue with the continuity options. These apply when the trustees of a master trust are pursuing option 1. Clause 25 sets out the framework for continuity option 1. This is where the scheme transfers out all the members’ accrued rights and benefits, and winds up. The amendments would allow regulations to be made in future that would let the trustees in this situation choose a scheme that is not a master trust to receive their members’ rights and benefits.
The receiving scheme would have to have characteristics set out in the regulations. The non-master trust receiving scheme would be made subject to exactly the same restrictions on increasing or introducing the new charges as those to which master trust receiving schemes are subject. The amendments would enable the type of schemes that can be receiving schemes to be widened where a master trust is going to wind up and has to transfer all its members out.
In that situation, although members have the opportunity to make their own choice about where their accrued rights and benefits go, where they do not make a choice there needs to be provision for their rights and benefits to be transferred into a suitable pension scheme. At present that is restricted to another master trust. These measures permit this to be opened up by providing a regulation-making power to include other pension schemes, should that be appropriate. It may well not be appropriate, but in some cases it will be. Such schemes could include personal pensions and pension schemes that provide decumulation options, such as drawdown. This means we will be able to react appropriately to future innovations and developments in the pensions market. Indeed, the rise of master trusts shows how quickly markets change. This may be of particular use where members were using a decumulation option, as it leaves open the possibility that members could make use of new decumulation products in future.
Allowing other types of pension schemes to receive transferred members, as long as they meet specified requirements, could increase the options available to trustees, introduce extra flexibility and widen the market for potential schemes. This might be useful if trustees found that they were struggling to find somewhere appropriate for their members’ rights, which might particularly benefit members using decumulation options. Being able to increase the options in future might help reduce the risk that trustees of failing master trusts might not be able to find another master trust to take their members on.
As these amendments will mean that it is possible to widen the options available to the trustees of a master trust that was closing, and as that would be for the benefit of members, I commend them to the Committee.
Alex Cunningham
We give a general welcome to the amendments, some of which have been tabled in response to issues raised by my colleagues in the other place. The amendments are intended principally to ensure that scheme members are protected in the event of a winding up, and we certainly welcome that. We also wish to ensure that a master trust winding up does not disincentivise savers or negatively affect their rights and benefits.
Government amendment 5 means that if there is a triggering event and a master trust has to wind up and transfer members and their benefits, this can now be to a scheme other than another master trust scheme. This change, which has been made since the Bill left the House of Lords, invites three questions to which the answers are not clear. First, in the event of a failing master trust winding up, what conditions and regulatory standards must a receiving scheme that is not a master trust meet before the Pensions Regulator will authorise the transfer of members and their assets to it? Secondly, how will the concept of scheme funder in the Bill be applied to a receiving scheme that is not a master trust?
Thirdly, an essential provision in the Bill to protect master trust scheme members from bearing the costs of sorting out a scheme failure is in clause 34, which places a prohibition on increasing members’ charges during a triggering event, including wind-up and transfer. The prohibition is binding on both the transferring and receiving master trust scheme. Can the Minister give a categorical assurance that the prohibition on increasing member charges will, in the light of the amendment, apply to any receiving scheme in a triggering event? If the receiving scheme is not a trust-based scheme, which regulator will police adherence to that prohibition? Where is the line of vision in the Bill to show that all receiving schemes, master trusts or otherwise will be bound by the prohibition on increasing members’ charges?
We remain somewhat concerned that the Government have chosen to pursue their aim by introducing broad powers for the Secretary of State to make regulations in amendments 8, 10 and 12. We do not believe that approach provides a strong enough guarantee to scheme members that their benefits will not be eroded through the course of the transfer. Can the Minister guarantee to scheme members that that will never be the case? If he can, why not place such a guarantee in primary legislation? If he cannot, why not?
Richard Harrington
I have listened carefully to the hon. Gentleman’s points. This goes back to the core question of whether things should be in primary or secondary legislation and why. I repeat the argument, which I think is very reasonable, that part of the Bill is providing flexibility for the way things will change in the future. Whichever party happens to be in power, primary legislation is very difficult and takes a long period. The industry moves far more quickly. I know I keep repeating the same answer, but that flexibility is very much the principle of the whole Bill.
There is a difference in principle between us, but I hope the hon. Gentleman will agree that I have tried to be pragmatic with the arrangements, which provide the necessary practicality. I cannot therefore give him the undertakings that I would like to, because of the flexibility within the Bill, but I am convinced that this system will provide the most protection for members. As he knows, a lot of thought has gone into this. It is not a question of dispute based on an irresistible force and an immovable object; we have come up with a suitable compromise.
Alex Cunningham
I recognise the constraints and difficulties of trying to develop regulations on the hoof, as I was perhaps requesting of the Minister. If members started to understand this area, they would be really worried about it and want to understand it more, but I accept the Minister’s explanation.
Amendment 5 agreed to.
Amendments made: 6, in clause 25, page 17, line 23, leave out “subsection” and insert “subsections (1A)(b) and”.
This amendment is consequential on amendments 5 and 8.
Amendment 7, in clause 25, page 17, line 24, after “the” insert “Master Trust”.
This amendment is consequential on amendments 5 and 8.
Amendment 8, in clause 25, page 17, line 27, at end insert—
‘(1A) Each pension scheme proposed under subsection (1)(a) must be—
(a) a Master Trust scheme, or
(b) in such circumstances as may be specified in regulations made by the Secretary of State, a pension scheme that has characteristics specified in regulations made by the Secretary of State (“an alternative scheme”).”.
See Member’s explanatory statement for amendment 5.
Amendment 9, in clause 25, page 17, line 28, leave out “The notification” insert “Notification under subsection (1)(b)”.
This amendment is consequential on amendments 5 and 8.
Amendment 10, in clause 25, page 17, line 33, leave out subsection (3) and insert—
“(3) The Secretary of State—
(a) must make regulations about how continuity option 1 is to be pursued, in a case where a proposed transfer is to a Master Trust scheme;
(b) may make regulations about how continuity option 1 is to be pursued, in a case where a proposed transfer is to an alternative scheme;
(c) may make regulations for the purpose of otherwise giving effect to continuity option 1, in either case.”.
This amendment confers power on the Secretary of State to make regulations about how continuity option 1 is to be pursued, where a proposed transfer of members’ rights and benefits is to a pension scheme that is not a Master Trust scheme.
Amendment 11, in clause 25, page 18, line 29, leave out “receiving”.
This technical amendment removes an unnecessary word from clause 25(4)(l).
Amendment 12, in clause 25, page 18, line 37, at end insert—
“(4A) Regulations under subsection (3)(b) may include—
(a) any provision mentioned in subsection (4);
(b) provision deeming any member whose accrued rights or benefits are to be transferred to an alternative scheme to have entered into an agreement with a person of a description specified in the regulations.”.
This amendment makes it clear that regulations about how continuity option 1 is to be pursued in a case where a proposed transfer is to pension scheme that is not a Master Trust scheme may include any of the provision mentioned in clause 25(4) and also provision deeming a member to have entered into an agreement with a person (such as the provider under the new scheme).
Amendment 13, in clause 25, page 18, line 46, leave out “subsection” and insert “subsections (1A)(b) and”.—(Richard Harrington.)
This amendment makes regulations under the new subsection (1A)(b) (specifying alternative types of pension schemes to which transfers can be proposed) subject to the affirmative resolution procedure. (Regulations under the new paragraph (b) of subsection (3) (about bulk transfers to schemes other than Master Trust schemes) will also be subject to the affirmative procedure.)
Clause 25, as amended, ordered to stand part of the Bill.
Clause 26
Continuity option 2: resolving triggering event
Question proposed, That the clause stand part of the Bill.
Richard Harrington
The clause sets out the framework where a scheme pursues continuity option 2, which we have not mentioned in detail. The clause places a series of requirements on schemes and the regulator to ensure that a triggering event is resolved to the regulator’s satisfaction. Subsections (2) and (3) set out that once the trustees consider that they have resolved a triggering event, they must notify the Pensions Regulator, setting out how they consider that has been achieved. Subsection (4) provides for the time period for the notification to be prescribed in regulations. Subsection (5) requires the regulator, having considered a notification, to notify the trustees of whether it is satisfied that the event has been resolved.
Our aim is to ensure that where trustees decide to try to resolve a triggering event, they have the opportunity to do so, so that the scheme can continue and its members can continue to save in the scheme with as little disruption as possible. However, following a triggering event, the trustees must set out a comprehensive and detailed implementation strategy containing the steps that they plan to take. We consider a scheme that has had a triggering event to have increased risk—that really is part of the definition of a triggering event—so such schemes need greater and more in-depth planning, safeguards for members and employers, and greater protection for members. However, we want members to continue to save and employers to continue to comply with their legal automatic enrolment minimum obligations, and for there to be general confidence in the master trust market.
We do not want to restrict how trustees resolve a triggering event, but we want to encourage and facilitate the continuity of pension saving by members. The best way to achieve that is for schemes to have the freedom to resolve their specific issues in the most appropriate way, but under the supervision of the regulator. There has to be an external check that triggering events have been properly resolved, because otherwise we could not assure the protection of members’ savings, and the regulator provides that. We consider that to be the best way of ensuring the continuity and security that we want. We believe that the clause provides the framework for doing that, so I ask the Committee to support it.
Question put and agreed to.
Clause 26 accordingly ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(Steve Brine.)
Westminster Hall
(7 years, 9 months ago)
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Serious Fraud Office
(7 years, 9 months ago)
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Stephen Timms (East Ham) (Lab)
I beg to move,
That this House has considered funding of the Serious Fraud Office.
It is a pleasure to serve under your chairmanship, Mr Owen. The Serious Fraud Office owes its origins to the work of the fraud trials committee, set up under the chairmanship of Lord Roskill in 1983 after a series of failures to secure convictions in relation to high-profile City of London scandals. The SFO began its work in 1988.
I know from previous discussions on the SFO in the House that the Minister values its work very highly. He said in one debate that the Roskill model on which the SFO operates is
“essential when it comes to this type of offending. It works and it must continue to be supported.”
He also said:
“It is important that we give our full-throated support to the work of the SFO”.—[Official Report, 2 July 2015; Vol. 606, c. 1610.]
I very much agree with the view that he expressed and I hope it will be shared by other hon. Members contributing to this important debate. It was in the spirit of wanting the SFO to do the best possible job that I applied for this debate on how it is funded. However, it is worth just revisiting at the outset the case for the SFO, because the model has had its detractors, including the current Prime Minister when she was Home Secretary, so the case needs to continue to be made and the arguments need to be spelt out.
The SFO is unique among UK law enforcement agencies. Under the model recommended by Lord Roskill at the conclusion of the fraud trials committee in 1985, it is both investigator and prosecutor of the cases that it handles. A string of failed City of London fraud cases undermined public trust and inspired the recommendation and decision to break with the usual division between those two roles that we see in most of the rest of the English and Welsh legal system. I want to return to the issue of public confidence that justice will be done in fraud cases when arguing that the Government need to look again at the mechanisms by which the SFO is funded.
Legal cases are often complex, but the cases that the SFO deals with are frequently an order of magnitude more complex than others. They involve thousands of documents and a huge amount of complex financial data. The SFO requires multidisciplinary teams working under its case controllers: they are made up of lawyers, investigators, forensic accountants and so on. Those multidisciplinary teams ensure that legal scrutiny is applied to investigations from their commencement.
The Roskill model also ensures that there is no hand-off point, when specialist knowledge and insight developed by investigators and accountants who have been studying a case may be lost as it is transferred to the barristers. That does not happen in the SFO model. Institutional memory and continuity are very important in the prosecution of complex fraud cases, and I am concerned that that important virtue of the Roskill model might be being undermined by the way the SFO is funded at the moment.
The Prime Minister, when she was Home Secretary, tried in 2011 and again in 2014 to bring the SFO into the new National Crime Agency. The Financial Times reported on 5 October 2014 that she was
“to revive plans to abolish the UK’s main anti-fraud and corruption agency and bring it into her new FBI-style national crime force, according to officials familiar with the situation.”
I am glad to say that that move was resisted. The director of the SFO from 2012 to the present, David Green, QC, was clear in his statement that it would
“distract and destabilise the SFO in a really bad way at a time when”
it was “grappling with what” was
“probably its heaviest-ever workload and making real headway.”
He was not alone in making the case against abolition of the office. Bond, the umbrella organisation representing 370 international development organisations, which sees the impact of corporate corruption at the sharp end, with millions lost to public services and community wellbeing in developing countries, co-ordinated a letter to the then Prime Minister in 2015 from seven charity chief executives, in which they suggested three key tests for the Government on bribery and corruption. First, they stated:
“Investigation and prosecution teams should be combined in the same agency.”
The Roskill model achieves that requirement, and a number of observers think that moving the work into the NCA would probably end that beneficial arrangement. Secondly, the letter stated:
“Corruption must be a top priority for that agency, and not simply one amongst many.”
Thirdly, it stated:
“There must be specialist corruption teams”
in the agency.
The current arrangements for the make-up of the SFO meet those requirements, and as a result the UK is one among only four countries that are officially recognised as “active enforcers” of the OECD’s anti-bribery convention. I hope that maintaining that status will be an important concern of the Government and the Minister. Moving the anti-corruption role of the SFO into another agency would undermine UK leadership in this area. I agree with Transparency International UK, which says that it
“strongly opposes the abolition of the SFO unless an alternative is proposed which is demonstrably better. We believe that is highly unlikely given the SFO’s recent success, the instability and damage to caseload that would be caused by abolition, the detailed analysis that went into the creation of the SFO, and the lack of expertise and track record in any other government agencies regarding prosecutions of corporate corruption.”
I therefore hope that the model will be maintained, but how well is the current SFO doing? It is quite difficult to assess its effectiveness. Its case load is deliberately small: under David Green, it has focused its attention, taking the most serious and complicated cases through to prosecution. However, we can say that over the four-year period, 2012-13 to 2015-16, it had a case conviction rate of 81%, although that goes up and down from year to year, and since then it has achieved some important successes, including the first individual prosecutions for LIBOR rigging, which are welcome, and the recent landmark deferred prosecution agreement with Rolls-Royce, which resulted in a fine of £671 million, which was equivalent to the company’s entire operating profits. The SFO is undoubtedly making an impact. The question is whether it is as effective as it could be and as we would all wish it to be.
Alex Chalk (Cheltenham) (Con)
I declare an interest as someone who has previously been appointed to the SFO’s “A” panel of counsel. Does the right hon. Gentleman agree that in looking at the SFO’s achievements, it is right to focus also on the sums recovered under the Proceeds of Crime Act 2002 through confiscation? Its track record on that is certainly better than that of equivalent agencies.
Stephen Timms
The hon. Gentleman is absolutely right. I certainly do not want to argue that the SFO has not been effective; there is good evidence that it has been. The question is whether it is as effective as it could and should be, and that is why I now want to come to the numbers and my concerns about the way it is funded. It receives its funding as a mix of core costs and what is termed “blockbuster” funding.
Marie Rimmer (St Helens South and Whiston) (Lab)
Blockbuster funding can make up a significant amount of the total funding for the SFO. Does my right hon. Friend share my concerns about the lack of transparency around the process for blockbuster funding, which will inevitably cover the most serious and complex cases?
Stephen Timms
Yes, I do share concerns about that, and I will come to it in a moment. I hope the Minister might tell us a bit more about how the process works and how decisions are made about whether blockbuster funding is provided. I noticed that in the exchange between my hon. Friend and the head of the Serious Fraud Office in the Select Committee on Justice, he made the point:
“I would like to move to less dependence on blockbuster funding and more core funding”.
I think he is on to something and I want to explain why, in my view, that shift would be worth making.
Blockbuster funding is additional funding allocated on a case-by-case basis where individual, high-profile cases are likely to cost more than 5% of the SFO’s core budget—those costing more than around £1.5 million. To access that funding, the SFO has to apply directly to the Treasury. As I understand it—I hope the Minister will tell us a bit more about this—applications bypass the Attorney General’s office. However, as my hon. Friend the Member for St Helens South and Whiston (Marie Rimmer) has pointed out, the basis on which they are approved or denied is not transparent. I certainly do not know—I would be grateful if the Minister could shed some light on this—what the criteria are for allocating the funding. I know the system was renegotiated by Mr Green in 2012.
David Simpson (Upper Bann) (DUP)
Does the right hon. Gentleman think that the way in which the Serious Fraud Office is funded has a detrimental impact on recruiting the proper staff required to do the job?
Stephen Timms
Yes, it inevitably does. We have seen a big shift over time away from core funding towards blockbuster funding. That inevitably means fewer permanent staff at the SFO and more temporary staff. That raises a serious concern about how the SFO is able to function. In 2008, core funding was £52 million. In 2015-16, the total budget was about the same, but core funding was only £34 million. For each of the last three complete financial years, the blockbuster funding element was large: £24 million in 2013-14, £24.5 million in the following year and £28 million in 2015-16. In 2015-16, the blockbuster funding was more than 80% on top of the core funding. The SFO’s total expenditure has been as much—perhaps rather more—in recent years as it was in 2008, before core funding started to be reduced as part of the Government’s efforts to cut public spending, but a big slice of the funding today is in the form of this one-off, exceptional Treasury grant. I am grateful to the hon. Gentleman for drawing attention to the fact that, as a result of that, a large proportion of those working at the SFO are temporary staff brought in for a particular case and then laid off when it is concluded.
I would be grateful for the Minister’s comments on whether that is an effective way to run an organisation as important as the SFO. Her Majesty’s Crown Prosecution Service inspectorate certainly thinks that it is not. In its view, the current model is not satisfactory, and I think it has an important point. In its 2016 report, it stated:
“The blockbuster funding model is not representing value for money and it prevents the SFO building future capability and capacity. Temporary and contract staff are often more expensive than permanent staff and managing surge capacity is a constant drain on Human Resources (HR) and other staff. Increasing core funding would provide the SFO with the ability to build capacity and capability in-house and lead to less reliance on blockbuster funding.”
That is the case that I want to press upon the Minister this morning. The evidence is on the inspectorate’s side. At the time of the inspection, 21% of SFO staff were temporary. As of March 2016, 106 of the 510 staff were there on an agency basis and another 35 were there on a fixed-term basis. That level of instability and impermanence would damage any major organisation.
Alex Chalk
The right hon. Gentleman is making a powerful and important speech; however, the real question is whether the surge that we have seen in demand, which has given rise to the need for blockbuster funding, is likely to be sustained. Can he shed any light on whether that is perceived to be a likely outcome?
Stephen Timms
It certainly has been sustained over a lengthy period, although I think I am right in saying that in the most recent year the funding sharply reduced. For me, that accentuates the problem, because once the funding is sharply reduced, a large number of people get sacked or their employment at the SFO ends and the expertise and experience they have built up is dissipated. It seems to me that we should aim to hang on to that expertise and build up the capacity and skills that the SFO can deploy for its future work.
I am not saying that the 106 people who were there on an agency basis in March 2016 were second-rate or anything like that. I am sure that they were talented people, doing good work. However, as temporary staff they are more expensive than permanent staff and the additional expense does not make sense when the blockbuster funding is consistently high over an extended period—not permanently, but consistently over a long period. Temporary staff will build up skills and expertise during their work with the SFO, which will then be lost as soon as their contracts expire and they leave. That raises concerns about an inability to ensure consistency across the entire duration of a case and build institutional knowledge in the longer term, which was precisely the aim of setting up the Roskill model in the first place 30 years or so ago. Surely we want the SFO to build up its expertise, and having so many people on temporary contracts makes that a great deal harder. At a time when the Government are, for very good reason, pushing for the public sector to spend less on expensive agency staff in areas such as education, Ministers can surely see that the same considerations apply—I suggest even more powerfully—to the SFO.
Managing the human resources implications of blockbuster funding makes it harder, as the inspectorate points out, for personnel staff to do the other things they ought to be doing. The SFO is the only one of the Law Officers’ departments with fewer than half of its staff positions held by women and it has less than half the proportion of disabled people working for it than the civil service does as a whole, at only 3.6% of employees. We know that delivering diversity requires focused human resources effort, but with such high levels of turnover and agency staff at the SFO, HR attention is perhaps inevitably turned elsewhere. That weakens the organisation.
I am sure that the Minister will argue in his response that the director of the SFO has spoken favourably about the blockbuster funding system in the past. To an extent, that is true. Last October, he told the Justice Committee in the evidence session that I referred to:
“There are pros and cons to it.”
The SFO’s submission to the Committee prior to the session stated:
“It is a workable mechanism which allows the SFO to respond flexibly to a demand-led workload.”
That may well be the case, but “workable” is not the same as “optimal”.
I am not arguing that we should not have any blockbuster funding. I entirely accept that such a mechanism can enable the department to cope with fluctuations and ensure that it does not have to turn down a case on the basis of cost, but we have funded getting on for half the SFO’s budget for the last three or four financial years in that way. As a result, it has not been possible to build the expert, permanent workforce that I think we all want to see, so the balance must surely be wrong. Judging from the director’s comments to the Justice Committee, that appears to be his view as well.
There is another important issue. In requiring the SFO to ask the Treasury for additional funding on a case-by-case basis through a pretty opaque process, it is impossible to demonstrate independence about decisions on which cases are prosecuted. I do not want to make too much of that point, but being seen to be independent is important. Making the SFO dependent, case by case, on a Treasury sign-off does not provide that all-important assurance. That problem could be greatly reduced by making core funding a bigger proportion of the overall SFO budget. Another risk presented by the level of blockbuster funding—other Members have raised this matter in the House—is that justice may be delayed if an unnecessary layer of bureaucratic delay is added to the office’s work by its having to apply for blockbuster funding.
The model under which the SFO operates has established the UK as a global leader in tackling corruption, fraud and bribery. That is an important achievement, which we all want to maintain, and I commend the director of the SFO for his progress in focusing the organisation on its core purpose. The recent inspectorate report, however, was right to point out that over-reliance on blockbuster funding makes the SFO less effective than it should be. Will the Minister therefore commit this morning to looking again at the proportion of the SFO’s funding that comes from the blockbuster mechanism? Will he also look again at whether the SFO could do a better job, building up and maintaining better expertise more effectively in the long term, with more permanent staff, if a larger proportion of its funding was in its core budget?
Sir Edward Garnier (Harborough) (Con)
I congratulate the right hon. Member for East Ham (Stephen Timms) on initiating the debate. I listened to him with great care and gratitude, because he spoke as a critical friend of the Serious Fraud Office. As he gently pointed out, when the current Prime Minister was Home Secretary, she was perhaps not a friend, even if she was critical, of the SFO. Possibly—who knows?—one reason I remained a Law Officer for two and a half years, but no longer, was because I fell out with the Home Secretary over the independence of the Serious Fraud Office.
There is a misunderstanding among politicians about the Roskill model and its value. However, before I go on further, I declare an interest—as must be obvious—in the SFO and all that it does. I also declare an interest in that, like my hon. Friend the Member for Cheltenham (Alex Chalk), the SFO instructs me from time to time as a member of the private Bar. One of the most recent cases that I have been instructed in was that of Rolls-Royce, which the right hon. Member for East Ham spoke about. Although I do not want to talk too much about my wonderful case load, I want to use the case of Rolls-Royce to illustrate the successful way in which the organisation deals with criminal activity at the corporate and most complex level.
It is a given, certainly among those who know anything about the Serious Fraud Office, that the Roskill model of having a joint investigating and prosecuting system in the organisation works. Although plenty of people criticise the SFO—as the right hon. Gentleman said fairly, it is not beyond criticism, and there are things to be said about the blockbuster system and so forth—it is remarkably successful, given the limited resources under which it has to operate.
When I was shadow Attorney General in the lead-up to the 2010 election, I made quite a study of the way in which the Serious Fraud Office operated, not least because it was one of the most important aspects of our prosecuting system that came under the supervision of the Attorney General and the Solicitor General. When I got into office in 2010, it was clear that the comprehensive spending review that the new Government introduced would have a pretty direct and possibly damaging effect on the SFO’s ability to carry out its important work. That persuaded me that we needed to find other pragmatic ways of allowing the SFO to get on and catch villains, both human and corporate. I was particularly concerned that we were underperforming on—that we were inhibiting—the prosecution and conviction of corporate crime.
