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Oral Answers to Questions
(7 years, 9 months ago)
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Deidre Brock (Edinburgh North and Leith) (SNP)
Alan Brown (Kilmarnock and Loudoun) (SNP)
Dr Paul Monaghan (Caithness, Sutherland and Easter Ross) (SNP)
The Minister for Climate Change and Industry (Mr Nick Hurd)
Between 1990 and 2015 the UK’s emissions have fallen by over a third while our economy has grown by over 60%. Since 2010, Government policy has contributed to a trebling of renewable electricity capacity and encouraging the take-up of low-carbon heating and ultra-low emission vehicles.
Deidre Brock
I thank the Minister for his answer. Businesses in the Scottish renewables sector predict that one in six jobs is at risk over the next six months due to changes in UK Government support. Will the Minister take action now to reverse those changes, to make sure we grasp the opportunities that our fantastic national energy resources provide?
Mr Hurd
Few countries, certainly in Europe, have done more than we have to expand renewable energy electricity capacity since 2010, and the low-carbon economy sector now employs over 220,000 people. The hon. Lady questions our continued commitment to renewable energy; I refer her to the public commitment to forthcoming auctions to support the less mature renewable technologies.
Alan Brown
A recent Chatham House report as well as the Department for Business, Energy and Industrial Strategy’s own following study on North American woody biomass both concluded that the use of these pellets for energy production in the UK is high-carbon. Given that and that a review was promised of bio-energy policies in 2012, will the Government conduct an urgent review and impose a moratorium on new subsidies for biomass?
Dr Monaghan
Given that Scotland’s renewable energy will be cheaper than that produced at Hinkley by the time it is complete and that Brexit is already pushing up the build costs of these reactors in an environment where the UK Government have unilaterally decided to abandon the protection of Euratom, will you scrap the costly and inefficient nuclear obsession in favour of a low-carbon future?
Mr Speaker
The hon. Gentleman invests me with powers that I do not possess; that is very good of him.
Mr Hurd
Frankly, previous Governments neglected their responsibility to this country to invest in upgrading its power infrastructure, but this Government are grasping that challenge. As I have said, few countries have done more to make the transition to cleaner energy, with a trebling of capacity in renewable electricity, and the commitment to Hinkley offers us the potential for 7% of the country’s electricity—low-carbon based power.
Mr Andrew Turner (Isle of Wight) (Con)
Colleagues in both Houses have signed an offshore blade made by MHI Vestas on the Isle of Wight, which is also arranging a schools outreach programme. Does my hon. Friend agree that this sort of initiative raises awareness of how low-carbon renewable energy technology can ensure that the UK reaches its potential of exporting its first-class engineering and advanced manufacturing worldwide?
Mr Hurd
I thank my hon. Friend for his question and wholly endorse what he says. The Secretary of State and I saw at first-hand when visiting the new Siemens offshore wind blade turbine factory in Hull just what this technology and engineering can do to inspire, in particular, young people in the area about opportunities for employment in this exciting sector.
Antoinette Sandbach (Eddisbury) (Con)
Nuclear power is an important part of the transition to a low-carbon economy. Will the Minister update us on the small modular reactor competition?
Mr Hurd
I congratulate my hon. Friend on her election to the Select Committee, and she is absolutely right: energy innovation is critical to both our future ability to reduce the cost of decarbonisation and unlocking the industrial opportunities inside the low-carbon energy sector. We are reviewing our plans in relation to our energy innovation portfolio. The nuclear industry is a very important part of those plans, and I hope we will have something to say very shortly.
Kevin Foster (Torbay) (Con)
The Minister will be aware that we in the south-west do not share the Scottish National party’s negative view of the Hinkley Point power station project, but will he reassure me about what work the Government will do to ensure that young people have the skills to take the jobs that will become available in these industries?
Mr Hurd
I thank my hon. Friend for correcting the impression that investment in new jobs in the nuclear industry is somehow bad news, given the commitment that 65% of the content of Hinkley should be supplied from this country. Just as important is the contribution it makes to upgrading our power infrastructure and making sure this country has the ability to access reliable low-carbon energy in the future.