Of course we were, and still are, beset by the Victorian identification principle: in order for a company to be convicted of a crime, a directing mind of sufficient seniority has to be able to be identified in order to fix criminal liability on the company. That was fine in the 1860s, 1870s or the 1880s, when companies had a board of two or three and operated within a town or a county—or possibly even within the country as a whole—but the vast international conglomerates that there are now, with offices in several jurisdictions and boards, sub-boards, national and international boards, make it extremely difficult for the Serious Fraud Office to attach criminal liability for a crime to the company. Individual financial directors, country directors, or country managing directors can be prosecuted, as the SFO has—we have seen that happen in a number of the cases that the right hon. Gentleman referred to—but that has proved difficult when dealing with international companies that misconduct themselves.
That is why—this is a slight diversion, but an important one—this House and the Government should develop the “failure to prevent” model. Under section 7 of the Bribery Act 2010, it is a criminal offence for a company to fail to prevent bribery by one of its associated people or bodies. The first deferred prosecution agreement—in which I appeared, as it happened—dealt with the failure of a bank to prevent bribery by one, or a number, of its staff in Dar es Salaam in Tanzania. Under the terms of the deferred prosecution agreement, that brought in from the errant bank about US$25 million in costs and penalties.
As the right hon. Gentleman correctly identified, the Rolls-Royce case brought in something in excess of half a billion pounds sterling, which will be paid by that company over the next five years. Beyond the penalty, it will have to pay interest on the delayed payment. More importantly, as far as funding the Serious Fraud Office is concerned, part of the deferred prosecution agreement is that the respondent company pays the SFO’s costs, which, at the time of the announcement of the agreement before the President of the Queen’s Bench division, Sir Brian Leveson, 10 or so days ago, amounted to about £13 million. Sadly, that £13 million did not go into the Edward Garnier special holiday fund; it went into reimbursing the Serious Fraud Office for what was essentially the biggest investigation that it had ever done since its inception. That investigation required huge international co-operation with the United States Department of Justice and with investigators and prosecutors in a number of other jurisdictions—the criminal allegations against Rolls-Royce covered the company’s activities within seven jurisdictions.
While the Rolls-Royce matter was being brought to an end a fortnight or so ago in this country, it was also being brought to an end in the United States and in Brazil, where the company had to pay the authorities about $176 million and $25 million respectively. That illustrates how the Serious Fraud Office can be pragmatic, efficient and effective now that it has the deferred prosecution agreement model and can use its money wisely to bring international companies to book for international criminal conduct.
Alex Chalk
Now that the SFO has more tools at its disposal, including the DPA model, does my right hon. and learned Friend believe that its workload will increase? Does that make the case for a larger underlying capacity, as the right hon. Member for East Ham indicated?
Sir Edward Garnier
Yes. The DPA system is a new tool—there have been three DPA cases—but if the Serious Fraud Office is to carry out its international investigative work at the highest and most complex level, it will need a bigger budget. That was clear to me when I became Solicitor General in 2010 and it remains clear to me now. In 2010, as I understood it, the revenue budget was about £40 million and was set to go down over the course of the Parliament, under the comprehensive spending review, to something like £29 million.
When I went to the United States to discuss international corporate crime and learn from American prosecutors about the system for prosecuting corporate crime there, one of the federal prosecutors in Manhattan asked me how much our budget was. I said, “It’s about £40 million, going down to just under £30 million.” He laughed and said, “Is that just for one office?” I said, “No, it’s for the entire jurisdiction: England and Wales, and Northern Ireland”—unusually for a prosecuting agency in this country, the Serious Fraud Office covers England, Wales and Northern Ireland, but not Scotland. The American prosecutor found it unbelievable that one of the centres of the financial world had a serious fraud office that ran on that amount of money. He went on to joke that he spent more than that on flowers at home; I do not think that that was quite true, but I would not be at all surprised if he lived pretty well. Good luck to him.
What I want the House to understand is that there is no perfect way to sort this out. The right hon. Member for East Ham is entirely right to say that there are uncertainties and, to some extent, an absence of transparency—or at least prospective transparency—in how the blockbuster system works. There is retrospective transparency, because the Justice Committee, Parliament, the National Audit Office and non-governmental organisations such as Transparency International—to pick one organisation at random—can delve into the SFO’s financial workings. I accept that although the blockbuster system works up to a point, it is not ideal, but the best is often the enemy of the good; I would rather the SFO could apply to the Treasury for blockbuster funding than its being constantly in danger of having its budget slashed and slashed again. The SFO is unusual and not very well known and therefore not terribly politically popular. Obviously its work is often private, because if its investigations are not conducted in privacy, the villains get away—I take the right hon. Gentleman’s point about that.
To assist the SFO in its complicated and difficult work, we need to think hard about how to nail corporate misconduct. Will we be brave enough to move to the American system of vicarious corporate liability, so that when an employee commits in the course of their work a crime that has a benefit for their company, the company should be liable in criminal law—just as it would be in civil law for the negligence of one of its drivers, for instance? If not, we will have to extend the failure-to-prevent model. The Criminal Finances Bill that is going through the House at the moment will enact a failure-to-prevent tax offence; I have tabled some amendments that would extend the list of failure-to-prevent offences to a far wider collection of financial crimes. My amendments will not be agreed to, but Parliament needs to debate the issue. I look forward to co-operating with the right hon. Gentleman, who not only has experience as a Treasury Minister but can no doubt see the City of London across the road from his constituency office. I hope that the question of developing the criminal law to meet the increased sophistication with which business is done internationally will be cross-party and non-partisan.
On the right hon. Gentleman’s point about staff, I agree that any form of threat to any organisation from the promise or threat of change is distracting and destabilising. Now that the SFO is doing good work and building on its record of success with LIBOR, with the three deferred prosecution agreements and with the cases against Barclays bank, GSK and others, the one thing that it does not need is to be subjected to further interference. That would be destabilising and cause the employment equivalent of planning blight. Imagine a bright young lawyer in a City firm who thinks that it might be good to go and work for the Serious Fraud Office for a while. It would be, and it is, but if they know that the Government want to pull up the pot plant every 20 minutes and have a look at the roots, the SFO is not going to seem like a very stable place to go and work.
I want to see people from the private sector—the big City firms that have expertise in dealing with corporate crime, mergers and acquisitions and the highly complicated banking law that is sometimes involved—coming to work for the SFO for two or three years. I also want permanent members of the SFO staff to go into the City firms and other banking organisations, so that there is proper cross-fertilisation. What I do not want is for the current Whitehall fascination with sticking things with nice initials into great pots of alphabet soup to destroy David Green’s valuable work or distract him from it. I am proud to say that he is a personal friend of mine; he and his organisation have a proud record of demonstrating to the Government that it is worth every penny it gets and that it ought to get yet more money, so that it can catch more and more villains.
The reputation of our country is to a large extent built upon our financial services industry. Our corporations that sustain that industry—be they banks, be they insurance companies, be they whatever—and the people who work in it need to know that if they step beyond the line of honesty and acceptable behaviour, there is an investigating prosecuting authority that will not only come and get them but will make sure that they are convicted. That is what our constituents want. They want a vibrant financial services industry, but they also want an honest one, which attracts business, taxation and employment to our constituencies, whether they are in East Ham or Harborough.
Mr Owen, thank you for your patience. I hope that my hon. and learned Friend the Solicitor General can give me the reassurance that the SFO is safe from interference and distraction, and that we can look forward to another period of success, and well-funded success, for this most impressive organisation.
Mark Field (Cities of London and Westminster) (Con)
In congratulating the right hon. Member for East Ham (Stephen Timms) on securing this overdue debate on the workings of the Serious Fraud Office, I register my concern that the regular reliance of the SFO on special funding facilities from the Treasury lays it open to the charge that it lacks full and proper independence.
As we know, we live in financially straitened times for those agencies that depend on the public purse. Nevertheless, the sight of the SFO repeatedly having to go cap in hand to the Treasury for supplemental income opens up the Government to the potential accusation that they at least have the ability to close down what might be politically sensitive inquiries by the simple expedient of refusing the SFO funding.
I am not suggesting for one moment that the Government are behaving improperly. However, they must see that there is an inherent conflict of interest, which will persist unless and until the SFO’s funding is placed on a more sustainable and arm’s length basis.
Alex Chalk
Is it not important in this debate to keep a measure of context as well? The sums of money that we are talking about, while not insignificant, need to be set against a wider context. They are less in total, even including blockbuster funding, than the cost of one joint strike fighter and, given the ability of the SFO to protect British interests at home and abroad, that context is worth considering.
Mark Field
My hon. Friend makes a fair point, although in the comparison he draws he also possibly makes a point about the expense of defence procurement.
Those of us of a certain age cannot help but be transported back in time when we learn of the SFO’s requests for so-called blockbuster funding to pay for major investigations. Some Members will know that I am a keen pop music fan, and it is exactly 44 years ago today that the glam rock anthem “Blockbuster” by The Sweet was at No. 1 in the UK charts. Now, I am not sure that the 17-year-old future right hon. Member for East Ham was a great glam rock fan, but I am sure that his hair was fashionably longer back in 1973.
The cost of funding the SFO’s blockbuster investigations now invariably takes the SFO well beyond the Treasury’s year-on-year allocation of funding, as we have heard from other Members. Last year, the SFO’s spending reached some £65 million, which was a 12% uplift on the 2015 figure. Blockbuster funding has been applied for, not on an exceptional basis but for four of the last five years, so presumably that form of funding is here to stay permanently, at least in the eyes of the Solicitor General. I would be interested to hear what he has to say about that.
As my right hon. and learned Friend the Member for Harborough (Sir Edward Garnier) has pointed out, at the end of last year the SFO successfully secured funding to pursue criminal investigations against the Monaco-based Unaoil, which stands accused of securing complex corrupt contracts for a range of multinationals, including Rolls-Royce. I understand that the ongoing investigations over Barclays in Qatar and a range of potential fraud cases involving foreign exchange may yet have to be subject to special blockbuster funding appeals. Although I accept the Government line that that sort of mechanism allows the SFO great flexibility in the allocation of work, I trust that, as large and complex investigations become the norm, a serious re-evaluation of the pros and cons of the funding system for the SFO will be carried out.
I have to say something else, which I know will lead to my parting company with my right hon. and learned Friend in his paean to how wonderful the SFO is: I deeply regret that the reform of the entire workings of the SFO is overdue, and I believe that was yet another missed opportunity for the coalition Administration who were in office between 2010 and 2015.
For my part, as long ago as the autumn of 2009 I wrote two essays for the ConservativeHome website in the immediate aftermath of the financial crisis, setting out what I regarded as a proposed blueprint for the SFO. Then as now, I contend that an effective financial enforcement system requires the promotion of deterrence and competition, in order to boost consumer protection. Even at that time, a year after the financial crisis began, it seemed clear that, despite grandstanding galore from politicians, there was—indeed, there remains—a growing unease at the paucity of substantial change in the aftermath of that crisis.
Nowhere did that feeling resonate more than in the field of enforcement, where the prospect of adopting US-style powers to prosecute alleged wrongdoers in financial services has of course been dashed. Although over the past year or so the SFO has finally secured LIBOR convictions, it is in all honesty a body that I am afraid has long lacked clout and the respect of those who are most engaged in the financial industry.
As the right hon. Member for East Ham has said, the SFO has been operational since 1988 and the Roskill reforms. It is responsible for the detection, investigation and prosecution of serious fraud cases in England, Wales and Northern Ireland. Although it is operationally independent—as it should be—the SFO comes within the remit of the Attorney General and is given the power to bring criminal prosecutions directly. In contrast, the FCA is able to impose civil sanctions and launch criminal cases on matters such as market abuse, working in tandem with the City of London police and the Crown Prosecution Service.
There are some lawyers—perhaps those who are less close to the SFO’s workings—who continue to lament the difficulties associated with securing convictions for fraud, especially given the collapse of a number of highly complex jury trials. For that reason, many people feel that the introduction of a system of plea bargaining similar to that in the USA would not work. No one will risk blowing the whistle or turning themselves in when the likelihood of a successful prosecution being brought is—at least in recent years, as we have seen—so slim.
The SFO’s problems are not necessarily personnel problems; I agree with what was said earlier. However, having spoken to experts in this field, I have come to believe that one of the organisation’s main problems is in finding cases to investigate. Only when the police or the Attorney General have firm cause to believe that a criminal act has occurred is the SFO permitted to get involved. Moreover, when a case does get under way, its prosecutors routinely face months of battling defence lawyers before they can even get to trial. Of course, the defence has a strong incentive to engage in a war of attrition, in order to derail a prosecution on legal technicalities.
As a result, I think we have faced this task of reforming the financial services system and inculcating in the minds of its participants that sense of right and wrong, with an “umpire”—the SFO, in this case—that too often has lacked the tools or the respect from the market to do its job properly. I am not making any personal criticism of David Green, who, while at the helm, has developed a number of improvements to the SFO in the last three or four years.
Instinctively, I support a more robust economic crime policy, which would place the promotion of commercial competition at the heart of a new code of enforcement designed to deter fraudulent, anti-competitive or criminal activity. Such a policy should centre upon a new agency in place of the SFO, which would combine the SFO and the FCA’s enforcement division.
It is perhaps incongruous that the SFO stands under the jurisdiction of the Attorney General, although I very much appreciate that the right hon. Member for East Ham put that arrangement into some sort of historical perspective. Nevertheless, we should now look to place the SFO’s responsibilities within the remit of the Department for Business, Energy and Industrial Strategy, so that the SFO would work alongside the Competition and Markets Authority. By associating consumer protection with fraud and trust-busting, we would give competition its correct place as a central priority in the future commercial landscape.
Sir Edward Garnier
Is it not a problem to place the supervision of a prosecutor with a spending Ministry—a political Ministry? Obviously, the advantage of leaving the SFO and the CPS where they are—that is, under the supervision of the Attorney General—is that, in that respect, the Attorney General and the Solicitor General are not politicians, but protectors of the public interest. As soon as a Cabinet applies pressure upon a political Secretary of State, and we have seen this recently with the—
Mark Field
I very much take on board what my right hon. and learned Friend says, and I understand his concerns. He made a powerful point towards the end of his speech about the importance of there being public trust in the financial services sphere if it is to be the success we all hope it will be in the post-Brexit world.
To effect the necessary sea change in attitude and create a body with the powers of its US equivalent, we would need to be able to impose substantial fines on wrongdoers. Such fines could play a role in covering the costs of any new organisation. Clearly, there would be a need for some legislative changes, but measures would also need to be put in place to protect whistleblowers and offer genuine immunity to those who were aware of anti-competitive practice when they came forward.
The Solicitor General (Robert Buckland)
I am very interested in the point that my right hon. Friend outlines. What standard of proof would be applied in the proposed new regime?
Mark Field
I understand the point about moving away from a criminal more to a civil standard of proof. This is a back-of-the-envelope-type suggestion. I am just putting a few broader proposals forward because, as has been referred to elsewhere, the power of deferred prosecution is very much a positive step in the right direction. As Members know, deferred prosecutions will enable proceedings in a criminal case to be delayed for a given period, subject to certain conditions being met by the company in question. At the end of the set period, if all agreed conditions have been met—often, that includes paying a substantial fine along the lines of the one that Rolls-Royce had to pay—charges can be dismissed and the judgment of conviction can be entered. It is a more pragmatic prosecution-related process.
I could go on and on, but I know that at least one other Member wishes to speak and that we all want to hear from the Front-Bench spokespersons. Let me just say this, if I may: the incentives provided by healthy competition and the deterrent of stiff punishments should have formed the backbone to the new era of banking and business in the aftermath of 2008. The past two Administrations have missed the boat in restoring both the confidence of market professionals and the trust of the British public in our financial institutions. I very much hope that in addition to addressing the important issues raised in the thoughtful contributions made by the right hon. Member for East Ham and my right hon. and learned Friend the Member for Harborough, the Government will use this opportunity to take a fresh, broader look when it comes to the overall workings of the SFO, as well as its funding, and ensure that it has its rightful place within the enforcement sphere in the years to come.
Albert Owen (in the Chair)
I am grateful to the right hon. Gentleman. I remind Members that I will call the Front-Bench spokespersons at half-past 10. In calling you, Mr Shannon, I point out that it did not escape my notice that you were six minutes late joining us. That is discourteous to the Member leading the debate and to all other Members present. A less generous Chair would have gone straight to the Front-Bench speeches and ignored you. You are running out of excuses, but I ask you to be brief and finish at half-past.
Jim Shannon (Strangford) (DUP)
Thank you for calling me, Mr Owen. I apologise for not being here on time. I had a meeting with the—
Albert Owen (in the Chair)
You are running out of excuses, Mr Shannon. Just carry on.
Jim Shannon
I congratulate the right hon. Member for East Ham (Stephen Timms) on making a very good case with lots of knowledge. His immense knowledge has been tremendous to have.
The role the Serious Fraud Office plays is essential and the House should ensure that it continues. The SFO initially had a financial threshold for its cases of £1 million, which was increased to £5 million. However, such thresholds soon became outdated, and the current director has published a statement of principle to make clear the main factors he takes into account when considering a case. We all know what those are: whether the apparent criminality undermines UK plc commercial or financial interests in general and those of the City of London in particular; whether the actual or potential financial loss involved is high; whether the actual or potential economic harm is significant; whether there is a significant public interest element; and whether there is any new species of fraud.
Current cases include, as other Members have said, investigations into the manipulation of the LIBOR rate; the recapitalisation deal by Barclays bank with Qatar at the height of the financial crisis; alleged bribes paid for the award of contracts relating to Rolls-Royce; alleged false accounting relating to Tesco; alleged bribery of public officials relating to Alstom; and alleged bribes paid to induce customer orders relating to GlaxoSmithKline. The list goes on and on.
Members have mentioned whistleblowing, and I myself have referred a whistleblowing incident to the SFO. Although it did not reach the aforementioned level, it was passed on to the financial regulatory authority. There must be a way to deal with the big firms; the individuals—the whistleblowers of this world—cannot take on such cases themselves. The SFO is essential in helping to take on the big firms. We have all watched or heard of the film “Erin Brockovich”, in which the David is able to take on the Goliath, but that is not the norm. The norm is that litigation costs are out of this world and, as a consequence, wrong is allowed to take place.
I fully support the SFO and hope I have made that clear. Indeed, its ability to look into cases should be much wider, and should include the case that I referred to it, which was of major importance at the time. However, there must be value for money and accountability for public spending, and the public must rest assured that there is no way to deal with those issues other than with the funding that is required.
Right hon. and hon. Members have spoken about how the core budget can be supplemented by blockbuster funding, and the right hon. Member for Cities of London and Westminster (Mark Field) mentioned that song from many years ago. He referred to hairstyles; I can refer to the days when I had hair. Indeed, I suspect that you remember those days as well, Mr Owen.
Jim Shannon
It is always good to look back and remember what we had in the past.
The core budget can be supplemented by the blockbuster funding—that is clear—but if we are still recovering those large amounts of money, can that money go to the centre and can those recoveries be publicised, Minister, to show value for money? It is all about how the system works and how it works best.
I agree with the report from Her Majesty’s Crown Prosecution Service, which found that the blockbuster funding model does not represent value for money and prevents the SFO from building future capability and capacity. I understand the reasons and the thinking within that. Temporary and contract staff are often more expensive than permanent staff, and managing surge capacity is a constant drain on human resources and other staff. Increased core funding would provide the SFO with the ability to build capacity and capability in-house and lead to less reliance on blockbuster funding. I agree with that reasoning, and I think that other Members have expressed that also. Minister, I look forward to your addressing those issues to our satisfaction.
In a previous life, I worked as a local councillor—for some 26 years—and often queried the use of long-term temporary contracts for staff supplied through agencies because of the cost increase, often going through the pros and cons of the issue. Although I understand the rationale of needing to grow or shrink depending on the size of the case, a larger base to begin with could—would, I believe—save money and provide job security for those with the specialised know-how. There must always be the ability to access blockbuster funding for cases such as LIBOR, which was an extremely transparent case, but there should not be a standard top-up that excuses the need to do what every Department from Health to Work and Pensions has done—cost-cut, look at efficiency measures and see whether staffing arrangements are adequate.
In conclusion, and ever mindful of the timescale that you set me, Mr Owen, I do not believe that what I have just set out is happening in the SFO. I put on record my wholehearted support for the body, but I believe that it must learn to cut costs like the rest of us. I agree that that can be done through a larger core budget—that is where we start, and the Minister might refer to it—and through the ability then to apply for blockbuster funding in exceptional cases, not just as a matter of note or opportunity. Thank you, Mr Owen.
Albert Owen (in the Chair)
I now call the Front-Bench spokespersons, starting with Kirsten Oswald.
Kirsten Oswald (East Renfrewshire) (SNP)
I thank the right hon. Member for East Ham (Stephen Timms) for securing the debate and for the very considered way in which he approached the topic. In fact, all the speeches we have heard have been considered and thoughtful on the question of how we should move things forward.
The right hon. Gentleman highlighted the complexity and depth of the work of the Serious Fraud Office, and I was pleased that he highlighted the prosecutions for LIBOR rigging. I was also interested in his comments and those of other Members on whether the funding mechanisms allow for the best recruitment of appropriate staff. The right hon. and learned Member for Harborough (Sir Edward Garnier) made a number of useful points relating to that, as did the hon. Member for Strangford (Jim Shannon) and the right hon. Member for Cities of London and Westminster (Mark Field), who made me smile by admitting to a love of glam rock. I entirely agree with him on that. I hope he will agree with me that the SFO has a vital role in prosecuting complex fraud and tackling corruption. I hope he will also join me and the Scottish National party in calling on the Government to increase funding to the SFO to show their commitment to fighting fraud and corruption—adding clout, as he would have it.
The UK Government have indicated that they seek to move towards more of a tax haven economic model, which rings serious alarm bells for combating fraud. The right hon. and learned Member for Harborough spoke about reputation, which is key here. The SNP calls on the UK Government to respond to the findings in the report by the Crown Prosecution Service inspectorate and ensure that future funding arrangements ensure that the SFO provides the very best value for money. As the right hon. and learned Gentleman pointed out, the Crown Office and Procurator Fiscal Service is Scotland’s sole prosecution service, so the SFO does not have jurisdiction to prosecute in Scotland, although its powers may be used to investigate serious or complex fraud that is prosecutable in England, Wales or Northern Ireland. The SFO works with Scottish authorities on UK-wide fraud. I am interested in this issue because it has relevance for some cases that I am dealing with.
As Members may be aware, I have recently taken on chairmanship of the all-party parliamentary group on the Connaught Income Fund. As happens with many cases of its kind, the Connaught case has disappeared into an extended limbo as investigations take place. To the astonishment of many, those investigations are being conducted by the Financial Conduct Authority and not by the SFO or even by the City of London police. When I read the subject of this debate, it set me wondering about what we should expect from the SFO as part of its core funding. Why was the Connaught case not quickly elevated to the SFO for investigation? Why has it been dealt with as a matter of regulation, rather than of potential criminality from the start?
The Connaught fund was set up in 2008 and collapsed in 2012. A related case, Connaught v. Hewetts, was heard in the High Court in July last year. Evidence in that case indicated that Connaught had all the hallmarks of being a dishonest enterprise from the start. Instead of gathering funds from a range of investors and lending them on to a wide range of borrowers, the fund made all its loans to a single group of companies, the Tiuta Group. Tiuta immediately started to use the Connaught loans to pay off existing loans and to bankroll dubious projects already sitting on its books. Early in 2011, a very clear allegation of fraudulent behaviour was made to the Financial Services Authority by George Patellis, the newly arrived chief executive of the Tiuta Group. Despite that, Connaught and Tiuta were allowed to continue their activities for many more months, before finally going into liquidation in 2012. It is not even clear if the case was raised with the SFO, which raises the question of just what we are funding the SFO for.
Since I arrived in the House, the Connaught case has been raised on a number of occasions, both in debate and in questions. Ministers and the Financial Conduct Authority have given assurances that the police have been informed of the activities around the fund, but to date there have been no prosecutions. I have written to the City of London police’s economic crime unit, seeking assurances that a police investigation is under way. I will let Members know the outcome of that correspondence when I receive a response.
The reason for raising the matter today is that when I looked at the briefing, I decided to return to the question of why the Serious Fraud Office was not at the heart of the Connaught inquiry. The director of the SFO has helpfully provided a statement of principles he uses when considering a case, and I have compared the Connaught case with the factors contained within that statement. If Connaught meets the criteria for cases that the SFO should look into, that suggests that the organisation’s core funding should cover at least exploratory investigations in this situation.
The first criterion the SFO uses is whether the actual or potential financial loss involved is high. With more than £100 million lost by investors, the Connaught case clearly meets that threshold. Is it any surprise that investors are surprised that the Connaught case has languished for so long, instead of quickly being elevated to the SFO?
The second criterion used by the SFO is whether the actual or potential economic harm is significant. In this case, it is. Many Connaught investors were looking for an unexciting but steady rate of return on their capital, with no expectation of risk. Indeed, when the fund was launched, it was called the “Guaranteed Low Risk Income Fund”. Not surprisingly, many of the people attracted were looking for a low-risk income fund. Immense damage was caused to the life plans of many. If the core funding of the SFO is not intended to protect such investors, perhaps the Solicitor General can explain why.
The third criterion for SFO involvement is whether there is significant public interest in a case. Again, with Connaught, for many reasons there has been huge public interest and significant public sympathy for those who have lost money. There is also a great deal of interest in the failure of the regulatory system to prevent harm in response to the whistleblowing by Mr Patellis. The information he provided appears to have been simply ignored by the FSA for many months. In a recent report on a complaint by Mr Patellis, the Complaints Commissioner referred to an internal memo within the FSA, acknowledging that there was an opportunity here to prevent harm, rather than simply clear up afterwards. There is a great deal of public interest in why the FSA failed and whether its replacement, the FCA, is any more likely to succeed and if not, why not. Surely the SFO would not be so ineffective in its handling of this kind of complaint.
The last component of public interest is the role of Capita, which is one of the major players in the UK’s financial services sector and a supplier of services to many levels of Government. As the initial operators of the fund, Capita gave Connaught an aura of credibility that it clearly never deserved. People want to know who in Capita knew what and when about the Connaught fund. Is such post-financial disaster investigation not the role of the SFO?
As a prosecuting authority, the SFO clearly has the power to demand papers, but so do the FSA and the FCA. In at least one instance, Connaught’s auditors were asked for papers and responded that it was beyond their remit to produce them. Astonishingly, the regulator simply dropped the request. Would the SFO or the City of London police have reacted in the same way? If there are multiple agencies in the field, yet not one of them seems able to impose on those suspected of economic crimes the level of disclosure that is routine in other kinds of investigation, what are we funding all these agencies for?
The fourth criterion for SFO involvement is whether it is a new species of fraud. Well, I am no expert, but I gather that the rules regarding the promotion of unregulated collective investment schemes, such as Connaught, have been changed. That suggests that some new form of fraud was seen to emerge in this case, and steps were taken to cut it off.
The final criterion used in assessing SFO involvement is whether the apparent criminality undermines UK plc commercial or financial interests in general or the City of London in particular. Now, that is tricky. Many of those involved in the Connaught case are suspicious that the lack of action six years after Mr Patellis blew the whistle is because of the damage that full and early revelation of information in the course of a fraud trial might have done to the reputation of Capita and the wider financial services sector. My point in this debate is that after reviewing the rationale for the SFO’s work, I see Connaught as something that should have been accommodated in the agency’s core funding. I am told that an agreement is in place between the FCA and the police to prevent overlapping investigations. Having looked at the protocol between the Attorney General and the directors of the prosecuting departments, including the SFO, I was surprised to see no reference to that agreement, at least not explicitly, within the protocol.
Many are concerned that the delay in concluding the Connaught investigation will lead to any criminal charges that emerge being challenged on the grounds of delay. I am not sure whose interests are served by having such a wide number of agencies with apparently overlapping and sometimes clashing interests. It would certainly be in the interests of justice to ensure a great deal more clarity and security of funding for whichever agency is on the frontline of trying to protect the public from deceptions, frauds and scams—the kind of thing perpetrated on Connaught investors. I look forward to hearing from the Solicitor General about the issues of the SFO and, in particular, the Connaught fund.
Nick Thomas-Symonds (Torfaen) (Lab)
It is a pleasure to serve under your chairmanship, Mr Owen, for what I believe is the first time. I refer to my relevant entry in the register and the fact that I am a non-practising door tenant at Civitas Law in Cardiff. I pay great tribute to my right hon. Friend the Member for East Ham (Stephen Timms) for his measured, carefully phrased contribution. Whenever I listen to him, he always adds a great deal to the quality of the debate, and that has to be said about his contribution this morning. I thought he set out extremely well the emergence and creation of the Serious Fraud Office in the 1980s and the importance of the Roskill model, with investigatory and prosecuting functions under one roof together with all the other necessary skills, including forensic accountancy. He set out the SFO’s history extremely well: its emergence from the fraud trials committee and its creation under the Criminal Justice Act 1987.
The contribution from the right hon. and learned Member for Harborough (Sir Edward Garnier) was extraordinarily erudite, if I may say so. He set out extremely well the complexity of the cases, not simply in terms of their scope and scale but in terms of the law itself. We are not in a position where vicarious liability has been extended into the criminal corporate sphere in the UK. We are therefore left with the directing mind concept, which, as he pointed out, was originally devised in the mid-Victorian era, when companies were different from how they are today. Of course, there is the ongoing importance of the failure-to-prevent model under section 7 of the Bribery Act 2010.
The right hon. Member for Cities of London and Westminster (Mark Field) put his finger on one of the key issues in this debate: transparency of the funding model. It was put well by the right hon. and learned Member for Harborough when he talked about prospective and retrospective transparency. Although I am not for a moment suggesting there has been political interference from the Treasury, the truth is that the model lends itself to the appearance of a potential conflict of interest in the way it is set up. The hon. Member for East Renfrewshire (Kirsten Oswald) put it quite well when she talked about the public interest in these cases.
I give the Solicitor General great credit for recently providing a letter requesting additional funding. Transparent though that is, the content of the letter illustrates the complexity, because in fact the parliamentary timetable means that the SFO cannot expect to have access to any additional funding from the supplementary estimates until the third week in March, so there has to be a cash advance from the Contingencies Fund to keep cash flowing until then, which is not the clearest of situations to be able to explain to the public.
The hon. Member for Strangford (Jim Shannon) pointed out very well the importance of value for money, which is what I want to direct my remarks to. Clearly, everyone in this room is united by the desire to see good corporate conduct, and the Serious Fraud Office is an absolutely essential part of that. However, on the funding model, I would press the Solicitor General to look at the balance between core and blockbuster funding and whether we have that precisely right.
It is difficult at times to judge the performance of the Serious Fraud Office. I agree with the right hon. and learned Member for Harborough, in that we are always looking to improve. My right hon. Friend the Member for East Ham was described as a critical friend, and I would put myself in the same category. Looking at prosecution and conviction rates is not the easiest thing to do. In 2015-16, at one point it was down to about 31%. Objectively, that does not look like a good figure, but, looking at the director’s evidence to the Justice Committee, it came about because there were two defendants who ended up not being fit to stand trial, which severely affects the statistics, because we are dealing with such a small number of cases.
Similarly, although the confiscation rates are important, they do not show appreciation for the fact that not every case is as cash-rich as another might be, so even they are not necessarily an essential yardstick. I ask the Solicitor General to look more generally at that and at transparency, which is important, particularly in relation to the use of deferred prosecution agreements and when they are thought appropriate. Cases should be monitored because of the situation I have described of defendants being too ill to stand trial. That may not be within the control of the SFO, but where there can be careful monitoring of whether it is realistic that something will ever come to trial, that should be considered. Over time, we need to look not only at the number of acquittals, because that is not always the best indicator, but at whether, over a long period, there were cases falling at half-time in the criminal courts, which would be a cause for concern.
We could also look at international comparisons. America has a very different legal framework and different corporate culture, but we should still look around the world at how other agencies perform and at how economic crimes are tackled to see whether there can be improvements in that regard.
On the specific model, my right hon. Friend the Member for East Ham quoted the director of the Serious Fraud Office at the Justice Committee in October last year. He said:
“I would like to move to less dependence on blockbuster funding and more core funding.”
Indeed, the investigation by Her Majesty’s Crown Prosecution Service inspectorate concluded that it was not necessarily providing the best value for money. When the Solicitor General comes to address the matter, I am sure he will mention the issue of unused capacity if the budget was set too high for too long. At the same time, we have to acknowledge that we may be preventing the Serious Fraud Office from building future capability and capacity if, as my right hon. Friend the Member for East Ham pointed out, we have staff who build expertise in a certain area and are then, in essence, lost to the SFO. There is also the issue of large surges of temporary staff. Not only does that create a burden on human resources management, but temporary staff are often more expensive than permanent staff.
I appreciate the flexibility of the blockbuster funding model, but I am directing my remarks to the balance between core funding and the additional funding that is available. In some years, such as 2015-16, the blockbuster funding nearly matches the core funding at the start of the year—I think it is £33.8 million versus £28 million. That may be only one year, but it is illustrative of what can happen.
I have a series of questions to pose to the Solicitor General. Could a greater core element of funding increase the in-house capacity and be of benefit to the Serious Fraud Office? Can it enhance the depth and quality of expertise available in-house? Could it increase value for money? In addition, could it increase diversity? The Solicitor General may have more up-to-date figures, but as of 31 December 2015 the Serious Fraud Office was the only one of the Law Officers’ departments with far more men than women. All the others had more women than men, but not the Serious Fraud Office.
There is also the issue of what I have described as the Treasury veto. Is that system necessarily the best sustainable long way forward? Can the Solicitor General look at ways in which that might not be necessary? For example, could there be a contingency fund, with Law Officers having far more authority over additional funds? Is the Treasury necessarily needed to give that specific assurance or permission?
In conclusion, the Serious Fraud Office plays a vital part in good corporate governance across the United Kingdom. Everyone who has made a contribution to this debate today wants to see that, but of course we want to see the Serious Fraud Office, even with its achievements, improve. I look forward to hearing what the Solicitor General has to say about that.
The Solicitor General (Robert Buckland)
It is a pleasure to serve once again under your chairmanship, Mr Owen. I thank and pay tribute to the right hon. Member for East Ham (Stephen Timms) for securing this debate, which has been wide-ranging and well informed. Perhaps we should expect that when we have a former Chief Secretary to the Treasury in the room and one of my predecessors as Solicitor General, my right hon. and learned Friend the Member for Harborough (Sir Edward Garnier). Indeed, my right hon. Friend the Member for Cities of London and Westminster (Mark Field) also has long expertise in and knowledge of combating financial crime.
The hon. Member for East Renfrewshire (Kirsten Oswald) raised a specific case. I am grateful to her for raising such a serious matter. She is right to say that from the layperson’s point of view, it can be—to borrow a phrase from my right hon. and learned Friend the Member for Harborough—a bit of an alphabet soup when it comes to the investigation of serious crime. I have not had notice of that particular issue. I make no criticism of the hon. Lady for that, but my advice would be to write directly, if she has not already, to the director of the SFO, copying in the Law Officers, so that we can have full and up-to-date knowledge of the serious case she raises.
I will do my best in the 10 minutes or so that I have to answer the questions posed by the right hon. Member for East Ham. I come straight to blockbuster funding. I have to confess that I am too young for glam rock, and perhaps that is a good thing. In my mind, the word “blockbuster” conjures up the golden age of Hollywood. I do not know whether that is an appropriate metaphor, because we are dealing with an independent prosecutorial authority that, for the best part of 30 years, has worked in a particularly specialised way, bringing together investigators and prosecutors from the outset. That is the Roskill model to which right hon. and hon. Members have referred. To be scrupulously fair to the right hon. Gentleman, he conceded—I think properly—the point that some element of blockbuster funding is desirable and, indeed, appropriate. When he was in the Treasury, I am sure the same rules were applied to the SFO. The question is not one of principle therefore, but of degree.
I come back to the age old question of balance and how to maintain that from year to year. The particular criterion that is now used by the Treasury was set out back in October 2012, when the then Chief Secretary to the Treasury came to an agreement with the director in relation to the funding of very large cases. Blockbuster funding is applied for when it is expected that costs to investigate and potentially prosecute a case will exceed 5% of the SFO’s core budget, which, at present, are cases likely to exceed £1.7 million. The ability to have recourse to funding for very large cases is a model that the Law Officers fully support. The SFO has to present a business case to the Treasury, but I reassure right hon. and hon. Members that it is not the Treasury’s function to perform the role of gatekeeper and assess the legal merits of a particular case. That is not its function at all. As the right hon. Member for East Ham will well know, its function is to make sure that the case is sound and that there is evidence on which to base that application; that the SFO has demonstrated that there is a real need for the money based on specific investigations or day-to-day needs. It is on that basis that we would see an advance being made.
The hon. Member for Torfaen (Nick Thomas-Symonds) rightly refers to a written ministerial statement that I am laying today to outline the position. I agree with him that it might seem rather inelegant, but, when it comes to the need to be flexible and to recognise the ever-changing demands on the SFO, I am afraid a degree of inelegance is a price worth paying for the practical effect of making sure that the SFO has fleetness of foot for dealing with a case load that varies dramatically year on year.
Nick Thomas-Symonds
I do not think there is any dispute on the principle and the flexibility. The dispute is about the balance. Does the Solicitor General feel that the balance has been right in recent years? Should it be adjusted in favour of core funding?
The Solicitor General
The hon. Gentleman is right to bring me back to balance. From year to year, it is very difficult to predict. There will be times—he cited a year—when the amount of blockbuster funding exceeds the core funding, but there are other years when that is not the case. That underlines more eloquently than I can the essential fluidity of the system.
In replying to the right hon. Member for East Ham, I would deal with the question in this way. It would be troubling if either the Law Officers’ Department—there was once a suggestion that our Department should be the gatekeeper—or the Treasury acted in some way as a second opinion, second-guessing the professional judgments of members of the SFO. That would be wrong and is not what happens when it comes to blockbuster funding. No application for blockbuster funding has ever met with a refusal. That is a very important point to hold on to when it comes to the Government’s understanding of the reputational importance that the fight against economic crime has not just for the Government, but for the United Kingdom generally.
The Solicitor General
I give way to my right hon. Friend, who made that point.
Mark Field
The Solicitor General made a statement on the instances of refusal by the Treasury. I was going to come on to that. Has there been a refusal on the degree of blockbuster funding? It might not have been about the overall amount, but has there been a sense of haggling between the SFO and the Treasury over the amounts that should be given for particular cases?
The Solicitor General
My right hon. Friend invites me down a course that I am perhaps not fully qualified to talk about. There will of course have been discussions about the amounts, but at no time—this is again very important—has funding been a bar to the proper investigation of cases that are brought before the SFO and meet the criterion that the hon. Member for East Renfrewshire and the hon. Member for Strangford (Jim Shannon) set out. Previous Law Officers, including my right hon. and learned Friend the Member for Harborough, and current Law Officers have made it clear that funding issues will never be a bar to the prosecution of serious fraud in this country. That is why the reputation of the United Kingdom, to which organisations such as Transparency International have attested, is as one of the leaders in the field for the prosecution of economic crime.
In response to my earlier invention, my right hon. Friend the Member for Cities of London and Westminster conceded that his interesting ideas, which I very much hope will be fed into the Cabinet Office review of economic crime, must acknowledge the fact that we are dealing with not a regulatory but a prosecutorial authority. The tests, with which most hon. Members are familiar, of reasonable prospect of success and the public interest, as well as remembering the high standard of proof that needs to be reached, are vital when it comes to the criteria for an independent prosecutorial authority.
Right hon. and hon. Members will know that the Ministry of Justice is conducting a call for evidence on corporate responsibility. The Government have an excellent track record in that area, having supported and brought into force the Bribery Act 2010, particularly section 7, which created a failure to prevent bribery offence. A similar offence in the field of tax evasion is in the Criminal Finances Bill and the Government will seriously consider the outcome of the forthcoming consultation when it comes to failing to prevent economic crime.
I think the question of the attitude of the director to blockbuster funding has been adequately covered. I have described the system as inelegant, or imperfect. Although the director works within the system, at no point has he felt under any improper pressure from the Government, or the Treasury, on applications for funding. That is very important, bearing in mind the current director’s record in improving and enhancing the role of the SFO in our public life. In paying warm tribute to David Green, I also commend him for the creation of a chief operating officer post, which I think will go a long way to dealing with some of the human resources points raised by hon. Members.
On diversity, I am glad to say that when it comes to new starters at the SFO, 51% are female. I accept the diversity figures. However, before I sit down to allow the right hon. Member for East Ham to conclude the debate, I would say that it is tempting to seek to create a permanent cadre of staff at the SFO who might be able to build up expertise, but each large case stands very much on its own facts. The context of each case can vary widely. Therefore, the continuing need for flexibility in employing specialist agency staff who might be familiar with a particular scenario will not go away. I make no apology for the fact that flexibility of funding is important in terms of year-to-year demand, and employing and engaging agency staff can be of real benefit when it comes to the prosecution of specialist crime.
Stephen Timms
I am grateful to everyone who has contributed to the debate. Sadly, I do not think I have time to discuss glam rock. I want to ask the Solicitor General if he will reflect on the fact that everybody who spoke in the debate before him—I think I am right in saying that—agreed that the current heavy reliance on temporary blockbuster funding for the SFO is not the optimal arrangement. He accepted that it was not elegant, but it is not really the elegance that is the concern—it is the fact that it is an expensive way to pay for the SFO’s work and undermines its ability to build up a cadre of long-term, committed expertise.
Motion lapsed (Standing Order No. 10(6)).
Seagulls
(7 years, 9 months ago)
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Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
I beg to move,
That this House has considered seagulls in coastal towns and cities.
It is a delight to move the motion, especially under your chairmanship, Mr Streeter. I am pleased to have not only a neighbouring MP in the Chair but another of my neighbours, my hon. Friend the Member for South East Cornwall (Mrs Murray), acting as the Minister’s excellent Parliamentary Private Secretary. It is truly a team effort from Devon and parts of Cornwall. I thank the House of Commons authorities for granting me the debate.
I am pleased to have secured this timely debate on seagulls and coastal towns and cities, which gives me an opportunity to talk about an issue that has plagued many people not only in my inner-city constituency but throughout the UK. For context, my constituency houses the city centre, the Barbican and the Hoe, where Smeaton’s tower is situated. Thousands of tourists flock to our city every summer to see the historic place where the Mayflower ship set sail 400 years ago to found the American colonies. Indeed, in 2020 Plymouth will be at the centre of commemorations. American tourists do not need to come to Plymouth only to be plagued by sweeping and aggressive seagulls.
I am concerned that increasingly aggressive seagulls could put off more tourists from coming across the world and visiting Plymouth and other coastal towns and cities such as Looe. They are not content to just take to the skies over my city; there is even a Twitter account called @PlymSeagull. I pay tribute to my hon. Friend the Member for Waveney (Peter Aldous), who has fought a long and hard campaign against nuisance seagulls, and Fiona Kerslake of Eco Environmental, based in my constituency. She gave me an excellent briefing note on the topic.
Sir Greg Knight (East Yorkshire) (Con)
I congratulate my hon. Friend on securing this important debate. Does he agree that one of the most important elements is access to food? If seagulls are denied access to that, they will often go elsewhere. Therefore, the very holidaymakers he refers to have a role to play: they should be encouraged not to feed seagulls when they are on the coast. We should also encourage local businesses such as takeaways to have seagull-resistant forms of waste disposal.
Oliver Colvile
I have a strange feeling that my right hon. Friend might have had sight of my speech. I will come on to that point. He makes a relevant and worthwhile case.
I would also like to praise Nigel Eadie, who owns the Original Pasty House in Plymouth, who first brought this issue to my attention in the last Parliament. Last night, as right hon. and hon. Members were walking through the Division Lobbies, my hon. Friend the Member for Wells (James Heappey) informed me that while Brexit is an extremely important ongoing issue, he had been inundated with communications from constituents expressing their support for this debate and suggesting what action the Government should take. The debate is particularly timely as we approach the spring and therefore the breeding season. By May, eggs will be hatching and the gulls will become even more aggressive as they seek to protect their young. As we head into the summer, we could very well see gull wars on our high streets!
My office mate, my hon. Friend the Member for South East Cornwall, who is doing a brilliant job as PPS, told me the old saying that each seagull carries the soul of a fisherman who died at sea. As the chairman of the all-party parliamentary fisheries group, I have had a few messages from people asking whether the common fisheries policy has been slightly to blame for the rise in aggressive urban seagulls as we seem to have overfished our waters. However, I will leave the Minister to address that point if she wishes.
In the past 200 years, most species of gull have learned that they no longer need to migrate north or south. That is because the UK holds a variety of relatively mild climate conditions throughout each season and food is readily available from a wide selection of sources, as my right hon. Friend mentioned. Like all wild animals, seagulls have an ingrained will to survive. Much of that comes down to the fact that they are scavengers looking for food scraps wherever they can find them. Indeed, last year a group of psychology students at the University of the West of England launched a research project to study the psyche of the gull, focusing on the nesting of the birds, their feeding habits and how humans interact with them. When my hon. Friend the Minister sums up, I very much hope she will confirm that she has followed that research. When it is published, will her Department respond to it?
Over the weekend, it was widely publicised in the local and national press that the reason I applied for this debate was because my friend had a chip taken away from him by an overly aggressive seagull. We were campaigning in the Torbay mayoral election at the time. He put his fish and chips to one side and a gull swooped down and took them away. I am afraid he did not finish his lunch.
John Woodcock (Barrow and Furness) (Lab/Co-op)
I congratulate the hon. Gentleman on bringing this important matter here. Is he aware that not simply chips are at risk? A pensioner was hospitalised by a seagull in Barrow within the past two years. This is a real public safety risk for the people of our coastal towns.
Oliver Colvile
The hon. Gentleman is quite right. Indeed, I will give some examples of where that has happened elsewhere. As I said, a very aggressive seagull came down on my friend’s fish and chips. Yes, that happened, but no, that is not the reason why I sought the debate. I did so because I have been contacted by a whole series of people. A number of constituents have contacted me regarding over-zealous and aggressive seagulls. This is not a vendetta; it is an opportunity to ensure that shoppers, residents and tourists feel safe when they are outdoors.
Even my local newspaper, the Plymouth Herald, ran a story last summer titled “Plymouth will belong to seagulls this summer—but this is how you can avoid them”. We see photos in the press of a pensioner with a large cut to her scalp. We read stories about a diving seagull killing a pet dog. Things have become so bad and so widely publicised that our former Prime Minister, David Cameron, said that he wanted a “big conversation” about murderous seagulls.
Earlier today, I received an email from my constituent, Graham Steen, who tells me that a few years ago he was attacked by a pair of gulls that were nesting in his chimney. The gulls used their claws and beaks to attack the top of his head, causing a large amount of damage and pain. The gentleman has a bald head, so we can imagine what he was encouraged to go and do.
Real-life cases such as that have brought together Members from across the country to discuss this topic. Despite the anti-seagull sentiment, I am not advocating or supporting a cull of the species. Given the political surprises of the last two years, we should be very wary of polls. However, in 2015, YouGov surveyed more than 1,700 people on their support for a cull of seagulls and, according to the poll, 44% of people support one, while 36% oppose one. In beginning a cull of seagulls, I believe we could set a worrying precedent, especially as herring gulls are a protected species under the Wildlife and Countryside Act 1981. I am therefore against the cull.
While we are on the subject of protected wildlife—I hope you will indulge me for a moment, Mr Streeter—Members may know that I have been running a national campaign to save the hedgehog by making it a protected species. I know the Minister will have heard me speaking about that several times over the last year; I realise that I have got quite a reputation around the country for it. I want to ask her this: how can it be that an aggressive bird such as the herring gull is protected when the small, timid hedgehog, whose population has declined by 30% in the last 10 years, is not?
Sir Greg Knight
I know my hon. Friend is a big supporter of the European Union. Is not the answer to his question that the Wildlife and Countryside Act derives from the EU birds directive, which forbids us to have a cull?
Oliver Colvile
My right hon. Friend is quite right. I very much hope that that will be included in the Brexit Bill when it comes forward, so that we can protect our wildlife and, I hope, improve upon it, because that is important.
Back in September, my hon. Friend the Member for Cheltenham (Alex Chalk) tabled a question to the Department for Environment, Food and Rural Affairs asking whether it had made an assessment of the potential effect of removing the protected status of seagulls in urban areas.
Graham Stringer (Blackley and Broughton) (Lab)
I congratulate the hon. Gentleman on securing this important debate. There is not only a contradiction between the lack of protection for hedgehogs and the protection for aggressive seagulls. Governments of all colours in the past have agreed to onshore and offshore wind farms, which randomly kill many seabirds. Does he agree that there is a huge contradiction between seagulls being protected, when we could save people from attack, and killing them randomly with wind farms?