Barry Gardiner (Brent North) (Lab)
Last week, the Budget failed to stop the 800% rise in business rates for companies that have installed solar panels. This week, research published in the journal Nature Energy states that to achieve our targets set out in the Paris agreement we need to set out longer-term plans beyond 2050, yet the Government have now dithered for five years and still refuse to publish their own implementation plan, even up to 2030. How does the Minister propose to increase our low-carbon exports when he cannot even set out how we will achieve our medium-term climate targets?
Mr Hurd
The hon. Gentleman accuses us of dithering, but our performance on emissions during the last Parliament was one of the most successful since 1990. He talks about delaying the emissions plan but he will know that the fifth carbon budget was set only last July. This country, and this Government, have a proud record of proving that we can reduce emissions while growing our economy, and we will continue to build on that.
Mr Philip Hollobone (Kettering) (Con)
With more than 30 large wind turbines in the borough, Kettering is coming close to generating more green electricity than it consumes, but what incentives are there in the business rates and planning systems to reward housing developments and business start-ups that are low carbon?
Mr Hurd
I thank my hon. Friend for pointing out how much progress we are making at the local level as well as nationally on the transition to green power. This has been facilitated by substantial investment through public subsidies and, as we look to encourage the deployment of renewable energy through competitive markets—preferably subsidy free—we are looking at what else we can do to facilitate that using the tools available to the Government.
Callum McCaig (Aberdeen South) (SNP)
Our concern on Hinkley is that the Government appear to be stacking the deck in favour of nuclear power over the much cheaper renewable energy. The strike price for Hinkley was £92.50 in 2012, compared with a much lower £82.50 for onshore wind in 2015, yet in the value-for-money assessment the Government assume a £90 strike price for onshore wind. Why are they inflating the price for renewables in comparison to Hinkley?
Mr Hurd
I hope that the hon. Gentleman does not want to give the wrong impression. He knows from his experience that one of the keys to a successful energy policy is diversity of supply. That is the key to energy security, which is the primary responsibility of every Government. Ensuring diversity of supply is absolutely evident in what we as a Government are trying to do.
Callum McCaig
The Minister has completely missed the point of my question, which was about comparisons. The Government commissioned Frontier Economics to look at the whole systems impact of electricity generation models, yet despite repeated parliamentary questions and freedom of information requests the report has not been published. If the Government have nothing to hide, why are they hiding things?
Mr Hurd
I am not aware of hiding anything. I am trying to make a point about diversity of energy supply. I would make a further point about prices, in answer to the hon. Gentleman’s question. One of the most encouraging things is the progress we have made in our policy structure on driving greater competition, through contracts for difference, in order to get better prices for consumers and for the taxpayer from the public subsidies that are available. I hope that that will be evident very soon in the results of the forthcoming auctions.
Andrew Bridgen (North West Leicestershire) (Con)
The Minister for Universities, Science, Research and Innovation (Joseph Johnson)
We are committed to making the UK the global go-to nation for scientists, innovators and tech investors. That is why, as part of the industrial strategy, we have announced an increase of £4.7 billion in public research and development funds—the biggest increase in science support for 40 years.
Andrew Bridgen
I welcome the Government’s recent £14 million investment to develop space technologies in Leicester, including the university-led national space park. What further steps could the Minister take to encourage the space industrial cluster in the midlands?
Joseph Johnson
The space industry has an important role to play in driving growth across the UK, and the Government are working closely with the sector to make that a reality. I am pleased that the Leicester and Leicestershire local enterprise partnership is grasping this opportunity. The Satellite Applications Catapult has funded a centre of excellence in the east midlands for the past three years, focused on linking industry to local and national expertise. In addition, the UK Space Agency is supporting business incubators in Leicester, Nottingham and Loughborough to develop innovative space start-ups.