Oliver Colvile
I quite understand where the hon. Gentleman is coming from, but I have always been a keen supporter of renewable energy. I have always thought that the more we can do to use tidal and wave technology, the better, but he makes a fair point.
The Minister replied to the written question from my hon. Friend the Member for Cheltenham, stating:
“The Wildlife and Countryside Act 1981 already allows for the control of gulls…in the interest of public health and safety or to prevent disease.”
I cannot see how a seagull attacking a pensioner, leaving her with a huge and bloody cut on her scalp, is not seen in terms of public health and safety.
Mrs Anne-Marie Trevelyan (Berwick-upon-Tweed) (Con)
My hon. Friend brings a really important discussion to the House for debate. In Berwick-upon-Tweed, the most northerly town in my constituency, we are plagued with the seagull problem, to the point where last summer someone took it upon themselves to institute their own cull. While that was appreciated in some quarters, there is a risk that people are having to take the law into their own hands to deal with these difficult and aggressive birds, which means there are people wandering the streets of Berwick with firearms who really should not be doing so. The impact of that frustration is very real.
Oliver Colvile
I would most certainly advise my constituents to ensure they do not seek to break the law.
There are a number of things that the Government can do to make the position much better. Will the Minister consider amending the 1981 Act so that it is easier to control the gull population when such attacks are happening? I also firmly believe that we need greater flexibility in protecting very different species. If population growth occurs, especially to the detriment of another species, it should be made easier to change the list of protected species, but very much on a regional basis.
Just before the last general election, the former Chancellor, my right hon. Friend the Member for Tatton (Mr Osborne), earmarked £250,000 for a study into the life cycle of the urban seagull. Unfortunately, that was scrapped three months later by DEFRA. I would be extremely grateful if the Minister could speak to the Treasury to try to get the money for that study back. I know that many Members who represent coastal towns and cities would be delighted if there were some movement on this, as many of our constituents’ lives are being blighted on a daily basis by seagulls.
Alex Chalk (Cheltenham) (Con)
Of course, this does not only affect coastal towns and cities; towns such as mine and the quality of my constituents’ lives are seriously affected. Given that we managed to clear pigeons from Trafalgar Square in a humane way, does my hon. Friend agree that it ought not to be beyond the wit of man to do the same for seagulls, which are such a menace to my constituents?
Oliver Colvile
My hon. Friend makes a fair point. When I was a child, I always believed that if there was a bad storm at sea, the birds had a tendency to come inland. I do not know whether that is still the case.
Studies show that between 2000 and 2015, the number of urban gull colonies in the UK and Ireland doubled from 239 to 473. Indeed, the number of gulls could have quadrupled in that time, as colonies are now larger than they were 17 years ago. The £250,000 study could mitigate our knowledge gap when it comes to gulls.
As you may know, Mr Streeter, I am the chairman of the all-party parliamentary group for excellence in the built environment. I therefore take a deep interest in how we can use our buildings to combat the scourge of angry seagulls. I believe we can use our built environment to tackle this problem. Commercial buildings should be proofed or built differently when redeveloped. Indeed, there are a number of bird deterrent systems. Bird nets are an effective deterrent system, providing a discreet and impenetrable barrier that protects premises without harming birds. Nets are one of the most effective and long-lasting ways of bird proofing, particularly for large open roofs, and can be used for commercial and industrial buildings such as warehouses.
Alternatively, a pin and wire system could be used to prevent perching without damaging the aesthetics or construction of the building. That system is almost invisible and is widely used across the UK for that reason. By preventing perching, the system makes it much more difficult for a gull to nest and eventually lay eggs.
The most well-known deterrent is spikes, which are used to deter not only gulls but pigeons and other birds. In built-up urban areas such as Plymouth, spikes would be helpful because they would make it very difficult for the birds to land, particularly in high-infestation areas. It has also been suggested to me that councils could paint eggs red, so that gulls think they are on fire and will not sit on top of them to incubate them. From what I understand, gulls see in black and white and not in colour—perhaps because they bought the wrong TV licence.
In terms of what can be done on the ground, there is an element of social responsibility, as my right hon. Friend the Member for East Yorkshire (Sir Greg Knight) said. Takeaways must take much more responsibility to keep their local environment clean, as overflowing bins and fish and chip wrappers are extremely attractive to gulls. Local authorities also need to be more proactive in keeping their streets clean and ensuring that litter bins are free from takeaway boxes and polystyrene containers. Those simple steps could help to take away one of the best sources of food for these birds.
In the 1970s, Restormel Council in Cornwall encouraged residents to leave out their black plastic bags, which were then picked at by the gulls in the local area. Residents would put blankets over the top of the bags to hide them from the gulls. I urge local authorities to use bins with secure lids, so that it is much more difficult for gulls to get into the bins and pick at the bags. I also encourage local authorities to continue their weekly bin collection, especially over the breeding season. I must confess, however, that my own local authority has just proposed a change to fortnightly bin collections.
Another form of contraception could be to replace eggs with dummy or fake eggs. Studies show that gulls welcome dummy eggs into the nest and will try to incubate them. I think that my own local authority in Plymouth used that method for a little while.
I am pleased that we have the opportunity to debate such an important issue, which transcends constituencies and affects hundreds and thousands of people across our coastal towns and cities. I hope that the Minister will listen to not only my concerns, but those of many of my constituents and many other Members of Parliament and their constituents. This is an important matter, and I hope that the Government will act before someone is really hurt yet again by an aggressive seagull. As you know, Mr Streeter, I represent a naval constituency, so in that great tradition we should pay tribute to the words of Horatio Nelson: we need action this day.
Several hon. Members rose—
Mr Gary Streeter (in the Chair)
Order. Four hon. Members are seeking to catch my eye. The winding-up speeches begin at 3.30 pm. We have 40 minutes and four speakers—do the maths.
John Woodcock (Barrow and Furness) (Lab/Co-op)
May I, too, say what a pleasure it is to serve with you in the Chair, Mr Streeter? It is also a pleasure to be able to contribute to this timely and essential debate—passions have already been stirred by the opening contribution from the hon. Member for Plymouth, Sutton and Devonport (Oliver Colvile). I agree with so much of what he said. I will just add a few thoughts from the perspective of the blighted and besieged people of Barrow and Furness, who have dealt with this threat for many years. I mentioned in my intervention the example of a pensioner, 72-year-old Brian Griffin, who was attacked on the way to the library in Walney and ended up having to be hospitalised.
There is a rather gruesome video on the North West Evening Mail website—I do not recommend that you click on it, Mr Streeter. It shows a very large herring gull feasting on a pigeon. There is another example of a gull popping into Greggs on Dalton Road to help itself to the produce. I have with me a photo that I took on my walk to the office a couple of weeks ago. You have rightly reminded me that it cannot be used as a prop, Mr Streeter, but let me take a moment to describe it. It shows, in one of the back alleys in central Barrow, a wheelie bin whose lid has clearly been left ajar, and the rubbish bags that are on show have become a feasting site for—well, I will not count them now, because that would not be a valuable use of time, but there are at least a dozen seagulls there. This is not just an inconvenience for people; it is a proper health and safety risk to our citizens.
In the four years since I was able locally to bring people together for the Barrow and Furness seagull summit and we instituted a three-point plan to deal with seagulls, there has been some effect. The measures that we all agreed to back then were pursuing contraception for seagulls where that was possible; removing the space where seagulls unfortunately too often congregate and nest in our town; and clearing out waste. There has been some sporadic progress.
Alex Chalk
I commend the hon. Gentleman for his summit and for trying to achieve solutions locally, but does he agree that there is an opportunity for central Government to try to co-ordinate what might be best practice, potentially underpinned by a study, so that we are not having to reinvent the wheel in every location to work out what best practice is? We should know that from the centre.
John Woodcock
Absolutely. That is an excellent idea, and I will come on to what more I think the Government could do in relation to individuals. I, too, was disheartened by the cancellation of the £250,000 project. I am sure that the former Chancellor took inspiration from one of my former employers, the former Prime Minister Gordon Brown, in taking a personal interest in what might otherwise seem insignificant amounts of money at Budget time. That project clearly would have been welcomed in the towns blighted by seagulls. It is a real shame that the Chancellor cancelled it.
Oliver Colvile
Would it not also be a good idea if local authorities were to work with other local authorities around them that have a similar issue? That could also save costs, and I am acutely aware that local authorities are finding it very difficult to make ends meet at the moment.
John Woodcock
Absolutely. These are trying times. We have had the Barrow and Furness seagull summit. Perhaps the time has come for a national seagull summit, so that the blighted populations along our coasts can get together and discuss the issue, perhaps in comparative safety at an inland venue, for their mutual convenience.
BAE has taken action, which reduced many of the nesting sites in our town, and a number of years ago the council distributed a leaflet, but there is still a really significant problem. Certainly in the perception of most citizens in Barrow, Ulverston and across the area, the blight is pretty much as it was. That is not to say that we do not value the South Walney nature reserve, where the seagulls ought to be living their lives, but unfortunately they come into town too often because food supplies are too readily available there. There are clearly things that individuals and businesses can do to lock up those supplies, but I wonder whether there is a limit to the effectiveness even of those measures.
I am very interested in what the hon. Member for Plymouth, Sutton and Devonport says about the potential for reinstating a cull once the United Kingdom has left the European Union. Amid the flurry of worry and concern about downsides, that is possibly one thing that we ought to keep in mind as a real step forward for an independent UK. We will be able to make our own decisions about whether herring gulls, which are hugely preponderant in Barrow town centre, could be taken off the protected species list.
I will finish with a further suggestion as to how the Government could get involved. It is true that herring gulls are on the protected list, so the ability that is available in relation to other species, if they prove to be a health and safety concern, does not exist for gulls, but too often that leads individuals to believe that they can do nothing. Actually, if people go to the Natural England website and read the provisions of its general licence, that makes it clear that someone can take action against a herring gull by removing its nest and taking away its eggs if they are a property owner, there is a clear health and safety danger from failing to do that and other measures have proved ineffective. Many homeowners or managers of public buildings would clearly meet those criteria in the Furness area and, I imagine, in other towns.
Sir Greg Knight
Does the hon. Gentleman accept that many seaside properties are three-storey, not two-storey, and where they are owned by an elderly couple, it is just not possible for them to get up on the roof and remove the eggs?
John Woodcock
Indeed, but let me explain what I strongly believe the provisions of that licence say. Perhaps the Minister will be able to clarify this. I can share with her the terms of the licence if her staff do not have this information and that would be helpful. I am not sure that it requires an elderly person to do the deed themselves. I think that they may be able to employ someone else to do it. Let us hope that there clearly is a role for local authorities. There is a long established role in vermin control. Someone can bring in people to help if they have a rat or mouse infestation. I think that there clearly is a role for local authorities, but where either the local authority or the Government could really make the difference would be in enabling citizens to know what their rights are in these situations.
Alex Chalk
Two things: first, citizens need to know what their rights are; secondly, we need to enable citizens to know what is most effective. All of us— individuals and local authorities—have limited resources and limited time. We need to target resources effectively.
John Woodcock
Absolutely. People need to know they can take action. Yes, they need a licence to take action against herring gulls, but they can obtain the licence by going on the internet and printing it out for themselves. Does the Minister agree that there could be a case for, as I like to put it, mobile licensing awareness points around coastal towns? We would simply need desks with printers and bits of information to tell people what their rights are and to empower them to take back their communities against the blight of seagulls, which so often spoil our towns.
Steve Double (St Austell and Newquay) (Con)
It is a pleasure to serve under your chairmanship, Mr Streeter. I congratulate my hon. Friend the Member for Plymouth, Sutton and Devonport (Oliver Colvile) on securing this important debate and it is a pleasure to follow the hon. Member for Barrow and Furness (John Woodcock).
I represent St Austell and Newquay in mid-Cornwall, and the issue of seagulls has long been a hot topic in my constituency, particularly in places such as Newquay, Mevagissey and Fowey—coastal towns that rely heavily on tourism. We have seen the growing nuisance of seagulls in recent years. That nuisance is to do with noise and droppings that can damage car paintwork, as well as gutters blocked by nests, which then cause gutters to overflow. There is also the nuisance of rubbish strewn across our streets every time there is a waste collection in the community.
Seagulls are not only a nuisance. Increasingly, there is an issue of danger. We often laugh at tourists in our seaside towns who have their pasty or their ice cream stolen by a sweeping seagull, but too frequently that results in injury. Our local A&E in Cornwall reports that every late spring/early summer our seagulls become more aggressive and several people visit A&E as a result of being injured by a seagull.
In 2015, there was the well-publicised case, which my hon. Friend the Member for Plymouth, Sutton and Devonport mentioned, of a family dog in Newquay being killed by a seagull. That drew a lot of media attention and was directly responsible for former Prime Minister David Cameron commenting that we needed to have a big conversation about seagulls. Sadly, we never got to have that big conversation. The issue went away, as it does most summers, and we have never really come back to address it in the way that I believe we need to.
Oliver Colvile
Does my hon. Friend think that a clever idea would be for us to have a debate of this sort annually, especially at this time of year?
Steve Double
I am grateful for that comment from my hon. Friend. However we do it, we need to keep returning to this issue until it is addressed in such a way that seagulls no longer blight our seaside communities. Whether it is an annual debate or whatever the mechanism is, we need to keep focusing on the issue until something is done.
My observation is that we have almost two species of seagulls in this country. The gull we most often refer to is the herring gull, which is a large bird. I understand it can grow to about 55 cm, although now that we are leaving the EU we are allowed to say 22 inches. That bird is the most common cause of nuisance and attacks. As I said, it is now almost two species, as there are the birds that live out on the clifftops as nature intended them to live—by eating from the sea and living in the wild—but increasingly we see the urban seagulls that come into our towns becoming a very different species from those that live in the wild.
We do the seagulls no favour by drawing them into our towns. One of the facts that I discovered when I looked into this matter was that the average life expectancy for a gull that lives in the wild on the clifftops is more than 30 years, but for a gull that has come into the town and lives by scavenging off human waste it is 12 to 15 years. Gulls live more than twice as long when they live in their natural habitat than they do in our towns. By removing them from our towns, we would do the gulls a favour and help them to live the long and pleasurable lives that nature intended.
Increasingly in our seaside towns in Cornwall the gulls are seen as nothing more than flying rats. They scavenge from our rubbish bins and seek to steal food from us whenever they can.
Stuart Blair Donaldson (West Aberdeenshire and Kincardine) (SNP)
The hon. Gentleman mentioned stealing food. I am sure he is aware of the video of the Aberdonian seagull shoplifting a packet of Doritos in Aberdeen. Seagulls cause real problems for residents, businesses and tourists. Will he join me in welcoming Aberdeenshire Council’s “Survivor’s Guide to Living with Urban Gulls” to deal with these issues?
Steve Double
I am grateful for that intervention. Indeed, I am aware that many local authorities across the country, including Cornwall Council, have issued guidance to residents and businesses on how to minimise the impact of gulls. All that is most welcome, but we are reaching a point where perhaps more direct action needs to be taken. Part of the process is about education and increasing awareness. The point already made by some hon. Members is that a lot of the problems are caused by people feeding gulls or leaving their food waste in such a way that it is easily accessible for gulls. Educating people to minimise that is one of the best ways to reduce the impact of gulls.
I was formerly the Cornwall Council cabinet member responsible for waste management. I am proud of the fact that during my time in the cabinet I introduced seagull sacks across Cornwall, which we made readily available through the local authority at a nominal cost. Residents can put their black bin bag rubbish into seagull-proof sacks. The seagulls cannot access the rubbish within. Encouraging residents to take such practical steps will minimise the impact that seagulls have in our communities. However, more needs to be done.
As my hon. Friend the Member for Plymouth, Sutton and Devonport mentioned, it was regrettable that the Government cancelled the study on seagulls and their life cycles and habits, because we need to make informed decisions. There have been calls for a cull, although I am not convinced that is the answer. I do not completely reject some other measures that have been mentioned, such as taking eggs and such things. All those could work, but we need to make informed decisions about how we tackle this menace. A comprehensive study of and report on seagulls, their impact and their life cycle would help us to form an action plan to address the issue for the long term and help us to minimise the impact that seagulls have.
I would certainly welcome the Minister’s comments and views. Is she prepared to support a call for a new study to be done on how seagulls impact on our coastal communities—as we have heard, increasingly this is not only a coastal issue—so that we can have comprehensive knowledge of the issues and then make informed choices about how we address the problem?
I am grateful to my hon. Friend the Member for Plymouth, Sutton and Devonport for initiating the debate as this is an important issue that many of our communities and constituents want to see us address. I hope this can be the start of not just a big conversation, but some action that might go somewhere and help us to address the issue.
Patricia Gibson (North Ayrshire and Arran) (SNP)
It is a pleasure to serve under your chairmanship, Mr Streeter, and I thank the hon. Member for Plymouth, Sutton and Devonport (Oliver Colvile) for introducing the debate. It is quite nice to be in a debate where we all agree about what the problem is, and about the fact that we must find some way through it. Indeed, we all agree that seagulls are a menace to our towns and cities, thriving on litter and behaving aggressively towards other birds, and to pets and people. They are increasingly problematic.
I particularly want to speak because seagulls are a problem for the seaside town of Largs, in my constituency. I recommend Largs to those hon. Members who have not yet been fortunate enough to visit—it is a beautiful and picturesque town with much to offer residents and visitors—but the presence of seagulls is a constant challenge. That challenge can range from a simple nuisance to a downright menace. As hon. Members have mentioned, some people have been quite badly injured; others have escaped with just being terrorised.
I think that there has already been mention of the first important instrument that should be used to tackle seagulls in coastal areas, which is for the public to stop feeding them. Feeding only attracts more gulls and builds up their expectation that the food is there for the taking. As we know, seagulls hover in the sky waiting to snatch food from local people who are eating fish and chips on the prom. They have even been known to plague Largs residents sitting in their gardens some distance from the shoreline. It is important for day trippers in seaside towns such as Largs to appreciate that they should not feed seagulls. Largs welcomes thousands of day trippers every year, at high season. If someone took their child there on a visit and the child was viciously attacked by a seagull, it seems logical that they would not choose to return.
The world-famous Largs ice cream outlet Nardini’s has even warned its patrons not to eat the ice cream outdoors, as seagulls will soon appear to claim it as their own. Indeed, nothing can really be safely eaten on the shorefront without risking life and limb at the hands, or should I say beak, of a vicious seagull. I can top the story told by my hon. Friend the Member for West Aberdeenshire and Kincardine (Stuart Blair Donaldson) about the snatching of a packet of Doritos in his constituency. In my constituency, a seagull was bold enough to snatch a £20 note from an unsuspecting visitor’s hand, only to deposit it some distance down the street when it realised that it was not particularly appetising.
The problem of seagulls is not confined to town centres and the sea front, however. They breed and nest on the flat roofs of houses; they squabble with each other; they squawk incessantly at all hours of the day or night, creating a nasty racket; they bombard and soil windows; and they soil washing. That noise and filth, which can only be a health hazard, constitute a serious challenge for residents of even the most picturesque towns, such as Largs.
Largs, however, has been trying to think creatively about the issue. One idea that was mooted, which I do not think has been mentioned today—perhaps there is good reason—is the deployment of birds of prey to control the number of seagulls. That would mean using hawks as a deterrent, working the seagulls away to a much less densely populated area and letting them congregate elsewhere. I understand that that solution has worked in Anglesey, so why not in Largs or other seaside towns? It would also be important to provide a feeding station elsewhere, to move the food source and to keep the seagulls in a designated zone. As the hon. Member for St Austell and Newquay (Steve Double) mentioned, that would be good for the seagulls’ health and lifespan.
Assistance has been sought from local councils, and in Largs that has led to the use of solar seagull-proof bins. The bins in Largs are often filled to overflowing, given the high turnover of visitors in summer. When the town is packed with visitors the bins start to overflow very early in the day, but solar seagull-proof bins were installed on the seafront last summer. As well as having improved capacity, they compress the waste and alert the council when they need emptying. That innovation has been warmly welcomed by visitors and residents. I can take no credit for lobbying for those bins; the credit must go to the local MSP. In the interest of family harmony, I should say that that happens to be Kenneth Gibson, my husband.
Oliver Colvile
I hope that the hon. Lady can help me; I am somewhat confused. We have devolved Assemblies, including the Scottish Assembly. What role does the Scottish Assembly play in all this? Is it a reserved matter for the Westminster and Whitehall Government or is it also a policy issue in the Scottish Parliament?
Patricia Gibson
As the hon. Gentleman will know, the matter is ultimately the responsibility of local authorities, but support and guidance on the treatment of species is given by the Scottish Parliament. He may well ask—I suspect, perhaps unfairly, that this is at the core of his question—what I am doing here today. I will enlighten him: it is to share good practice. I came here hoping that his pearls of wisdom would cascade down to me and that I could report some innovations back to Scotland. I hope that, similarly, I can help him.
Oliver Colvile
I was genuinely concerned to know how the whole thing works. I served on the Select Committee on Northern Ireland Affairs, and every time there was an issue that was thought to be Northern Irish, a Committee member would remind me that it was a reserved matter for the Northern Ireland Executive and nothing to do with us in Westminster. I am therefore grateful to the hon. Lady for taking some time to explain the constitutional impact.
Patricia Gibson
I am delighted to be of service to the hon. Gentleman.
How we deal with seagulls and their interference with the town and residents is a long-standing issue. Further measures are needed, and we have not solved the problem yet. Wild birds are protected by law in Scotland, but—the hon. Gentleman anticipated my remarks—local authorities and authorised persons are allowed to control and manage certain birds for the protection of public health and safety, and to prevent the spread of disease. If the problem is believed to have become unmanageable, and it is thought that public health is in serious danger, local authorities can take further measures.
As the hon. Gentleman said, we need to continue to monitor the situation. The public and residents of coastal areas—but not just coastal areas—need protection from this menace. We must work towards a more permanent solution to this difficult issue and continue to seek innovations. I am keen to hear what the Minister has to say and what pearls of wisdom she can offer, so that I can rush back and share them with the people of Scotland, who will be most interested. I hope that I have provided some enlightenment to the good Members here today who do not have the privilege of representing anywhere in Scotland.
Mr Gary Streeter (in the Chair)
You have also name-checked your husband, which is even more important.
Derek Thomas (St Ives) (Con)
I would love to mention my wife, Mr Streeter, but she does not have much to do with this.
I thank my hon. Friend the Member for Plymouth, Sutton and Devonport (Oliver Colvile) for bringing this matter to Westminster Hall. There is no shortage of material from St Ives that I could talk about with reference to seagulls, and their welfare—it is not just about their being pests. St Ives’s fame comes most recently, as many in the House will know, from its neighbourhood plan. Hon. Members can talk to me about it later, if they are interested; it hit the international headlines. St Ives is also famous for Barbara Hepworth, the Tate Gallery, beautiful beaches, and seagulls. In fact last July an 18-year-old girl was airlifted to hospital having fallen off a 15-foot wall because of an incident involving a seagull and an ice cream.
This is a very tricky public debate, as I learnt without even contributing to it. At the same time as David Cameron was making his comments last summer, I was having a surgery in a local pub in Longrock. I came out of the pub with the landlady and she asked me to do something about a seagull that had been injured. It was there by her doorway, causing a problem to people coming in and out of the pub. I bundled it up, put it in my MG, drove it home and gave it some care and attention in our chicken run. After I got into my house having done all that, I opened my email inbox and had a whole host of emails wanting me to be removed from the planet because of our attitude towards seagulls. I am aware how tricky this public debate is, so my hon. Friend the Member for Plymouth, Sutton and Devonport is a very brave man for raising it—this is an emotive issue.
There is no disputing that seagulls are beginning to behave badly. We have mentioned most of the issues today. There is a safety issue for both humans—as I mentioned—and animals; we know of stories in Cornwall of pets and other wildlife being attacked by seagulls. There is also an issue for tourism. Interestingly, my hon. Friend the Member for St Austell and Newquay (Steve Double) referred to the noise that seagulls make, but when I am in my constituency on the phone to anyone anywhere else in the country, they always refer to the lovely sound of seagulls in the background. Many people come to Cornwall because of the contribution that seagulls make.
The truth is that seagulls are getting a bit out of control; however, this is no new problem. My hon. Friend also referred to the work that he did on Cornwall Council to try to solve the problem of seagulls distributing people’s rubbish wherever that rubbish might be on bin day. I was a member of Penwith District Council—we used to have six district councils in Cornwall before we went to a unitary system—and we were the only council to introduce wheelie bins to solve this problem. We had to do that because of our tourism and our local economy. The risk to health was a real problem. People would put their rubbish out late one night and in the morning it was everywhere but where it was intended to be, so wheelie bins were introduced. It is of great concern in other parts of Cornwall that Cornwall Council refuses to distribute them.
Steve Double
To pick up my hon. Friend’s point, and I have some knowledge of this, part of the problem in places such as Cornwall is that in a lot of our very small coastal villages wheelie bins are completely impractical because people do not have the space outside their properties to store them. That is why, when I was a cabinet member, we introduced the sacks, which are a lot easier to store.
Derek Thomas
My hon. Friend is absolutely right. Again, that is exactly the problem in St Ives; I have elderly residents who have had their bins removed for that very reason. We need to understand how to manage the problem of seagulls and other wildlife distributing our rubbish. That is a big debate—perhaps the subject for another Westminster Hall debate.
Oliver Colvile
Does my hon. Friend not also feel that the seagull cause has been helped by the opening of “Desert Island Discs”, which has seagulls calling in the background?
Derek Thomas
When my hon. Friend has the opportunity to go on that programme, I suggest he try to correct that, but I will not go into it.
There are things that we can do and there is some human responsibility in this. First, we really must stop feeding seagulls. There are people in Mousehole, where we have a particular problem, who have their own pet seagulls—or believe they do—and feed them every single morning. People try to explain the situation to them, but they continue to feed the seagulls. There are some really lovely people who think that they are caring for these beautiful birds, but actually they are not being caring at all. We need to get the message out to these people somehow that feeding the seagulls is not good for all concerned—including the seagulls themselves, I believe. We also need to address how we secure our bins and look after rubbish because, again, that is obviously a key tension.
There is some conversation about how we provide contraceptives for seagulls. Rather than cull them, which I assure hon. Members would be a very difficult and unpalatable thing to argue in my constituency, there must be a way that we can introduce contraceptives to seagulls to reduce their ability to reproduce. I imagine that if we did that for three or four years, it would have a significant, positive impact on the number of seagulls. I would not personally be willing to offer to do a drug trial, but I am sure that I can suggest ways that a contraceptive for seagulls can be trialled in that area. I know that it already exists.
Finally, we could remove eggs. I was in the building trade and when I did my apprenticeship I used to go up on high street roofs—mainly those of banks. A colleague of mine, who was considerably older than me and more responsible, would have a yard broom and would wave away the seagulls that were intent on knocking me off the roof because I was removing their eggs. That was part of my apprenticeship in the building trade. We used to go up on roofs at this time of year and a bit later to remove eggs because that was the only way that we could control the problem back then. I understand that we are still able to do that, but there are obviously some safety implications and we need to support communities to do it. In fact, in my building trade I spent a lot of time and lots of people’s money on creating all sorts of nets, wires and the various things we have discussed. We even looked at creating ways of spraying water on seagulls, because apparently they do not nest on roofs if they are sprayed.
There are lots of people out there who are trying to resolve this issue, but I completely accept that we must avoid having to come here every year to have a discussion about seagulls—although that is important until we resolve this issue. We need leadership from Government, support for councils and local communities and an honest debate about not how we cull and get rid of seagulls, but how we keep communities safe, protect coastal communities and tourism and look after the welfare of these magnificent birds.
Kirsty Blackman (Aberdeen North) (SNP)
It is an honour to serve under your chairmanship, Mr Streeter. I really appreciate it that the hon. Member for Plymouth, Sutton and Devonport (Oliver Colvile) has brought this issue to us for debate. I want to start by talking about Aberdeen and the reasons why I feel it is important for me to be here. I was reading the Library briefing—those briefings are really useful for a lot of debates—and about the number of gulls that are apparently in the United Kingdom. Apparently there are 45,000 herring gulls in the United Kingdom. According to the city council’s website, there are 3,500 pairs in Aberdeen. That means we have 15% of the UK’s herring gull population in our city. That seems quite unbelievable, but it comes from the figures provided. Look up internet memes on seagulls—the Aberdeen seagull is the size of a large dog. It is absolutely ginormous and it regularly gets mentioned; people who come to uni in Aberdeen from Glasgow or elsewhere in Scotland or England are shocked at the size of these creatures. They are not like normal seagulls; they are ginormous. We mostly have herring gulls, although we also have some lesser black-backed gulls.
The hon. Member for St Ives (Derek Thomas) talked about gulls beginning to behave badly, but he went on to say that we have been grappling with this problem for a long time. I grew up in Aberdeen and during my entire lifetime there has been a plague of these creatures. In Aberdeen we introduced wheelie bins and on-street bins as well because we have a huge number of tenement properties in the city. There is a huge number of places where people cannot have wheelie bins. We now have a really good on-street bin system with large bins on the streets. Residents have to put up with a slight loss of parking as a result of those big bins, which have big lids on them. The birds cannot access the bins, so they have been pretty successful in deterring the birds’ access to food.
As for the issues caused by seagulls, stealing food and aggression have been mentioned, as has the fact that they used be on land really only between April and September, but increasingly are beginning to winter in cities and towns rather than going out to sea. That causes a real problem because we continue to have these issues throughout the year.
There are a couple of issues that have not really been mentioned, such as noise. A huge amount of the correspondence that I get from constituents on this subject is about the problem of noise. It is about the concern that they are being woken at 3 o’clock in the morning by seagulls fighting with one another. I used to live on the Gallowgate in Aberdeen. There are several multi-storey buildings there and we were on the 13th floor of flats. Without fail, throughout the breeding season, we would be woken throughout the night by the noise of seagulls and that was a real problem.
Gulls cause significant damage to buildings, around chimney stacks, for example. They cause damage to people’s roofs. They cause damage to business buildings. Again, that has not really been mentioned. There is a financial cost associated with this problem, as well as the issue of people being scared of coming into town because of the aggression.
Seagulls also carry diseases. According to a piece of literature from our local authority—it is also called a “Survivor’s Guide”; I think Aberdeen City Council and Aberdeenshire Council got together to compose these survivors’ guides—they can carry salmonella and TB. It is pretty concerning to know that we have these creatures roaming about our city, carrying diseases that can badly affect human beings.
Those are all the issues, and my mailbox indicates that seagulls are never far away from the minds of my constituents. When people come in the door to talk to my office staff, they often mention in passing the problems that they have faced with seagulls. In fact, I wrote to the Scottish Government Minister last September following a spate of emails that residents had sent raising concerns.
It strikes me that there are a few things that can be done and a few things that could be done better. In Scotland, taking action by removing eggs, for example, is licensed by Scottish Natural Heritage. Companies can exercise that option, which ensures that the action is taken humanely and only in circumstances where there is no alternative. Action cannot be taken when spikes could be put up. However, gulls are increasingly managing to navigate a way around spikes. They have more of a problem with nets, but nets cannot be put on all roofs.
Steve Double
Does the hon. Lady agree that part of the problem is that gulls are very tenacious and intelligent birds and that no matter what measures we take to deter them, it usually only a matter of time before they find a way around them?
Kirsty Blackman
I absolutely agree. One thing about gulls is that they learn from one another, so if one gull manages to find a way around something, they all do, because they observe one another and learn. Such things as removing eggs and oiling eggs work, as does poking holes in them. Dumfries and Galloway Council did a study on the efficacy of those methods, and the results showed that they work.
Other studies have previously been done in Scotland. In 2010, the Scottish Government commissioned a study on using falcons and birds of prey, as my hon. Friend the Member for North Ayrshire and Arran (Patricia Gibson) mentioned, so they have specific details on that. That 10-week study was not quite as successful as it could have been, but the Scottish Government learnt a lot and have a huge amount of recommendations for people. For example, we do not want to have falcons flying around at the same time each day because the gulls get used to it and stop being scared of them. A huge number of useful recommendations came out of the study. Using such things as distress calls, kites, pyrotechnics and lasers was also suggested.
I appreciate having a chance to speak in the debate. To wind up my comments, an issue we face in Aberdeen is that although the Scottish Government have overarching responsibility for the matter and local authorities are then responsible for specific areas of nuisance, the local authority is clear that individual building owners have to take the action. As we see when we are trying to get lights replaced in tenement buildings, it is sometimes very difficult to get owners to take action. If the council is not the majority owner in a property—for example, a tenement building—and we are trying to get eggs removed from it, it is very hard to get that to happen. Although sharing good practice is a good idea and we should do more of it, there is an issue with who is responsible and the lack of compulsion on landlords and property owners to take action. If they are not willing to take action, the noise made by the birds affects everybody around. Again, I thank the hon. Member for Plymouth, Sutton and Devonport for securing the debate.
Sue Hayman (Workington) (Lab)
It is a privilege to serve under your chairmanship, Mr Streeter. I congratulate the hon. Member for Plymouth, Sutton and Devonport (Oliver Colvile) on securing this debate on an ongoing issue that is familiar to all of us who represent coastal communities. He made an excellent speech with some really important points for consideration. My hon. Friend the Member for Barrow and Furness (John Woodcock) spoke passionately about how the problem affects his constituents, and there were well informed and important contributions from the hon. Members for St Austell and Newquay (Steve Double), for North Ayrshire and Arran (Patricia Gibson) and for St Ives (Derek Thomas).
Gulls are clearly a real problem in many parts of the country, particularly when they are breeding, but it is also clear that there is no quick-fix solution. We need to understand bird behaviour before deciding on a final course of action. As we have heard, gulls are problematic, particularly when they are breeding and nesting. They are often doing what any parent would do if they felt threatened: they are protecting their young. Urban gulls are often just looking for a nesting site that they see as safe from predators and with a good food supply. They do not know that they are sitting on top of somebody’s house or business.
We have heard that gulls enjoy a protected status in the UK under the Wildlife and Countryside Act 1981, which means that they cannot be intentionally killed or their nests intentionally destroyed. The Royal Society for the Protection of Birds, of which I am a member, notes with concern that the British gull population is in decline, so we have to look at what we can do to solve the problem without contributing to the further decline of the species.
Although there is marginal support for culling gulls, I support the RSPB’s position—and, it seems, that of the majority of hon. Members in the debate—that that should not be the immediate way forward. We should instead look at non-harmful deterrents as a priority. As Natural England has said, many problems associated with gulls can be avoided by taking preventive measures. Hon. Members have talked about the nets and wires that can be installed to deter nesting on buildings, and the need for better food storage and waste facility areas so that the food waste is kept secure and away from gulls. The public also needs to be discouraged from deliberately feeding them.
Gulls live for a long time and are intelligent and have good memories, so they have quickly learned that humans are a reliable source of food. We need to ensure that food is not just dropped and left—people need to be encouraged not to litter. We also need to ensure, as several hon. Members from Cornwall have mentioned, that there are secure bins or sacks in which food can be disposed of.
This problem has been going on for an incredibly long time, and although we could have an annual debate, we just need to crack on with tackling it. It is time that the Government gave councils that are dealing with this problem the resources that they need to manage the gull populations and solutions properly.
We have also heard about noise. Some areas have trialled high-frequency noise emitters—they are not too dissimilar to the Mosquito devices that have been used in areas with high levels of anti-social behaviour—but the results have been mixed. Local residents who can hear the noise have complained that their lives have been blighted and made a misery, so that solution clearly cannot be used everywhere.
As mentioned by the hon. Member for North Ayrshire and Arran, one way of potentially deterring gull populations is through the use of birds such as hawks or falcons. In 2009, an interesting study was conducted by the Scottish Government in Dumfries, just across the Solway from my constituency. I am sure that hon. Members are aware of the Harris hawks that we use on the parliamentary estate to keep down the number of pigeons. It seems that peregrine falcons could play a role in combating certain species of gulls, not by attacking or killing them, but simply by scaring them away. A humane system of deterrence such as that should be encouraged.
As we have heard, this is a serious health and safety issue. Last summer, in Maryport in my constituency, residents were surprised to see a notice come through their door saying that their post could not be delivered due to seagulls.
Oliver Colvile
If I may ask the same question, Mr Streeter, how did the leaflets get through the door, then?
Sue Hayman
My understanding is that the seagulls were extremely aggressive. I do not know how the postman managed to get the notice through the door. That is an extremely good question, and I shall have go back and find the answer—perhaps he put it in a different box. Anyway, the Royal Mail in Maryport managed the problem by getting a local falconer, Mike Morrison, to offer up his services and his hawks and successfully scare the gulls off so that the postmen could return and deliver the local mail.
Meanwhile, we have also had a problem with dive-bombing gulls on an industrial estate in Carlisle. Local businesses have got together to deploy an army of fake hawks to stop the gulls from nesting on their roofs. They report that it is working so far, so perhaps local councils could support that approach, providing that the Government give them the funding that they desperately need to buy the fake hawks.
Does the Minister agree that a cull is not the way forward and that we really need to look instead at non-harmful deterrence methods? Much has been said in this debate about the role that local authorities play in managing the problem, but they will only succeed if they are given the funding that they need to implement whichever method they believe is right for their area. We have heard a lot of good ideas that could solve the problem, but as we know, councils are seriously strapped for cash at the moment. Residents and businesses are being left to fork out their own money or put up with the situation.
I would really like to hear from the Minister how the Government plan to ensure that local authorities are given the financial support they need to tackle the problems caused by gulls. We have heard that the former Prime Minister David Cameron’s suggestion of a way forward was a big conversation, but I reiterate other Members present in saying that now is the time for action.
Mr Gary Streeter (in the Chair)
Before I call the Minister, I remind her to leave a few moments for Oliver Colvile to sum up at the end.
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Dr Thérèse Coffey)
It is a pleasure to serve under your chairmanship, Mr Streeter.
A flock of seagulls can be a very frightening sight for many people when they anticipate being dive-bombed or attacked. Some may have thought that this would be a light-hearted debate, but hon. Members have been assiduous in raising genuine concerns and in painting a vivid picture of the problems caused by the high density of gulls in our coastal towns and cities as well as some places inland. My hon. Friend the Member for Plymouth, Sutton and Devonport (Oliver Colvile) is well known in the House as the saviour of the hedgehog, but now he will be known as the scourge of the seagull.
The Government recognise that gulls can be problematic when found in high densities in urban areas—my hon. Friend mentioned the problems recently experienced in Plymouth. I fully understand that gulls can be a serious nuisance. Sensible and proportionate action should be taken by using the range of measures already available and by raising awareness about what works locally. We have heard many good examples of solutions today, but local councils especially will know best what works in their areas. A falcon may be suitable in one part of the country, but in other places we may need certain kinds of bins or sacks, as my hon. Friend the Member for St Austell and Newquay (Steve Double) pointed out—and as I experienced recently when I holidayed not in his constituency but in Salcombe, where we had certain kinds of waste to deal with.
This debate was headline news today. The hon. Member for Barrow and Furness (John Woodcock) asked what we can do to raise awareness of the issue. Well, it has made “BBC Breakfast”, so that has raised some awareness. People may watch this debate live or on catch-up and headlines may follow in the media to make people realise what they can do.
John Woodcock
Does the Minister agree that it would be totally unacceptable, cruel and messy for people to adopt the solution that has been circulated on the internet of using bicarbonate of soda and bread? That is a completely unacceptable way of dealing with the seagull menace.
Dr Coffey
I completely agree. An hon. Member whom I will not name raised that idea with me this morning and I told them off, because it is not acceptable to endorse such a cruel way of tackling the issue.
Hon. Members have referred to gull behaviour and to the fact that the urban gull is starting to display unacceptable characteristics. A build-up of gull populations is often the result of a readily available food supply and the availability of attractive sites for roosting or breeding. Herring gulls and occasionally lesser black-backed gulls roost and nest on buildings, where—as we have heard—they may become aggressive, particularly when incubating eggs and rearing young. Their protective behaviour can result in attacks on members of the public who are in the street or who need access to roofs for maintenance purposes.
I understand that gull behaviour can have a negative impact on people’s lives in coastal towns and cities, including inland—we have heard about Cheltenham, for instance. However, by using common sense, we can deal with the issue effectively through existing legislation and practical local action. I am particularly keen to draw attention to examples of local authorities taking such positive action to manage gulls, but I first want to set the context of the conservation status of gulls.
My hon. Friend the Member for Plymouth, Sutton and Devonport will understand that although lesser black-backed gulls and herring gulls may cause problems locally, there are serious concerns about their conservation status at a national level. As has been pointed out, gulls, like all wild birds, are protected under the Wildlife and Countryside Act 1981. Despite their appearance of thriving in urban areas throughout the UK, breeding populations of the herring gull have declined sharply and populations of the lesser black-backed gull have declined at a number of important sites. The UK herring gull population fell by 55% between 1970 and 2002, despite increases in some urban populations. As a result, the herring gull is listed as a species of principal importance and has been red-listed as a bird of conservation concern, while the lesser black-backed gull is a conservation priority and is amber-listed. The great black-backed gull is a scarce breeding species in England, with a breeding population of less than 1,500 pairs and wintering populations also in decline; it now meets the qualifying criteria for amber-listing as a bird of conservation concern.
Steve Double
Is the Minister aware of a point that I made earlier? Part of the problem is that a gull living in a town has less than half the life expectancy of a gull living in the wild, and that is one of the reasons for gulls’ diminishing numbers. Getting them out of our towns and back where they belong is one way that we can address the declining population.
Dr Coffey
I agree that that is the outcome we want, but we cannot just wish the issue away by saying, “Let’s get them out of towns.” I also agree that this is a man-made problem, because people are feeding and have lost control of the situation. The messages that we are sending today and that are being sent by councils are important, because we need to get it across to people that by feeding these birds they are worsening the problem, rather than making their “new best friend”, which is how they might see it—it probably does not help that Hastings adverts make seagulls look cute.
We want to see these wonderful birds in their natural habitat, rather than in an urban habitat. When we see large numbers of them in certain urban areas, it may be easy to forget that their conservation status is under threat at a national level. I am sure that hon. Members will understand that, given the decline in breeding populations and the pressures on them, there are no plans to change the legal protection afforded to gulls.
There has been some discussion about research—my hon. Friend the Member for Plymouth, Sutton and Devonport referred to the University of the West of England. The Department for Environment, Food and Rural Affairs looks forward to reading the university’s findings, and I am sure that we will comment on them in due course, if appropriate. As for the £250,000 grant, I am sure that my answer will disappoint my hon. Friends, but I do not believe that such research is currently necessary, because a wide range of tools are already available. However, DEFRA has commissioned research, which is still at an early stage, on the use of immunocontraceptives in a range of species, including birds. There are also possible evidence projects with Natural England, including a key project on gull life that aims to deliver special protection area site action and a full survey of urban nesting gulls. We are waiting to find out whether our bid for EU funding has been successful; we hope to hear by the end of March. A studentship has begun, led by Exeter University in partnership with the British Ornithological Trust and Natural England, and this summer fieldwork will commence that aims to understand differences in the urban and natural breeding populations of urban gulls. Research is already ongoing.
John Woodcock
The Minister is being generous in giving way, but either we want these gulls in urban areas or we do not—and we are clear that we do not. She is clear on that as well, so is she interested in exploring the idea of a regional protected status for gulls that applies only outside urban areas where they are a menace and are not wanted?
Dr Coffey
It certainly will not be possible to do that until we leave the European Union, and I am concerned that opening up elements of regional protection might make the law unworkable. Nevertheless, let us consider that when the opportunity is there, in due course. I am sure the hon. Gentleman will return to this subject, although I am also sure that he will try to ensure that we never again have to debate these measures, by getting on with things.
Kirsty Blackman
Specifically on the studies, the hon. Member for Workington (Sue Hayman), who spoke from the Labour Front Bench, and I both mentioned the study undertaken in Scotland in 2010. I would appreciate it if the Minister had a look at that. I would also appreciate it if the contraceptives study that DEFRA is undertaking, which she has just mentioned, could be shared with the Scottish Government when it comes out.
Dr Coffey
I am quite sure that that research can be made available, and the research the hon. Lady refers to is well established and available for anybody to see.
The current legislation provides sufficient powers to take appropriate action to tackle the problems caused by gulls. It provides a range of methods that those authorised can use to manage birds humanely, and it permits population control, nest clearance and egg control. I assure the hon. Member for Barrow and Furness that landowners can employ competent others to act under a general licence. While there are no provisions within current legislation to allow the control of birds specifically for the purpose of relieving nuisance or damage to property, the legislation allows for the control or disturbance of certain wild birds for particular reasons. Those most relevant to urban gull issues are if such action is taken in the interest of public health and safety, or to prevent disease.
Natural England’s general licence allows those authorised to kill or take lesser black-backed gulls and to damage or destroy the nests or eggs of lesser black-backed gulls and herring gulls to preserve public health or safety, or to prevent the spread of disease or serious damage to livestock and crops. These general licences have a very low regulatory burden. Those authorised do not need to apply to Natural England to make use of them, provided they comply with the licence conditions. These conditions include making sure that non-lethal methods are ineffective or impractical, and users do not need to report any action undertaken to Natural England.
Where an individual cannot undertake the control required under a general licence, it does not mean they cannot take action, but they would need to apply for an individual licence to do so. Natural England commonly issues individual licences to permit the control of gulls for health and safety purposes. On average, it issues 17 individual licences for herring gull control for health and safety purposes annually, and it grants most of the applications that it receives. Indeed, the Wildlife and Countryside Act 1981 also provides for action to be taken without a licence if the action in question is urgently necessary, such as preserving public health and safety. This allows a person to take action in a genuine emergency without fear of committing an offence, where it would not have been possible for them to have predicted the issue and to have acted under a licence. I understand that between 2014 and 2017, Natural England issued 10 individual licences in Devon to permit the control of large gulls, in addition to the general licences.
While licensing control of birds populations can help to control the number of gulls, we should not rely solely on a licensing approach to control gull populations. We should look at other measures to manage the problem in a sustainable way. Local authorities, businesses and individuals are able to take a range of actions to manage urban gull populations. We encourage all local authorities and businesses to help to address the problem by, as has largely been pointed out, removing sources of food such as fallen fruit and accessible household waste, using bins with secured lids, ensuring that domestic animals are not fed outside, using birds of prey to scare gulls, and providing local education measures. In all cases, individuals and local authorities concerned about the effects of gulls are recommended to seek advice from Natural England’s wildlife licensing unit, which offers free advice to those experiencing problems with gulls. Local teams have the knowledge and expertise to help.
I am sure that my hon. Friend the Member for Plymouth, Sutton and Devonport is aware of some of the excellent practice across the country. In his own county, East Devon District Council has introduced a range of current control measures—I see that my right hon. Friend the Member for East Devon (Sir Hugo Swire) is in his place, I think for the next debate. These measures include using litter bins in seaside towns with secure openings to prevent scavenging, displaying posters in seaside towns and distributing them to local food businesses—
Dr Coffey
No, I am afraid that I need to make progress. I know that I am pointing out great things that East Devon, rather than Plymouth, has done; nevertheless, I feel I need to say it.
Posters in seaside towns can inform residents and tourists of the risks of feeding seagulls. Other control measures include offering targeted advice to property owners on methods of protecting their own buildings. In addition, East Devon’s seaside towns have their refuse collected earlier in the day during the summer—I say that to answer a point made by the hon. Member for North Ayrshire and Arran (Patricia Gibson). Those towns have their refuse collected earlier in the summer, which successfully reduces littering caused by seagulls.
Sir Hugo Swire (East Devon) (Con)
I am grateful to the Minister for mentioning what East Devon is doing. Of course, we have problems in Exmouth, Sidmouth and other seaside holiday towns. Does she think that other local authorities would do well to learn from what East Devon is pioneering?
Dr Coffey
That is a fair point. I also point out the example of Herefordshire, which is not too far away from my right hon. Friend’s constituency. Herefordshire County Council has taken sensible and effective steps, such as removing gulls nests and eggs from April to August, which has meant that the number of pairs of breeding gulls has dropped considerably, from 500 in 2008 to approximately 200 in 2015.