Alison McGovern (Wirral South) (Lab)
Page 98 of the Government’s industrial strategy talks about the importance of long-term institutions. Many of those who work in the science-based industries in Wirral and elsewhere feel that the single market is a long-term institution that has served them well. Has the Minister asked the Prime Minister to change course and keep our country in the single market?
Joseph Johnson
The UK is a powerhouse of academic research, and our collaborations with institutions in Europe and around the world are an important part of that success. Through the industrial strategy, we want to continue to play to our great strengths as a science and research powerhouse, and we will continue to welcome agreements to collaborate with our European partners on major science and technology programmes in years to come.
Mark Pritchard (The Wrekin) (Con)
Agri-science plays a vital part in the industrial strategy, but more could be done. Is the Minister aware of the excellent work of Harper Adams University in my constituency? It exports its excellence all over the world.
Joseph Johnson
I am aware of the excellent work undertaken by that institution in my hon. Friend’s constituency. Agri-tech receives considerable support through our public investment in R and D, and will continue to do so.
Fiona Mactaggart (Slough) (Lab)
The European Medicines Agency, which is based in the UK, is one reason why our pharma industry is so successful. What will happen to the agency when we crash out of the EU? What is the Science Minister doing to ensure that we have effective regulations that support our pharma industry?
Joseph Johnson
The right hon. Lady should wait until we have embarked upon the negotiations for our future relationship with European funding streams. We anticipate that we will continue to collaborate closely with our European partners, so that our scientists can develop institutions such as the one she mentions to the benefit of this country for years to come.
Nusrat Ghani (Wealden) (Con)
Scientifica is a Wealden-based science and technology business that won the 2016 British Chambers of Commerce awards for business of the year and export business of the year, and I joined Scientifica members at the London Stock Exchange to open the markets yesterday. Will my hon. Friend join me in congratulating Scientifica on championing and promoting the best of British science and research?
Joseph Johnson
I am delighted to congratulate Scientifica. Companies such as that are doing brilliantly at exploiting the research that is undertaken in our science base to this country’s benefit and maximising the commercial opportunities arising from our significant public investment into R and D.
Mr Gregory Campbell (East Londonderry) (DUP)
Looking beyond the two-year period to when we exit the EU, will the Minister ensure liaison with the devolved Administrations—hopefully all fully restored before then—so that excellent facilities such as the science centres in Belfast and Londonderry can be availed of and replicated right across the UK to ensure that we get the maximum advantage?
Joseph Johnson
Through the creation of UK research and innovation, a UK-wide global funding and research agency, we will continue to ensure that excellent science and research are supported throughout the UK in the years to come.
Martyn Day (Linlithgow and East Falkirk) (SNP)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Jesse Norman)
The oil and gas sector is important for the UK’s economy, for energy security and for jobs. That is why the Government have established the Oil and Gas Authority as a strong, independent regulator over the past two years, providing a £2.3 billion package of support to encourage investment and exploration in the UK. In the spring Budget last week, the Chancellor announced that the Government will consider how tax could be used to assist sales of late-life oil and gas assets in the North sea, helping to keep them productive for longer.
Martyn Day
Do this Government stand by or reject comments, which are in contrast to industry voices, made by the Scottish Conservatives’ energy spokesman, Alexander Burnett MSP, that the oil and gas industry does not need any help and that
“People in Aberdeen are not asking for more at the moment”?
Jesse Norman
I am unsure whether I entirely caught the hon. Gentleman’s remarks, but the Government have been clear in their support not just for the UK continental shelf and the companies on it, but for Aberdeen through the £250 million city deal.
Michael Fabricant (Lichfield) (Con)
Jesse Norman
I am sure that my hon. Friend will understand that I will not comment on that specific economic issue. However, I admire his awareness of the oil spot price. The Government have managed to engineer a significant fall in oil and gas supply costs on the continental shelf—[Interruption.]
Mr Speaker
Order. A cerebral Minister is at the box responding to a pertinent inquiry, and the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell) is behaving in a mildly boorish fashion—very uncharacteristically. I am sure that this is an exceptional case.