The Local Government Association is well placed to share best practice on this issue. However, I must disappoint the hon. Member for Workington (Sue Hayman) by saying that central Government cannot provide additional resources on this matter. Having said that, it so happens that one of my councillors from Suffolk Coastal Council, Councillor Andy Smith, is chair of the coastal special interest group at the LGA, and I will ask him to consider this matter. I will also make sure that he invites councillors from inland towns as well as from coastal towns to contribute.
I am grateful to all Members for debating this issue and raising their constituency concerns. I encourage local authorities to continue to work together to share examples of methods and techniques that successfully deal with the issue of gulls in seaside towns and cities.
My hon. Friend the Member for Plymouth, Sutton and Devonport referred to “Desert Island Discs”. I insist that he has a record from that excellent Liverpool band, A Flock of Seagulls. My particular favourite is “The More You Live, The More You Love”, but he can refer to my contribution to find more song titles that he might wish to know about.
I hope that my hon. Friend understands that, although this issue is important, a lot of the action to deal with it must be taken locally and individually, and we must strike a balance between protecting species such as gulls and also fulfilling our international commitments, while mitigating the impacts of such species in our towns and cities.
I am sure that many hon. Members will be able to go back to their councils and their constituents over-brimming with the ideas that we have heard about, including those from over the border in Scotland; we heard some great examples from there. In fact, a professor from Leeds University has said that Aberdeen was getting this matter right, including flying a bird of prey around one of the local sports stadiums before matches, such is the prevalence of gulls and the risk of their attacking. So there is plenty of good practice to share.
Mr Streeter, I hope that we never again have to debate this matter. Nevertheless, I am sure that we will return to it. As we have heard, these gulls are clever creatures, but I am sure that we can defeat this menace.
Mr Gary Streeter (in the Chair)
Oliver Colvile, you have a few minutes to respond.
Oliver Colvile
Thank you very much, Mr Streeter, for chairing this debate so well; I am incredibly grateful to you for doing that. I also thank the hon. Members who have participated in this debate; I thank them all very much indeed. I especially thank the Scottish National party Members, for—quite rightly—giving some lectures on how the devolved responsibilities fit in.
I am grateful that the Minister has taken very seriously this whole matter of gull wars; in fact, if I was reapplying for this debate, I would call it a “gull war” debate, rather than necessarily one about seagulls.
A number of issues still need to be addressed. Evidently, we need quite a large amount of research to be done, and I encourage the Select Committee on Environment, Food and Rural Affairs to take this matter up and hold an inquiry into it. There is a lot of knowledge out there about what we should be doing.
I just say to my hon. Friend the Minister that although Plymouth is in the county of Devon, it is a unitary authority. Consequently, it is very independent of what takes place in Exeter county hall. Finally, could the Minister consider having a page on the DEFRA website that says what people can do to try to deal with this issue? We need to bring together a lot of the information that people have talked about today, so that we can have best practice and get the LGA much more firmly engaged. I am quite keen to ensure that we continue to monitor this issue and hold the Government to account, and I hope to apply for another debate on it next year, when we can see what progress has been made. I also thank my researcher, Stuart Pilcher, who has done an enormous amount of work on this issue and helped me to write my speech.
Question put and agreed to.
Resolved,
That this House has considered seagulls in coastal towns and cities.
Flood Defence Projects: South-west
(7 years, 9 months ago)
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Mr Ian Liddell-Grainger (Bridgwater and West Somerset) (Con)
I beg to move,
That this House has considered management of flood defence projects in the South West.
I am delighted to be working under your chairmanship, Mr Pritchard. I thank the Minister for responding to two debates in a row—seagulls and flooding. There is a sort of synonymy to that. I am grateful for this debate. It is a short one, and I know that my right hon. Friend the Member for East Devon (Sir Hugo Swire) wishes to contribute.
Three years ago, almost to the day, I stood in the Somerset levels in waders, in floodwater, fighting for Government action. We witnessed the most appalling and predictable natural calamity when rain began to fall. It was a relentless season of downpours, and many of my constituents were stranded and made homeless as the riverbanks burst.
My right hon. Friend the Minister for the Armed Forces is present, and I would like to let the Chamber know that at this precise moment there are three battalions in England, one in Scotland and one in Northern Ireland on stand-by for flooding. This is a critical time to have those people, and I am thankful for the work they did last weekend. The work they did in my patch was absolutely phenomenal. I know that they are ready to go.
Returning to what happened in my constituency, some of the sewers gave way and the landscape began to vanish under a feisty, filthy water. At the time, I was very critical of the Environment Agency and its then chairman, Lord Smith. I described him in a couple of TV interviews as a coward for failing to visit the stricken area. When asked what I would do if he turned up, I replied that I was tempted—and I was—to flush his head down the nearest water closet. Forgive my straightforward turn of phrase; they were tense and difficult times as 17 miles of my constituency had become an inland lake. Lives had been ruined. Tempers were at breaking point.
All that is happily behind us, but there is a saying about things destined for the water closet: Lord Smith may have been flushed out of the Environment Agency, but he remains afloat as provost of a Cambridge college and chairman of the Task Force on Shale Gas. How apt and rather sardonic. The good news is that the Environment Agency is in much safer hands these days and plays a far more proactive and constructive role in protecting us from the ravages of flooding. For that, the Government deserve a great deal of credit, and I thank them.
The Minister represents a constituency with flooding challenges of its own, so she fully understands the subject from personal experience. Because of her hard work and the efforts of her predecessors, Bridgwater and West Somerset can now breathe much more easily whenever we hear raindrops.
After the crisis of 2013-14, a new era of flood defence was born, with the creation of the Somerset Rivers Authority. The idea was simple and sensible: take back control of flood defences from the centralised Environment Agency and base it locally with people who live and work in the area. The agency would use its technical skills to get the job done and the authority would set out the important tasks to be tackled. There were big battles to be fought, of course. There had to be muscle to ensure that the then Prime Minister came up with enough money to pay the large sum we wanted for the initial remedial work, but, with determined arm-twisting, David Cameron delivered. At this point, I must pay tribute to the Minister for her efforts in pushing forward the legislation to secure the SRA future funding. We are all very grateful.
Now I would like to reveal one or two skeletons, unfortunately. It has not been easy getting the SRA set up and running. The authority was designed to bring together all the experts from the old river drainage boards and Somerset’s local authorities. The Government provided starter money, but the deal demanded local authority contributions too, some of which were easier to obtain than others. Without doubt, the worst offender was Taunton Deane Borough Council—my neighbour.
When it comes to alleviating flooding, Taunton Deane could not be called a big spender. The local authority has failed to deal properly with flood risks in Taunton over many years. It skimps. It calls for consultants’ reports. It sits on the results. But when the waters rise in Taunton the rivers burst in my constituency, not in that of Taunton Deane. The River Tone snakes its way right past the centre of Taunton and ends up joining the overworked River Parrett down in the middle of the Somerset levels, as the Minister is aware. That is where the worst flooding happened three years ago. Since then, the neighbouring Sedgemoor District Council has worked tirelessly, along with the Government, to get the important parts of the River Parrett properly dredged—grateful thanks again. Much of that great and important job has been done, but it is absolutely pointless if your next-door neighbour leans on his shovel and does next to nothing. I am sorry to report that that is precisely what has been happening in Taunton for almost 60 years—it ain’t new.
I hope that the House will forgive me for offering some of the background to this sad state of affairs. Records of flooding in Taunton go back to the late 19th century. Since then, we have been seriously flooded in 1929, 1960, 1968 and 2000, and, of course, more recently. Without a shadow of a doubt, the worst incident was in 1960 when, as the river overflowed, 500 properties in the town were washed out. Some parts of the town were 3 feet underwater. It was a soggy mess. Plans for a relief channel were suggested after that. The old Bridgwater to Taunton canal could have been used, which, in engineering terms, made perfect sense, but the estimated £1.7 million cost was considered prohibitive. So the cheap option was chosen, and the riverbanks were upgraded just a bit, but by the early 1990s it was obvious that more needed doing. The banks had to be built up again, and this time a guarantee was given to safeguard everyone for 200 years.
Rule one: never take a guarantee at face value. Barely a decade later, the River Tone flooded the town, and there have been more recent floods in 2004, 2008, 2009, 2012 and 2013. That gives Members the general idea: too little, too late, too cheap. It is the same old Taunton story repeated time after time.
Today, just as for the past eight years, Taunton Deane is led by Councillor John Williams, a builder with an extravagant plan for the future. By now, I think he probably believes he can walk on water and, if he is not too careful, pretty soon he will have to do just that. Mr Williams wants to grow Taunton by building. His dream is to put up 17,000 new houses by 2028. That is unbelievable growth, higher by a margin of 70% than the average Government prediction for new houses anywhere. It is absolutely impossible. Last year, with the help of Mr Williams’s mates in the local building trade—firms such as Summerfield, which seems to own an awful lot of land around there—Taunton Deane Borough Council presided over the construction of just 883 new houses, and that was a record then. If the council carries on at that rate, by the end of 2028 it will be way short of the insane target of 17,000 houses.
But, say what you like about Councillor Williams—a lot of people do—he is nothing if not determined. His absurd new building target was set in 2010 and he is sticking to it. There is a faint chance, and I sincerely hope it is a faint chance, that he might even get the Government to put in money to help him on his way. Mr Williams has tarted up his plans and submitted a bid for Taunton to build a new garden town. What his glossy documentation fails to point out, however, is that all this manic building will take place on some of the wettest and flood-prone land in the United Kingdom. The much-trumpeted Taunton garden town could well turn out to be tomorrow’s Atlantis. The builders might need aqua-lungs and flippers. Does Summerfield employ frogmen? Perhaps Wrencon—Councillor Williams’s personal building firm—does.
Those who follow parliamentary affairs will know that I take a dim view of some of Mr Williams’s activities. It is wrong for any elected councillor to accept a private building contract on his own patch without declaring it, but Taunton Deane has no rules about that. Even the council leader is immune. That is not just strange; it is downright wrong. It undermines the confidence we deserve to have in local government leaders at any level. No wonder people in Taunton have become highly suspicious of this leader and his empire-building plans.
Before I came to Westminster Hall this afternoon, I took a hard look at the Environment Agency’s flood maps for the Taunton area, and I ask the Minister to do the same. The blue bits represent risk, and the blue bits are almost everywhere. I have also read detailed reports compiled by flood experts on behalf of Taunton Deane. They do not go as far as to say, “Stop before it’s too late,” but they never minimise the threat and they urge absolute caution unless flood defences are radically improved. Let me quote from one of the latest reports, completed in 2014:
“The town centre and many existing properties rely heavily on the degree of protection resulting from the existing flood defence embankments and structures. The condition of these… is very variable, many will need to be replaced… None of the defences will provide an appropriate standard of protection… and they do not include a ‘safety margin’… which is essential… where so much property and business could be affected by small changes in the predicted flood water levels.”
John Mc Nally (Falkirk) (SNP)
As chair of the all-party group on flood prevention, I am undertaking a routine check on all areas throughout the United Kingdom. I started in Tadcaster last week, and I hope to complete some areas over the next five or six weeks. Is the hon. Gentleman minded to allow me to visit his area to gather some information?
Mr Liddell-Grainger
I would welcome the hon. Gentleman. The Minister has been down to look not just at the flooding, but at Hinkley Point nuclear power station—she has Sizewell. My right hon. Friend the Member for East Devon is one of my near neighbours and we welcome anyone coming to look at the flooding. It was a disaster for us all. The Minister’s Parliamentary Private Secretary, my hon. Friend the Member for South East Cornwall (Mrs Murray), is a Cornish MP and therefore knows how much flooding affects our area. I would welcome the hon. Gentleman and personally host him.
I will continue as I have a little bit to go and I know that my right hon. Friend the Member for East Devon wishes to have his say. This is what the flood experts had to say on Councillor Williams’ building bonanza:
“The proposed new development in the town centre and other sites will increase the volume of water discharging to the Levels and Moors”.
That was the clearest warning that Taunton’s building bonanza could spark floods next door. The report said that
“doing nothing is no answer”.
The only way to tackle the issue is with a new water storage facility costing around £15 million, but will it ever happen? I checked the National Rivers Authority programme for the coming year and there was no mention of it. Apart from some maintenance on French weir in the centre of town, Taunton is not scheduled to do any serious flood defence work in the foreseeable future, yet the council leader is boasting that he has the money in next year’s budget to deal with floods. How much? Slightly less than £2 million. That does not make sense. It is not enough.
Once again, Taunton is cutting corners, and it is not using its own cash either. Councillor Williams intends to spend the new homes bonus, which is a grant he gets from central Government, as the Minister is well aware. It is sleight of hand—trickery—and it is cheating the public. Everyone knows that flood prevention costs serious money. We know that. Everyone knows that budgets are tight. That is agreed. Everyone would understand if Taunton simply could not pay, but the council is prepared to spend money like water on totally pointless things.
Last night, the council voted to borrow millions of pounds—you are not going to believe this, Mr Pritchard—to refurbish its office. The Deane House is the council’s headquarters and it is 30 years old. The council would get about £2.5 million if it sold the place. Its advisers said it was not worth a penny, but Councillor Williams, the jobbing builder, intends to fork out £11 million to do it up. For that kind of cash, looking across the Atlantic, he could install gold lifts, marble walls and champagne fountains. Eat your heart out, President Trump; look what President Williams has got! A short step down the street is Somerset County Council’s headquarters, which the Minister knows. Taunton could have moved there to a brand new office for a fraction of the cost. It was offered a building. Does that sound like a good idea? I know a man who thinks so:
“If Taunton Deane moves to County Hall the Council will form part of a gathering of other public sector services, to create a one-stop shop for our community.”
The writer is none other than the leader of the council: John Raymond Williams, to use his full name. The words are on Taunton Deane Borough Council’s own website, but like the author, they are slightly out of date.
The reputation of any council depends on leadership and management. I do not have to tell anyone here that. Taunton Deane has a leader with bizarre territorial ambitions. He is trying to swallow up West Somerset Council, in my patch. He has an absentee chief executive with the worst sickness record of any local government officer in the whole of England. I am sorry to say that I would not trust either of them to run anything. Least of all, I cannot and will not trust them to look after the flood prevention measures that affect my constituency so badly.
Sir Hugo Swire (East Devon) (Con)
I am most grateful to you, Mr Pritchard, for allowing me to take part in this short debate. I cannot aspire to maintain the drive and momentum of my hon. Friend the Member for Bridgwater and West Somerset (Mr Liddell-Grainger), but I want to use this opportunity to raise one specific issue with the Minister. To date, I think she is unaware of it.
I want to talk specifically about a number of properties on The Green in Whimple that are adjacent to a local river and a train line. I have been following the issue for a number of years, not least because one of my councillors, Councillor Peter Bowden of Devon County Council, lives in one of the affected properties. The problem is that for a number of years, his property and the surrounding properties have been beset by flooding. We have identified the solution to the problem, which is clearly to replace the culvert under the railway line. There is some funding in place for that work, but Network Rail is unfortunately preventing that crucial work from being carried out. I draw this case to the Minister’s attention because I suspect that it is not the only place in the country where there is a stand-off between the different agencies involved.
I have had meetings on site with representatives of Network Rail, but they have made it clear that in the event of works to replace the culvert overrunning, my local authority, East Devon District Council, could be liable for a fine of £4,000 per minute, which is clearly ridiculous and unaffordable. The theory behind that, presumably, is to ensure that the works are carried out quickly and efficiently so as not to disrupt train times, and I have sympathy with that, but how can a local, hard-pressed district council possibly authorise such a project to be undertaken if it incurs a potential liability of £4,000 a minute? That is the reality.
As I said, I suspect that that situation is not unique. Indeed, I can cite another example. In the neighbouring constituency of Tiverton and Honiton is the village of Feniton, and it is affected by the same problem. It would be interesting to know whether the Minister is aware of problems elsewhere in the country. It requires ministerial involvement at this stage. We have tried all the different agencies. We have brought them all together. We have come up with a resolution, but it is impossible for my constituents to be exposed in this way to flooding that will happen time and again until the situation in Whimple is addressed.
Will the Minister please look at this particular situation again and, if necessary, bring all the interested parties together, including Network Rail, the local authority, the Environment Agency and anyone else she wishes to finally resolve this situation? I know that my neighbour, my hon. Friend the Member for Tiverton and Honiton (Neil Parish), who is in his place, would very much welcome a meeting with the Minister, if we can have one, to hear how the situations in Whimple and in Feniton, which I know he cares so desperately about, can be resolved.
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Dr Thérèse Coffey)
It is a pleasure to serve under your chairmanship, Mr Pritchard. I congratulate my hon. Friend the Member for Bridgwater and West Somerset (Mr Liddell-Grainger) on securing this debate on the management of flood defence projects in the south-west. He has spoken passionately on behalf of his constituents and the wider area. I note with concern his comments on Taunton Deane Borough Council and his long-standing concerns about its performance in regard to flooding. I also note his other specific concerns about possible sites for development. I am sure those words will have been heard clearly in Taunton Deane. He will understand that I am not going to take direct action, but I am sure that in moving forward, those concerns will be taken on board.
My hon. Friend may not be aware of this, but I hope he will join me in acknowledging the dedicated work of the Environment Agency’s flood and coastal risk manager for Wessex, Nick Lyness, who sadly passed away last month. Nick worked for the Environment Agency and its predecessors for more than 30 years. In that time he made a huge impact in helping to better protect the country from flooding. Nick had a personal hand in the Somerset flood action plan. He never lost sight of the fact that we are here to serve the communities and to ensure that we make things safer and better for them. Thousands of people have benefited from his tireless work even though they may not realise it. I am sure that those present today would also like to acknowledge the commitment that Nick made to the management of flood risk in the south-west.
I am aware of the impact that flooding can have on a community. I have supported my constituents in Suffolk following flooding in recent years. My hon. Friend has already acknowledged that I am absolutely committed to reducing the threat of flood risk. He will know that the Government continue to play a key role in improving protection for those at risk of flooding. We are investing £2.5 billion in more than 1,500 flood defences to better protect the country from flooding. That will protect more than 300,000 homes by 2021. We have increased maintenance spending in real terms over this Parliament to more than £l billion.
In the south-west of the country, the Government spent £169 million in the previous Parliament, providing better protection to more than 15,000 homes. Within our current programme of work to 2021, we are investing £176 million, which will provide better protection to more than 26,000 additional homes. I recently saw some of that good work on a visit to Exeter last December, where a new flood defence scheme is being constructed. It will provide better protection for more than 3,000 homes, and includes Government investment of more than £24 million.
My hon. Friend’s constituency is made up of a diverse range of watercourses and coastline, from the fast-flowing rivers and streams that start on Exmoor and in the Quantock hills, to the tidal River Parrett, which makes its way up to the Somerset levels, and the long length of coast from Porlock to the Steart peninsula. As he said, there is a history of flooding in the constituency, including the devastating flood that took place nearby in 1952, when 34 people lost their lives at Lynmouth and a further 420 were made homeless, and the more recent coastal flood in Minehead, in 1990. Everyone is particularly aware of what happened in the winter of 2013-14, when communities on the levels experienced widespread flooding, particularly within the Parrett and Tone river catchments. The Environment Agency estimates that there were 100 million cubic metres of floodwater covering an area of 65 square kilometres.
Following those floods, the Government provided more than £20 million to support actions in the Somerset flood action plan, which included the need for a new locally funded body to bring local flood risk management bodies together to work in partnership and undertake additional flood risk management work. The Somerset Rivers Authority was established in January 2015, bringing together partners to give real control over flood risk in the area. Supported by £1.9 million of start-up funding, the local authorities in Somerset were given the ability to continue to fund the SRA through additional council tax flexibility. We are working with the SRA on its long-term funding arrangements; my hon. Friend knows that I am working hard to make sure that, when parliamentary time allows, we will progress that legislation.
Some of the work that has already been led and carried out by the Environment Agency on behalf of the Somerset Rivers Authority includes improvements to the resilience and operation of both Northmoor and Saltmoor pumping stations and the preparation of an outline design to improve the capacity and flow of the King’s Sedgemoor Drain and the River Sowy, which will help to alleviate the pressure on the River Parrett and across the levels. A project that finished last autumn, adding two new culverts and weirs at Beer Wall, allows for better management of flood levels.
My hon. Friend will be pleased to know that in the last Parliament, the Government invested £25 million in protecting homes. The current planned investment up to 2021 is more than £17 million. The regional flood and coastal committee, which has a majority of local authority members, decides the schemes to prioritise, making local choices and agreeing the final programme, which allows for local input into decisions on where investment should be prioritised.
I want to point out that there have been several other investments, including the Steart managed realignment scheme, the Cannington Outfalls project, the King’s Sedgemoor Drain and planned investment in the Parrett Estuary Cannington Bends project, the Cannington flood defence scheme, and the Curry Moor reservoir. The Environment Agency has also been making good progress looking at the different options for a potential tidal barrier on the River Parrett near Bridgwater. Local consultation has taken place with stakeholders. Once a preferred option has been chosen, public consultation is expected to start this spring. A barrier would help to ensure that Bridgwater is better protected from the tidal influences of the River Parrett. If the business case gains final approval, it is expected that the barrier will be constructed and in operation by the summer of 2024. We forecast that, if the business case allows, our investment will be £25 million. I hope my hon. Friend is assured that we take his constituency very seriously.
It is also right to point out that the Environment Agency has successfully implemented some natural flood management measures on the National Trust’s Holnicote estate within the Horner Water and River Aller catchments of my hon. Friend’s constituency. It is also supporting the Hills to Levels partnership project, which is endorsed by the Somerset Rivers Authority, the Royal Bath and West of England Society and led by the south-west’s farming and wildlife advisory group. That project is considering the potential for natural flood management measures to slow the flow in some of the tributary catchments of the Rivers Parrett and Tone and west Somerset rivers and will be delivered over the next four years.
New flood defences only form part of the picture for the management of flood risk and the flood action plan for the Somerset moors and levels and dredging has happened along the Rivers Parrett and Tone. In 2016, the Environment Agency dredged a further section of the River Parrett on behalf of the SRA. As a consequence, since 2015, 99 km or 60 miles of desilting was carried out in Somerset by the Environment Agency, jointly with the SRA and the all-important internal drainage board. Although dredging assists in providing some additional relief from high river flows, it is not a solution in its own right and will always be considered carefully with other elements.
I am pleased to see the hon. Member for Falkirk (John Mc Nally) here and am grateful for his interest with regards to work on protection. On the national flood resilience review, it is worth setting out on the record that we continue to follow up on the actions of that review—we were certainly better prepared over this winter to deal with the risks. We continue to invest in mobile flood defences and pumps. As has already been said, 1,200 troops have been on standby if councils need their help, and they were recently deployed in Lincolnshire and Norfolk.
With regard to Bridgwater and West Somerset, the Environment Agency has undertaken a robust assessment of the locations that are suitable for using temporary barriers. It assessed the practical implications such as road closures and flood risk benefit as well as ensuring that they do not make the flood worse. A temporary defence deployment plan is currently being prepared for Croscombe, which was hit by flooding recently.
A key part of the national flood resilience review was having infrastructure providers reviewing the resilience of their key assets. They identified and protected their assets with temporary defences this winter while longer-term solutions are implemented. We have also continued to work with the private sector to develop a new flood resilience action plan, which illustrates to homeowners and business owners some straightforward measures they can take to improve the resilience of their property to flooding, as well as enabling them to get back in far more quickly if they are unfortunately flooded. Those can be simple measures, such as air-brick covers, or more substantial works, such as installing a pump, having solid floors or installing wiring so that plug sockets are higher up the wall.
My right hon. Friend the Member for East Devon (Sir Hugo Swire) referred to the situation in Whimple in his constituency. I understand that he met representatives from Network Rail and the Environment Agency last summer to discuss the issues. I am aware that the project currently under consideration is eligible for £600,000 of Government investment under the partnership funding policy. There is currently a shortfall, which will be required to be secured. I note that the regional flood and coastal committee has provisionally offered to help with a contribution of about a third of that amount from their local levy fund, and I am sure that he will continue to work with local partners to raise the additional funding required.
My right hon. Friend referred to a specific issue with the railway line and the discussions with Network Rail. I will ask the rail Minister to look into this matter with Network Rail. I have been advised that if the construction method chosen avoids the need for a track closure, the threat of the fines is no longer there. I recognise, however—as many of us who deal with Network Rail will do—the challenges of what we think of as common sense getting tied up in bureaucracy. I assure my right hon. Friend that I will refer the matter to the appropriate Minister, who I believe will be able to cut through some of the evident red tape.
This has been a very useful debate to consider the particular situation in the south-west and especially in this very special part of Somerset. I hope I have been able to show my hon. Friend the Member for Bridgwater and West Somerset that plans are under way to address flooding issues. I thank him for his praise of the Environment Agency. I recognise and agree that it is a different beast from what it was several years ago, when I first became an MP. A lot of that has to do with local leadership, which will now sadly be lacking due to Nick’s unfortunate death, but it also stems from the leadership of Sir James Bevan and his team, including people such as John Curtin, in addressing the issue.
Sir Hugo Swire
The Minister has made my point for me. I was going to praise the new chief executive, the former high commissioner to Delhi in India, Sir James Bevan, who has brought a fresh attitude to the Environment Agency.
Dr Coffey
That is why the Government are standing behind the Environment Agency. Although the Select Committee on Environment, Food and Rural Affairs did not entirely welcome our response, I believe that when there is good leadership getting on with the job, disruptive change is unnecessary when we are trying to do our best to protect more homes and more residents, especially when my hon. Friend the Member for Bridgwater and West Somerset recites examples of where he feels that local action could be better than it is and impacts on his own constituency. I assure him that the Environment Agency will continue to work with him and hon. Members from all parties to reduce flood risk and to work collaboratively to help deliver projects in the area.
Question put and agreed to.
Armed Forces Recruitment: Under-18s
(7 years, 9 months ago)
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Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
I beg to move,
That this House has considered recruitment of under-18s into the armed forces.
It is a pleasure to serve under your chairmanship, Mr Pritchard. This is an emotive and controversial issue, and I recognise the strength of feeling on both sides of the debate. For that reason, I will preface our discussion by saying that I want this to be the beginning of a dialogue on which we can build consensus and uncover the rational facts that should underpin any good policy.
Fundamentally, I sought the debate because I am concerned about the welfare of young people who join the armed forces—in particular, the Army. I have a professional background of more than 20 years of working in the education of young people aged between 14 and 19. The last group I taught were taking level 2 public services at Coleg Menai, many of whom had their sights set on joining the Army. I wish them all the best in their chosen career.
Some of my colleagues appear to believe that any questioning of the armed forces or Ministry of Defence policy is somehow an attack on the institution as a whole, so I would like to emphasise that nothing could be further from the truth. It is not attacking the Army to express the desire that soldiers be treated well and fairly, and that their short and long-term welfare be considered priorities in the recruitment and training process. I do not believe it is a threat to national security to seek the highest standards of welfare and educational attainment for all young people in this country. As we can see all too clearly in the world today, it is essential for the healthy functioning of a true democracy that Government institutions and the policies they make are continually exposed to scrutiny and challenge.
The purpose of the debate is to seek answers from the MOD regarding numerous concerns about the recruitment of young people under the age of 18 to the armed forces and to press for a thorough and independent review. Dozens of religious, military, legal and policy organisations, alongside unions and trusted military professionals, have expressed concerns about this policy. They include the Select Committee on Defence, the Joint Committee on Human Rights, the United Nations Committee on the Rights of the Child, the Children’s Commissioners for all four nations of the UK, the Equality and Human Rights Commission, UNICEF and many more. They seek to ensure the same fundamental standards of welfare and protection that are taken for granted for that age group in any other sphere of life, but the MOD has not yet provided a detailed response to assuage those concerns.
We have heard from the MOD many general assertions about the wider benefits to the individual and society as a whole of early enlistment, anecdotes about individual recruits who have achieved remarkable things, and apocryphal stories about the lad who would have been dead or in prison if he had not joined the Army at 16. We have also heard from many senior Members of the House about their own happy experience of military service—sometimes decades ago, sometimes more recently. Although I respect the insights drawn from the personal experience of many Members, possibly including some in this Chamber, the plural of anecdote is not facts. I and many others want to hear from the MOD hard, objective, empirical evidence and analysis that demonstrates a carefully thought through policy, taking into account both the recruitment requirement of the armed forces and the welfare of those who enlist.
The UK is unique in the developed world in enlisting 16-year-olds into its armed forces. That is not standard practice, it is not a necessity, and it is not a policy shared by our military allies and peers. It does not make me proud to say that our colleagues in this matter are North Korea and Iran.
George Kerevan (East Lothian) (SNP)
Am I correct in saying that the UK is the only NATO member that recruits at the age of 16?
Liz Saville Roberts
It is my understanding that we are indeed the only NATO member and the only standing member of the UN Security Council to do so.
This is a well-rehearsed argument—forgive me—but it is worth reminding the House that 16-year-olds cannot buy a kitchen knife in a shop, although they can be taught to kill with a bayonet. They can enlist and train in the Army, but the law states that they cannot play “Call of Duty” on an Xbox or watch the Channel 5 documentary series “Raw Recruits: Squaddies at 16”. To watch it online, they would have to tick a box to confirm they were over 18. If it were not so serious, it would be laughable.
Our respect for the armed forces as an institution and for the individuals who represent it makes it easy to treat the institution as beyond question, but I propose strongly that that is dangerous and wrong. There has been no thorough review of the enlistment of minors since at least the time of Deepcut, and I hope today that we can restart that conversation to ensure the welfare of our soldiers and young people across the country.
On the matter of education, I am sure we agree that the educational opportunities that we afford our young people must aim to achieve a common baseline, no matter what their background. The armed forces are, however, exempt from the Department for Education’s standard minimum target for all 16 to 18-year-olds of GCSEs in English and maths at grade C or above. I hope the Minister will be able to explain why our young recruits are not provided with those qualifications, which are deemed essential by all educational employment experts.
The MOD claims that the qualifications it offers—functional skills for numeracy and literacy—are equivalent to GCSEs, but they have been labelled as suffering from major and fundamental flaws by the Department for Education’s own expert review of vocational education, the Professor Wolf report. That finding holds true for all young people, including those who are not academically inclined in any traditional sense and are pursuing vocational, rather than academic, education. I am sure my colleagues agree that young soldiers deserve, as a very minimum, the same educational opportunities as their civilian friends, and certainly nothing less.
The MOD frequently refers to the apprenticeships that young recruits undertake, but closer examination of the curriculum and the content of those courses reveals that, although those apprenticeships may be excellent training for a military career, they are of little value for future civilian employment. Let us bear it in mind that soldiers may be with the infantry until their early 30s, but those young people will need to find work until they are 67, so they need those skills for their long-term welfare.
Those courses consist of modules such as “Tactical advance across battlefield” and “Use of light weaponry”. Young veterans have repeatedly stated that those qualifications were effectively useless in finding employment after they were discharged. That has been borne out repeatedly by Royal British Legion studies on unemployment among ex-service personnel, which show that young veterans are significantly more likely to be unemployed than their civilian peers, and that the lack of qualifications and skills that are transferrable to civilian life is a major factor in that. I hope the Minister will explain how young veterans, the majority of whom are trained for combat roles, not technical ones, can use those highly specialised military skills in future civilian employment.
The MOD has frequently asserted that the Army provides a constructive alternative to young people who otherwise would not be in employment, education or training, or worse. That is an appealing argument, and it would be quite persuasive if there were robust data to support it, but researchers working on my behalf have found none. I regret to say that MOD data indicate quite the opposite.
Tommy Sheppard (Edinburgh East) (SNP)
Does the hon. Lady agree that one of the problems appears to be that if the Army recruits at 16, it does not have access to the complete pool of 16-year-olds? In fact, there is now a presumption in public policy that education and training should continue beyond 16 to 18. Therefore, the only people available for recruitment at 16 are, to put it mildly, the ones the system has left behind. That gives rise to statistics such as the fact that three quarters of 16-year-old recruits have a reading age of 11 or less. Does that concern her?
Liz Saville Roberts
It does concern me. I would like to emphasise the long-term welfare of those young men and women, who need to be equipped to leave the armed forces. If they are serving their country, it is our duty to equip them as well as we can with the skills they will need in future life. They may well be working until they are 67, so literacy and numeracy skills are particularly important to that cohort, which I have taught.
More than a third of under-18 recruits drop out of initial training, and 40% of infantry soldiers who enlisted under the age of 18 are discharged within four years as early service leavers. Having left education early to enlist and without having achieved GCSEs in the Army, those young ex-service personnel will be significantly less qualified than their civilian peers and at increased risk of long-term unemployment and social exclusion.
Such findings are again borne out not by anecdotes, but by British Legion studies. According to a major 2012 study of education in the Army by the Department for Business, Innovation and Skills, recruits who enlisted at a young age and who had previously been excluded from school were more likely to drop out of the Army than those with a more positive academic record. The same BIS study showed that 48% of recruits who trained at Army Foundation College Harrogate, the junior entry training site, had left the Army within four years.
Without doubt, individual positive anecdotes exist and will always inspire, but there is scant evidence that, as a rule, the Army can turn around young people who have not engaged well at school. Will the Minister provide any data to support the hypothesis that enlisting disadvantaged adolescents in the Army is an effective way to secure their long-term engagement in education and employment? Will he provide any analysis of how cost-effective that strategy is in comparison with, for example, greater investment in specialised education and social-support services for at-risk young people? We have other institutions such as further education colleges and other training centres to help those young people, who may as well be in the cadets at the same time as receiving a decent education to equip them for future life.
On combat roles and the channelling of the youngest recruits into the most dangerous roles, I intended to discuss the MOD policy to seek under-18s “particularly for the infantry”, which has the highest fatality and injury rate of any major branch of the Army. In the interests of time, however, I simply ask the Minister to explain on what basis his Department decided to restrict the choice of roles for the youngest recruits to frontline combat roles only, rather than giving them the opportunity to enlist in the full range of technical roles.
Following a damning report in October last year by medical charity Medact, I want also to touch briefly on the long-term health impacts on young people recruited under the age of 18. The report revealed such recruits to be more vulnerable to post-traumatic stress disorder, alcohol abuse, self-harm and suicide. There is a 64% increased risk of suicide among men under the age of 20 in the Army as compared with the wider population.
Many in the House and in the country are deeply proud of the armed forces and supportive of the institution as a whole. We would be failing in our duties, however, were we not to hold up their policies to scrutiny. The overwhelming majority of nations worldwide enlist from the age of 18 or above. Welbeck College in Loughborough provides an outstanding residential sixth-form college that, without the burden of formal enlistment before 18, educates young people intending to pursue a military career, with evident advantages to the students and to the institution.
I hope that the debate will open the door to a fruitful, frank and detailed discussion of how improvements can be made to policy. It is not in the interests of young people or of the Army to continue assuming that the status quo is the best possible model without a thorough examination of the evidence and consideration of alternatives.
Only 52% of the population voted to leave the European Union, but today Parliament is acting on it. In 2014, according to a nationwide Ipsos MORI poll, 77% of respondents who expressed a view supported raising the minimum enlistment age to 18 or above. Will the Minister respect the wishes of the population and the recommendations of child rights, health and education experts, and commit to a thorough independent review of policy?
Mrs Anne-Marie Trevelyan (Berwick-upon-Tweed) (Con)
I thank the hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) for bringing this important debate to the House. The Minister is probably having a moment of fear that, because I am standing up to speak on military matters, I might not be entirely in support of Government policy, but he could be no further from the truth. I am an advocate of the armed forces covenant as a real and engaged process throughout our nation.
Recruitment to and training of our young people in the armed forces from the age of 16 can be a hugely positive experience, as the hon. Lady mentioned, and we do it very well and in a variety of ways. In my constituency, the Military Academy at the Kirkley Hall campus of Northumberland College was set up precisely for those young people whom the hon. Lady was thinking of. They not only were in vulnerable family environments and have not been able to make best use of their previous schooling environments, but were not even capable of living the sort of disciplined and ordinary life that joining the Army might provide. The Military Academy has, however, created a framework in which those young people who wish to participate in society and have an interest in the armed forces can develop those basic skills of discipline, leadership, teamwork, communications and personal self-motivation to understand what decisive thinking and such skills can mean for building them up as individuals.
Liz Saville Roberts
Does the hon. Lady not share my concern that basic literacy and numeracy skills are what we need to equip young people with for their lives as adults? Functional skills as a curriculum method does not appear to be sufficient. It was described by Professor Wolf as “fundamentally flawed”.
Mrs Trevelyan
The reality is that school has failed for some young people, and their literacy and numeracy skills are not where we would like them to be—they have not been able to benefit from such a development.
For example, one of my caseworkers spent 25 years in the Army and is now running my association office in Berwick. He left school at 15 functionally illiterate. He was severely dyslexic and throughout his school career he had been told that he was thick, useless and pretty much not good for anything. He joined the Army and within one week it was clear that he was none of those things, but simply dyslexic. That was some time ago, so I hope we are even better now with young people coming into the Army—perhaps the Minister will confirm that.
That new recruit was given intensive tuition to assist his literacy, which improved dramatically, as so often with dyslexic children who need a different way of learning, and he had a fulfilling career in the Army. He represents one of those anecdotes to which the hon. Member for Dwyfor Meirionnydd referred. We need to understand that those young people who choose to join the Army early in their lives, after leaving school where they have often had a poor experience, want to be doing something positive. The framework offered by the armed forces provides that opportunity.
The Medact report to which the hon. Lady referred is clear that 16-year-olds are not exactly being press ganged into our armed forces. After they have spent six weeks on the initial training course, young people may step off. After up to six months, they may again step off, if they feel that that career option is not right for them. Also, up to their 18th birthday, they may step off with three months’ notice. That is pretty similar to an employment framework that one might find after taking a job in a supermarket or on the factory floor. The implication that young people are somehow sucked into the armed forces against their will and cannot develop is wholly unfair to the armed forces and the incredible work of the training programme.
Liz Saville Roberts
I am a little surprised that the hon. Lady has not referred to parental consent, which is necessary under the age of 18. Does she share my concern that once parental consent has been given, parents have no right to revoke it?
Mrs Trevelyan
I am sure the Minister will be able to confirm such details, but a 16-year-old who chooses to leave school and go into employment and training elsewhere is still in charge of their own destiny. I am the mother of an about-to-be-16-year-old and an 18-year-old, and if they choose to step into the workplace, that would be their commitment to take on the responsibilities of adult life. Having supported them to make whatever their choice was, I would be very comfortable with them continuing with their choice. That is what growing up and taking adult decisions is all about.
Those under 18 cannot go out and serve in frontline roles, as was mentioned earlier, but they can participate in what we call national resilience activities. Over the past few years when we have had flooding problems in the north-east, on a number of occasions I have met some really energised and enthusiastic young men and women helping out with the flood defence crises, both in Morpeth in my patch and over in Cumbria. That highlights the many good qualities that joining the armed forces can give to young people—that sense of belonging and of learning to work in a team, which they so often have not had in their own lives.
The report highlights the statistical imbalance in post-traumatic stress disorder and other mental health problems for those who have joined young and come out the other side, but that is a chicken-and-egg argument.
Tommy Sheppard
The hon. Lady makes quite a compelling case about the benefits of early recruitment for 16 and 17-year-olds themselves, some of whom, as I said, may well have been let down by the system elsewhere. I do not choose to dispute any of her examples of those benefits, but I worry about whether that is the Army’s proper role or, in fact, a distraction from providing a good and efficient security service. If the Army waited until those individuals were 18 and other agencies had had the opportunity to try to improve their lot, it might recruit much better and more able people.
Mrs Trevelyan
The hon. Gentleman suggests that because some people might join at 16, others would not join at 18. One does not negate the other. The Army in particular offers young men and women who do not want to be in the education system any more because they found that it failed them—perhaps because they had poor teachers or they have dyslexia, or perhaps due to other issues—a framework within which they can really develop and thrive. I absolutely agree with the hon. Member for Dwyfor Meirionnydd that we need to ensure the welfare of those young people and that the covenant supports them as they develop skills in what can be a demanding and stretching environment, but that is part of the challenge, and so many of them really take that up.
I turn to the mental health issues of people who come out of the Army, who so often joined up early. There is a lot of work going on in that field, which I am involved with. Those young people would probably have been unable to find secure long-term employment had they fallen out of school and become NEET; they would have struggled through the system. They had the opportunity to take up an extraordinary career. I have the most enormous respect for anyone who joins the armed forces. It is a choice. To defend our nation and be part of a team of people who will put themselves in harm’s way to protect us and our families is an extraordinary thing to do. We must always bear that in mind.
I was interested in the report by Medact, which promotes disarmament and the abolition of nuclear weapons more broadly. I know quite a lot about that—my father was the leading journalist and specialist in the area in the 1960s, so it is a subject that I grew up with—but we cannot just wipe everything away and say, “Let’s no longer have armed forces. We want the world to be a happy and peaceful place.” I can think of nothing I would like more, but the reality is that we need robust and resilient armed forces, and we have some of the best in the world. Those young men and women, who join earlier than people who go to university and therefore come out of education at higher levels, do so because that brings them the opportunity to be part of a team that they can be proud of, and we can be proud of them.
Jim Shannon (Strangford) (DUP)
It is a pleasure to speak in this debate. I congratulate—this will be my first expedition into Welsh—the hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts), who put forward a good case. I spoke to her before the debate, and she knows where I am coming from; my opinion is similar to that of the hon. Member for Berwick-upon-Tweed (Mrs Trevelyan). Although the hon. Member for Dwyfor Meirionnydd clearly set the scene for the issues that she wishes the Minister to respond to, I will give a slightly different opinion about where we are. However, I concur with her request for an uplift in education. I have absolutely no doubt that the Minister, who has a special interest in the issue, will respond with positive steps for the way forward.
I joined the Ulster Defence Regiment at 18 and served in it for three years. I then joined the Royal Artillery in the Territorial Army, which I served in for 11 and a half years. I believe that that helped to shape and mould me as a man. Whether that is to everyone’s liking only the people can answer, but they elected me twice, so I suspect that they like what they see.
The Minister for the Armed Forces (Mike Penning)
I apologise for interrupting the hon. Gentleman, but I think it should be clarified for others in the room that people could not join the Ulster Defence Regiment before the age of 18, because it was always on operations. We should perhaps pay tribute to it for that.
Jim Shannon
I thank the Minister, who is knowledgeable about this subject.
I am the Democratic Unionist party’s representative at Westminster for the Cadet Force. I am proud to hail from Strangford, which has a proud and strong record of military service, including in the Special Air Service—Blair “Paddy” Mayne was born and bred in the constituency’s main town, Newtownards. With that in mind, hon. Members may be able to see where my comments are leading. Joining the armed forces is a vocation, not simply a career. A career does not demand of people what is expected of our soldiers, sailors and Air Force personnel; a vocation does. That calling is felt from a young age. I will give three examples of people who joined at an early age and excelled greatly in their choice of service.
A young lady from my area went to the Army-run youth camp at the age of 15 and on her return decided to join the Army, which she did at 16. She trained up and has completed three tours, some of them in conflict areas. She is now a sergeant. She met and married her husband, who is also a sergeant and lives here on the mainland serving Queen and country. Michelle’s family are so proud of her, as indeed we all are. She was equipped for her life as it is now by the life that she had in the Army at an early age. I know her, so I say that in all honesty.
A young lad from my area was the youngest person ever to be wounded in action on duty in Afghanistan. He was only 18 on his first tour, and he had joined the cadets as a young boy. I had the privilege of meeting him again at the remembrance service just across the road at Westminster Abbey in November last year. He had recuperated quickly from his injury and was raring to get back into uniform. He is no longer a boy; he is now a young man, and he is maturing greatly. I laid the wreath on behalf of the DUP, and it was an honour to see that lovely young fella, who was made in the British Army. The Army has moulded him well, and his family life has been exemplary, too.
The list is endless, but we must also note young Channing Day, who gave her life for Queen and country in the Medical Corps, as the Minister and other Members who were in the House back in 2010 will know. Those of us who know that family know that she always wanted to be in the Army. She was a cadet from a very early age, joined the Medical Corps and served her Queen and country. Her family and her town of Comber were inspired by her.
Although those young adults are indeed young, they have a passion and should be allowed to follow that passion. Let me make it quite clear, by the way, that I understand that the hon. Member for Dwyfor Meirionnydd does not say that they should not. She says that their qualifications and education standards must be lifted, and I am sure that the Minister will respond to that point. I remind Members that there is protection to ensure that young people cannot be sent on tours until they turn 18. To me, that means they have an additional two years’ training to ensure that they are safe and secure in what they do and how they do it.
The major issue is the length of the contract that young people sign, which can last until they turn 22. If they join at 16, that is six years, which is a major commitment. That is a massive concern for people who are so young, but I remind the House that for under-18s in the Army and everyone in the Navy and Air Force, the discharge as of right period is between 28 days and six months of service. After those six months are over, an unhappy junior in the armed forces may be discharged at the discretion of their commanding officer. There are several stages at which someone can get out if they so wish. I believe that that discretion is applied as needed, and I understand that the Army in particular tightly controls, monitors and regulates it. If there are issues to address, those must be addressed.
Some 2,180 under-18s were serving in the armed forces in October last year, of whom 170 were female and the other 2,010 were male. Those are people who made the choice to join at a young age, and I believe that that should be encouraged and allowed. The MOD also has apprenticeships, which the Minister no doubt will deal with, too. Those enable young people who join the services at an early age to achieve good educational standards, which is important, and then go beyond uniform into civilian life, as many do. We all know of those who have come through the cadets, gone into the Army at an early stage, served in uniform for a great many years and are now retired.
I understand the argument that no other UN member allows under-18s to join the armed forces, but we lead the way and should not be ashamed of that. We lead the way on many fronts, and there is a reason our armed forces are the best in the world. The US army, which is perhaps the second greatest army in the world after ours, allows recruitment at 17 with parental consent; we are not alone in allowing under-18s to join. And this is not child labour; it is training.
The ability to leave should be protected, but the young people whom I know personally in my constituency are glad that they had the option to join. Other young people should be allowed to make a career and serve Queen and country. I understand fully what the hon. Member for Dwyfor Meirionnydd is putting forward, but I think it is important that we recognise the benefits to those who join at an early age and what they can do. I have mentioned just three of them—there are many more—and they have been exemplary. They have done well, and the Army has helped to build them as people.
Several hon. Members rose—
Mark Pritchard (in the Chair)
Order. Let me provide guidance for Members. We have two speakers left, and I want the winding-up speeches to start at about seven or eight minutes past 5, so it is up to Scottish National party colleagues to share the remaining minutes if they wish to do so.
Steven Paterson (Stirling) (SNP)
I am grateful for the chance to speak and to serve under your chairmanship, Mr Pritchard. The SNP’s position is that we recognise persons who have reached the age of 16 as old enough to leave school, marry, work and pay tax, and, despite scepticism from the other parties in Scotland before the independence referendum, we believe and have long believed that they have the right to vote as well. I am glad to say that we have won over the doubters on that particular campaign and I look forward to that example being followed down here.
Fundamentally, the SNP position on this issue reflects our ambition to empower young people—to trust them with responsibility in these areas and trust that they will take that responsibility seriously. It also reflects the legal position in Scotland under the Age of Legal Capacity (Scotland) Act 1991, which determines that a person has full legal capacity from the age of 16. For those reasons, my party backs the current position on recruitment age for the armed forces for those who are 16 or 17 and choose to serve their country.
The minimum age at which an individual can enlist is set down in the Armed Forces (Enlistment) Regulations 2009. In summary, the current MOD policy is that service personnel under 18 are not deployed on operations outside the UK, except where the operation does not involve personnel becoming engaged in or exposed to hostilities. Humanitarian operations, for example, might qualify. In addition, in line with current UN policy, service personnel under 18 are not deployed on UN peacekeeping operations. As has been mentioned, age restrictions also apply when it comes to Northern Ireland.
It is important that there is recognition that a special duty of care is owed to under-18s who choose to serve in the armed forces—not because they are not old enough to make that decision and take that action, but because inevitably they have less experience in the world of work and in life.
Mike Penning
I do not want the hon. Gentleman to mislead the House unintentionally and I may have misled him. The only unit in Northern Ireland that could not do what we are discussing—it has been disbanded now—was the Ulster Defence Regiment, because it was permanently on operations. There are recruits of 16 and over from Northern Ireland serving in the armed forces today.
Steven Paterson
I am grateful for that clarification—I am skipping through my speech rather quickly, because I do not have the time that I thought I would have.
As I was saying, we have a special duty of care to these young people because of their lack of experience of work and of life in general. Whenever that has been discussed in Parliament before, Ministers have been very clear that they accept that and that safeguards are in place.
I can attest to the excellence of the practice that I witnessed in this area when I visited RAF Halton last year. I was able to meet young recruits, hear about their experiences in initial recruit training and see them being put through their paces by the officers. The recruits were developing a range of practical and problem-solving skills that were no doubt essential for the career in the Royal Air Force that they hoped to pursue, but also transferable skills that could assist employers in other sectors in the future. My visit to RAF Halton and particularly the conversations with those recruits were a very positive experience. I am assured that the welfare of our youngest recruits is taken very seriously.
A number of safeguards are built into the recruitment process for 16 and 17-year-olds. First, parents and guardians are positively encouraged—in fact, required—to be part of that process, and their consent is sought. Once accepted into service, under-18s have the right of automatic discharge at any time until their 18th birthday. It is not in the interests of either the armed forces or the individuals themselves for people to be there if they do not want to be. I welcome the provisions allowing for early discharge if that is appropriate.
MOD policy is not to deploy personnel under 18 on operations. That is absolutely correct. Service personnel under 18 are not deployed on any operation outside the UK, except where the operation does not involve their becoming engaged in or exposed to hostilities. However, there is a recommendation, I think, that has not been actioned since the 2005 report of the Defence Committee, on armed guard duty. Perhaps that is something we could look at again. My understanding is that that is still allowable.
Finally, I will offer a few thoughts on the Medact report “The Recruitment of Children by the UK Armed Forces: a critique from health professionals”. For the reasons that I have outlined I do not agree with the use of the word “children”. We have taken a decision as a country—certainly in Scotland and, I think, down here too—that 16 is the age at which we consider young people to have moved from adolescence to adulthood. If that is the case, I would argue that it should apply across the board. We choose to draw that arbitrary line at 16. However, it is entirely right that we should ensure that there are safeguards for those for whom the armed forces are not the right choice, or who may not be ready at 16 or 17, and that those safeguards should be taken seriously by commanding officers. That was my experience from visiting the RAF base.
I am open, however, to considering whether more can be done to improve the duty of care for under-18s—I have already mentioned guard duty. I am also open to any review that looks at educational attainment, as has been alluded to. Where we can demonstrate that better outcomes could be achieved, we must build on what there is, and make sure that those outcomes are realised. I would also welcome further consideration of the messages that the Ministry of Defence uses in recruitment drives, so that in addition to the many positive opportunities offered by the armed forces, the reality of the danger that serving can entail is clear and understood. It is because of the danger that members of the armed forces put themselves into on our behalf that we owe them the respect and gratitude that they have from us.
Mark Pritchard (in the Chair)
Order. Ronnie Cowan has 30 seconds. I will then call the Front-Bench speakers, which allows five minutes for the Scottish National party, five minutes for the Labour party, and 10 minutes for the Government.
Mark Pritchard (in the Chair)
Order. Please resume your seat. I advised the hon. Gentleman’s colleague that if he wanted to split the remaining minutes he could; clearly he had a different view. There are now 10 seconds remaining.
Ronnie Cowan
Let us be clear: the SNP supports 16 and 17-year-olds getting a vote and my view is quite simple. Sixteen and 17-year-olds—
Mark Pritchard (in the Chair)
Order. Mr Sheppard, I do not expect any backchat from you. You intervened twice in the debate; you have had your say. I said to the hon. Gentlemen that they could split the time between them. Mr Paterson chose to give a longer speech than perhaps Mr Cowan would have liked, but that was his decision and their decision. Do not question the Chair, or you might not catch my eye next time. The SNP have had their say.
Kirsten Oswald (East Renfrewshire) (SNP)
It is a pleasure to be here to discuss this important topic under your chairmanship, Mr Pritchard. I must thank the hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) for bringing the matter to the House. We have a great deal in common in many of our positions—and that is largely so in the present case, although perhaps not entirely.
I was struck by the focus on the duty of care that came through in all the speeches today. I think that all hon. Members, whether they spoke or not, will have reflected on that particularly. We might want also to reflect on the points made by my hon. Friend the Member for Stirling (Steven Paterson) about how serious the decision to join the armed forces is for anyone. I agree with the hon. Member for Dwyfor Meirionnydd about the need for transparency, facts and education, which the hon. Member for Berwick-upon-Tweed (Mrs Trevelyan) also touched on.
It is important that we should fully consider how countries around the world recruit, in considering that issue. Of course there are different approaches and age thresholds. Some countries conscript and some do not. I am glad that we do not. From my alphabetical list I think that the situation is somewhat more complex than we have heard; that is just from looking at Australia, Austria, Canada, Croatia and Cyprus at the beginning of the list. However, it is a mistake to focus too narrowly on that. As we have heard from my hon. Friend the Member for Stirling, at 16 people can vote, in Scotland; they can marry and pay tax, and make their own choices.
Kirsten Oswald
I am going to run through this, if I may.
It is particularly important for those under the age of 18 who choose to pursue a military career that we understand the impact on them. We have heard about the impact on young people from challenging backgrounds; that is important, and in considering it we should examine the entirety of those backgrounds. Young people should have the opportunity to choose as widely as possible as they move forward in their lives. For some people, joining the armed forces may be a positive choice. However, of course it is not the same as other jobs. It is therefore vital that full information is provided, that full discussions are had and that those are open, honest and transparent. For instance, it is vital that every opportunity is given for a recruit to change their mind and leave the forces. I know there have been many positive changes in recent years to allow people to leave more easily, particularly at that young age, which is hugely important. I would like to hear more from the Minister on that.
I would also like to hear from the Minister on what new measures he would propose to achieve greater post-service employment for young early-service leavers. The figures are not positive there, as I am sure he knows. I would also like to hear more from him on training, transferable skills and qualifications, because a recruit in the armed forces under 18 is essentially training, and it is important that we see that from that perspective.
As well as developing those skills, it is important to be clear on what under-18s must not be doing. They must not be deployed, and it is our position that there must not be any flexibility or room for manoeuvre on that. There cannot be any of the margin of error issues of the past; that would be quite unacceptable.
May we focus on welfare, which is the key issue I have heard today? That must be a key focus, because physical and mental health and pastoral care-wise that could not be more important. I would be interested to hear more from the Minister on the review that my hon. Friend the Member for Dwyfor Meirionnydd referred to. What are its parameters, what is its aim and when will it report? In the interests of transparency and aspiring to make the best progress for young recruits, full detail on that would be welcome.
We support the continued ability for 16 and 17-year-olds to make this choice if that is an informed, positive and open choice. However, it must be based on transparency. There must be a culture of improvement, training and aspiration and an openness to ongoing discussion about how we do the best we can for all our young people.
Mark Pritchard (in the Chair)
I call the shadow Minister. You have five minutes.
Wayne David (Caerphilly) (Lab)
I thank the hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) for initiating this important debate. I have always had a positive attitude towards the recruitment of young people—16 and 17-year-olds—to the armed forces, and the Army in particular. I come from and represent a valleys community in south Wales, and I recognise only too well that many young people are drawn to the armed forces. By and large, they have a positive experience, which sets them up well for a future life in civvy street. However, as the hon. Lady rightly said, various concerns have been raised by a raft of organisations for some time—including recently—and it is only correct that we have a proper debate and dialogue about the appropriateness of such recruitment as we have in this country. I therefore look forward to the Minister’s response to the many points that have been raised.
It is a fact that the British armed forces recruit about 2,000 16 and 17-year olds each year, and 80% of them are recruited by the Army. I suggest it is significant that fewer than 20 countries throughout the world allow direct recruitment of 16 and 17-year-olds. The United Kingdom is the only member of the United Nations Security Council that does that, the only member of NATO that does that and the only member of the European Union that has such recruitment. It has been said that although the Ministry of Defence says that it wants 16 and 17-year-olds, particularly for the infantry, and although minors are no longer routinely deployed to war zones, over their military career they make a disproportionate contribution to frontline combat roles.
It is often said that recruits come from disadvantaged backgrounds, but it is not as straightforward as that. In fact, enlisting at 16 leads to a higher risk of unemployment because of the large drop-out rate among 16 and 17-year-olds. That is a fact. I also want to express concern about the relatively weak safeguards around parental consent. Yes, it is correct to say that recruits need the consent of their adults. However, I suggest that for such a big commitment as joining the armed forces at 16 or 17 there should be an obligation for a face-to-face meeting between the armed forces concerned and the parent whose consent has to be obtained. It is important to have that ongoing dialogue so that the parents, as well as the young person, are fully aware of what is being signed up to.
At a time of austerity, let it be said, this is also a very expensive way to recruit to the armed forces given the relatively high drop-out rate. This country is not that different from many other countries. I suggest that we have the same demographics as many other countries and the same factors apply to like-minded countries and the United Kingdom in terms of the pressures.
I also want to make this broader point. This Government, like all Governments in recent times, have a proud record of being steadfastly opposed to the deployment of child soldiers. That is a reprehensible practice that takes place in some countries, and this country has always been adamant and forthright in its condemnation of it. It has been suggested that the argument we put forward is weakened to some extent because we rely so heavily on 16 and 17-year-olds ourselves. Although I do not consider them to be children, they are nevertheless not fully fledged, mature adults. That is something we ought to be careful of.
My final point is that the Defence Committee prepared a very thorough report in 2005 that made a number of recommendations to the Ministry of Defence. Several of those recommendations have been acted upon, but others have not. I would like to know from the Minister precisely what the Government intend to do next to ensure that they fulfil their rhetorical commitment to improvement.
Mark Pritchard (in the Chair)
I call the Minister of State, who will close at 5.27 pm, which will allow the mover of the motion two minutes.
The Minister for the Armed Forces (Mike Penning)
As usual, it is a pleasure to serve under your chairmanship, Mr Pritchard. I know what it feels like to get stuck within the time—we have all been there—and why the hon. Member for Inverclyde (Ronnie Cowan) probably does not feel great. We are where we are, but we have all done that.
It is a pleasure to discuss this for many reasons, as I will explain, and to see the—near enough—wide support for the young servicemen and women. I understand the concerns, particularly following Deepcut, for those of us who are interested in the armed forces, as I have been for many years. Lessons had to be learned from the terrible situation out in Deepcut, but we must not in any way look at Deepcut as what is happening in 2017.
I absolutely agree with the hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) about facts, but we cannot get away from some anecdotes, and I will use some anecdotes and some facts. As the hon. Member for Strangford (Jim Shannon) said, someone can serve in the American armed forces at 17; at 17 and a day they can serve with their parents’ consent. It is not true to say that there are no young servicemen in other NATO countries—they are there.
It is also very important to look at some of the figures as to why the armed forces invest so much time and money in recruiting young adults. Probably one of the most obvious ones, which goes completely against some of the evidence given by the hon. Lady, is that of those who were under 18 on enlistment between 2007 and 2013, 60% made warrant officer level 1—senior NCO. That is 60% of those who came through. It is also not true to say that the majority, in percentage terms, are from the infantry, or even from the Army, because the numbers are different. We have to look at this in context. As of October ’16 there were 32,500 personnel in the Navy and 8% of them were former junior servicemen. In the Royal Air Force on the same date, there were 33,270 and 5%. In the Army it was 8.7%, because the Army is much larger and thus the proportion is different.
Let us have a bit of anecdote. In 1974, a young man of 16 had been told by his headmaster three or four years earlier that he was too dim to take his 11-plus. He struggled enormously at school and came from a socially and economically deprived area of London. His father and grandfather had served in the armed forces—most of my generation’s grandparents had served in the second world war—and he applied to go into the Army. He struggled educationally when he went for assessment at Sutton Coldfield, but got into the Army and went as a boy soldier to Pirbright.
At the time, there were junior leaders and apprentices, and junior guardsmen, as there were junior infantry in other units. At no time did that junior soldier do armed guard. At no time did he do anything different in military terms from when he was in the cadets. He went on the ranges and thoroughly enjoyed it and went on exercises and thoroughly enjoyed them. At 16, that young person who had been written off by society did the dispatch rider’s course and got a full motorbike licence. In civvy street, the age for a motorbike licence was 17, but at 17 he got a full car licence and was sent on a medic course—not just a first-aid course, but as a battlefield runner. He was still not available for operations, but was gathering skills.
Mike Penning
The hon. Lady interrupted many times and she can sum up at the end of the debate.
The young man was gaining life skills. He was not a great soldier and did not make huge rank, but he fell in love and left the Army after four years, which was the term for adult service, not boy’s service. At 18, he had to sign to stay in. His parents signed for him to go in early, and at 18 he went before his Adjutant, who gave him the option to leave the Army or to sign up for three, six or nine years. After four years, he fell in love and bought himself out of the military—people can opt to leave now—but did not settle and went back into the Royal Army Medical Corps. He went on several other courses, which subsequently helped him to get into the fire service when he left the armed forces. That person went on to be the MinAF—the Minister for the Armed Forces; the person standing here now.
The Army gave me a home, a trade, aspiration and a chance to get on in life after being written off. I have been on several journeys in my career, not least as a journalist here, and in the fire service. What was interesting was my welfare. Why did I struggle when I was in the armed forces? Like my hon. Friend the Member for Berwick-upon-Tweed (Mrs Trevelyan), I am dyslexic and it is not something I hide. When I was at the Department for Work and Pensions, I outed myself as dyslexic, but at no time when I was at school did anyone pick that up and say, “We know why you have problems; you have learning difficulties.” Within weeks of me joining a boy soldier, a Royal Army Education Corps officer picked it up, got me on the relevant courses and helped me to become a journalist here, a politician and the first MinAF from the ranks, which I am enormously proud of. The earlier we can train people with apprenticeships and the skills we need throughout our armed forces, the better, without a shadow of doubt. We can utilise that time for that person to feel fulfilled, aspirational and to get the skills—
Mike Penning
No, I will not give way. The hon. Lady will have three minutes at the end and she has intervened quite a lot.
No one gets things perfectly right and there have been mistakes, but I believe passionately that it is wrong to say to a young person of 16 that they cannot go into the armed forces because they will become a trained killer. Tell that to the medics who are training as I was. I am proudly wearing a 23 Parachute Field Ambulance tie, which was presented to me by the regiment only a couple of days ago. Medics are there to save lives and their training is worth while. We are also desperately short of qualified Marine and RAF engineers. We need people with those skills, and the sooner we start to train them, the better. Of course, as I said earlier, if they want to leave at the age of 18, they can. As for the leaving rate, the figure of four years has always been there—it was about four years when I was in the armed forces many years ago, and it still is today.
I went to RAF Halton only the other day. It is the shortest journey that I have done as a Minister, because it is right on the edge of my constituency. What a fantastic facility for training young people, building them up and showing them what they can do! A lot of those young people will go on to be cooks, chefs, medics or firemen. They are not being trained as killers; they are being told, “We value you in our armed forces and we are giving you skills that can be used when you leave.”
I am absolutely passionate about ensuring that we never have another Deepcut or anything like it ever again, but as the hon. Lady said, we must use facts. I am afraid that, on some of the so-called facts that she gave earlier on, I will have to write to her specifically about the points she raised.
We continue to review how we do this. Ofsted inspects all the premises, which is important. We make sure that welfare support is there for those young people at a vulnerable age. For instance, I admit that when I was a young 16-year-old soldier, I went to see the lady from the Women’s Royal Voluntary Service regularly, because I wanted the comfort of talking to a mature lady who was not my sergeant, my warrant officer or one of the other officers. Those services are still there—I was at Pirbright the other day, and the facilities are there. Nor must we forget the work that the padres do, particularly at a junior level, because no matter what faith someone belongs to or whether they have no faith at all, having that comforting facility is crucial.
I am passionate that we need, and should have, a junior entry. These are young adults whose aspirations and life skills we can build so that they can actually get on in life slightly, as I myself have done—rather than writing them off, as some people seem to want to.
Liz Saville Roberts
I appreciate the hon. Members who have contributed today. There has been a general agreement that a duty of care is owed to our young recruits and that welfare and educational attainment is important to us all.
I am disappointed by the Minister’s response. I expected more of an answer to the specific questions I asked, although I welcome his offer to write to me. Although I was interested in his personal history, I have to bear in mind that as Minister he is also the person who is chiefly responsible for the welfare of young recruits.
I will end with the words of an early-day motion from 2005:
“That this House notes that those currently entering the army at the age of 16 years are committed for four years beyond their eighteenth birthday; welcomes the recommendation of the Defence Select Committee that the Ministry of Defence consider raising the age of recruitment into the armed forces to 18 years; further welcomes the finding of the Joint Committee on Human Rights that the UK Government’s declaration on ratifying the UN Optional Protocol to the Rights of the Child is overly broad, thereby undermining the UK’s commitment not to deploy under-18s in conflict zones; and urges the Government to withdraw its declaration and to raise the age at which young recruits can be enlisted into the armed forces to 18 years and thereby set an example of good practice internationally.”
The Minister signed that early-day motion in 2005. When did he change his mind?
Mark Pritchard (in the Chair)
Order. I am putting the Question, Minister.
Question put and agreed to.
Resolved,
That this House has considered recruitment of under-18s into the armed forces.
Written Statements
(7 years, 9 months ago)
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Serious Fraud Office (Contingencies Fund Advance)
(7 years, 9 months ago)
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The Solicitor General (Robert Buckland)
I would like to inform the House that a cash advance from the contingencies fund has been sought for the Serious Fraud Office (SFO).
In line with the current arrangement for SFO funding agreed with HM Treasury, the SFO will be submitting a reserve claim as part of the supplementary estimate process for 2016-17.
The advance is required to meet an urgent cash requirement on existing services pending parliamentary approval of the 2016-17 supplementary estimate. The supplementary estimate will seek an increase in both the Resource Departmental Expenditure Limit and the net cash requirement in order to cover the cost of significant investigations.
Parliamentary approval for additional resources of £5.5 million will be sought in a supplementary estimate for the Serious Fraud Office. Pending that approval, urgent expenditure estimated at £5.5 million will be met by repayable cash advances from the contingencies fund.
The advance will be repaid upon Royal Assent of the Supply and Appropriation (Anticipation and Adjustments) Bill.
[HCWS463]
Bills of Sale
(7 years, 9 months ago)
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The Economic Secretary to the Treasury (Simon Kirby)
In 2014, HM Treasury asked the Law Commission to review the Victorian-era bills of sale Acts. This legislation enables consumers and small businesses to borrow money using their goods as security, while allowing borrowers to retain possession of the goods. In recent years, bills of sale have been most commonly used in relation to logbook loans, which are loans that are secured on a consumer’s vehicle.
The desire for a comprehensive review reflected the Government’s significant concerns about consumer detriment in the logbook loan market, in particular the lack of protections available to consumers who took out a logbook loan, as well as innocent third party purchasers who unknowingly buy a vehicle that is subject to a logbook loan.
In 2014, the Government also fundamentally reformed the consumer credit market, by transferring regulation from the Office of Fair Trading to the Financial Conduct Authority (FCA). This more robust regulatory system is helping to deliver the Government’s vision for a well-functioning and sustainable consumer credit market which is able to meet consumers’ needs.
The Government have ensured that the FCA has strong powers to protect consumers, including the power to levy unlimited fines and require firms to compensate consumers who have lost out, where it finds wrongdoing. The FCA assesses every firm’s fitness to trade as part of the authorisation process, and it has put in place binding standards on firms. It proactively monitors the market, focusing on the areas most likely to cause consumer harm, and it has a broad enforcement toolkit to punish breaches of its rules. This has ensured that firms treat consumers fairly and consumers are better protected from sharp practice by firms.
However, the FCA cannot tackle the inadequacies of the bills of sale Acts, which mean that there are still significant gaps in the protection available for consumers who use logbook loans and third party purchasers.
The Law Commission’s final report and recommendations to reform the bills of sale Acts were published in September 2016, and the Government have now had the opportunity to consider the report fully.
The Government are grateful to the Law Commission for a report which is exhaustive and careful in its treatment of this complex matter, and which makes detailed recommendations for reform.
The Government agree with the Law Commission’s conclusion that consumers and unincorporated businesses should continue to be able to use their existing goods as security while retaining possession of them but that the bills of sale Acts no longer provide an appropriate legal framework and should be reformed. As well as accepting the overarching thrust of the recommendations, the Government welcome many of the detailed suggestions for reform. There are, however, some recommendations where the Government’s acceptance is qualified. We will want to reflect further on these points, and take discussions forward with the Law Commission, stakeholders and other Government Departments.
This is an opportunity for the Government to continue their work in creating a modern, fit-for-purpose consumer credit regime. The recommendations will improve outcomes for consumers by simplifying the information that is presented to them and providing increased protections if they get into financial difficulty. The recommendations will also remove unnecessary burdens for firms, and create new opportunities for small, unincorporated businesses to access finance.
Copies of the Government’s full response to the report’s recommendations will be placed in the Libraries of both Houses once these have been fully considered and agreed with the Law Commission.
The Government are keen that this work should move forward, and have agreed to support the Law Commission in drafting primary legislation to enact the necessary reforms. The Government will seek to use the special parliamentary procedure which is available for Bills that implement uncontroversial Law Commission recommendations, subject to agreement with the usual channels, and to bring forward the legislation when parliamentary time allows.
The Law Commission’s final report is available at:
http://www.lawcom.gov.uk/wp-content/uploads/2016/09/lc369_bills_of_sale.pdf
[HCWS462]
Fire Reform
(7 years, 9 months ago)
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The Minister for Policing and the Fire Service (Brandon Lewis)
I want to update the House on progress made since the Prime Minister, as then Home Secretary, set out plans last May to reform the fire and rescue service in England to become more accountable, efficient and professional than ever before.
Services are already transforming and seizing opportunities for collaboration, for example, delivering a single suite of national operational guidance, creating a single, cross-service research and development function and developing a cross-service new commercial strategy. The service has also recently formed the National Fire Chiefs’ Council which will transform the operational voice of fire and rescue services.
Our reform agenda is based around three distinct pillars: efficiency and collaboration, accountability and transparency, and workforce reform.
The Government have legislated through the Policing and Crime Act 2017 to transform local fire and rescue governance, enabling police and crime commissioners to become the fire and rescue authority where a strong local case is made. The Act also creates a statutory duty to collaborate. Better joint working can strengthen our emergency services, deliver significant savings to the taxpayer and—most importantly—enable them to better protect the public. This new duty requires emergency services to keep collaboration opportunities under review and to take on collaboration opportunities where it would be in the interests of efficiency and effectiveness to do so. It will come into force in April.
While fire and rescue authorities have achieved significant savings to date, I believe they can go further. Last year I undertook a basket of goods exercise to ascertain the prices each fire and rescue authority pays for a basket of 25 common items. The exercise illustrated that procurement practices need to be improved and so the Home Office has supported the sector develop a new commercial approach to aggregate and standardise procurement. This exercise will be repeated in the autumn to ensure progress is being made and a separate exercise will be undertaken this spring on different, high-spend items.
I will create an independent inspectorate and am considering options. I want this inspectorate to be rigorous in application and forensic in process, to deliver rounded and comprehensive inspections to assess the operational effectiveness and efficiency of each service. This independent scrutiny will ensure that fire authorities are held to the highest possible standards. I will update the House in due course as this body is formed.
Transparency of fire and rescue services increased last year by the publication of new procurement and workforce diversity data and will be strengthened further by the creation of a new website that will hold a range of information, in one place, about services. This will include information such as chief officer pay, expenditure and workforce composition and further information is planned.
I will create a professional standards body to further professionalise the service. The Home Office is working with the sector to develop options for this body which I hope will form later this year. I propose this body to set standards on a range of issues such as leadership, workforce development, equality arid diversity and codifying effective practice.
Finally, I published the independent review into firefighter terms and conditions by Adrian Thomas in November. The review’s recommendations, if implemented, will secure the future of the service for years to come by creating a diverse working environment free from bullying and harassment, with strong leadership and more flexible working conditions. I am encouraged that the Local Government Association, in partnership with the sector, recognise the need to take swift action in response to this report and deliver vital reforms to the workforce. I expect the recommendations of the review to be followed, particularly in relation to reforming the national joint council and the Grey Book, and I will be closely monitoring progress.
I also expect services to step up and find solutions to the current lack of diversity so clearly highlighted in the workforce statistics we published last year, with just 4% of firefighters from an ethnic minority background and just 5% female.
Delivering this ambitious reform agenda does not simply rest with me, or with the Government. Ultimately, the sector itself must shape and deliver these changes. It is for their benefit and the benefit of the communities they serve, and I look forward to seeing the results.
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