Jesse Norman
I am not sure that anyone can recover from the attribution of being “cerebral.”
The way in which the Oil and Gas Authority has lowered costs on the UKCS is testimony to how competitive our economy can be in oil and gas, even when oil prices are falling.
Justin Tomlinson (North Swindon) (Con)
The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)
The UK’s space sector is world leading. A quarter of the world’s telecommunication satellites are either built here or are built with key UK components. Our recently announced draft Spaceflight Bill will enable UK businesses to enter a global market worth an expected £25 billion over the next 20 years. Our industrial strategy will ensure that we build on that and continue to be a global leader in this very important sector.
Justin Tomlinson
Many people think that my constituency, North Swindon, is out of this world, and they are not wrong, as we are home to the UK Space Agency. Will the Secretary of State therefore tell me how the upcoming Spaceflight Bill will enable the UK to build on its strengths in science, research and innovation?
Greg Clark
North Swindon has a stellar Member of Parliament, too. The space sector is one of our most important industries, and the Spaceflight Bill, in particular, will move us forwards and enable us to be in the business not only of manufacturing satellites but of launching them, which will give us further industrial opportunities from which not only Swindon but the whole UK can benefit.
Ian C. Lucas (Wrexham) (Lab)
The collaborative approach of the UK aerospace sector is one of the lessons that the Government need to remember in the difficult years ahead. Will the Secretary of State please come to one of the most important aerospace sectors in the country in north-east Wales to see its excellent work and the potential threats to one of the most successful industries in our country?
Greg Clark
The hon. Gentleman is absolutely right. One of the reasons why the space and satellite sector has been so successful is the collaboration between the firms, the Government and the research institutions, which is the way forward. The Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman), will visit north Wales and the facilities that the hon. Member for Wrexham (Ian C. Lucas) mentions, and I look forward to hearing all about it.
Mr Steve Baker (Wycombe) (Con)
Greg Clark
I am glad that my hon. Friend is not questioning me on inertia ratios and matrices. The capacity is there, but it requires planning ahead. That is why the industrial strategy mentions the need to invest in science and research and development—it is important that we do that—and the need to look forward to make sure that we have the skills in the workforce to fulfil the order books. The purpose of having a long-term industrial strategy is so that we are prepared to reap those very opportunities.
Carol Monaghan (Glasgow North West) (SNP)
Martin Docherty-Hughes (West Dunbartonshire) (SNP)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Margot James)
Small businesses are vital to the economy, and we are providing additional access to finance and support to help scale up businesses so that they are able to reap the benefits of future trade with the EU and the rest of the world.
Carol Monaghan
I wish everybody a happy Pi Day—“pi,” the mathematical version, not “pie,” the pork version.
The Conservative party broke its 2015 manifesto commitment by failing to consult the business community on the changes to national insurance for the self-employed. Will the Government now address the ongoing uncertainty that those changes could bring to workers’ rights, such as maternity and paternity pay, sick pay, annual leave and pensions?
Margot James
The Government are absolutely committed, as the Prime Minister has said on several occasions, to protecting workers’ rights as we leave the European Union. And not just to protect those rights but to enhance them, if necessary. She has set up the Taylor review to examine the details.
Mr Speaker
I call Martin Docherty-Hughes. I am sad to note the rather uncharacteristic absence of the hon. Gentleman. We will do our best to bear up with such fortitude as we can muster.
Kirsty Blackman (Aberdeen North) (SNP)
A number of small businesses in the oil and gas sector supply chain have been hit disproportionately by the oil price reduction. My hon. Friend the Member for Aberdeen South (Callum McCaig) and I held a meeting last week to encourage young businesses to access different methods of capital financing so that they can grow. What are the UK Government doing to encourage such businesses to access capital finance?
Margot James
Although support for businesses in Scotland is largely devolved, the British Business Bank funds a vast number of companies in Scotland. It has provided £415 million of finance for Scottish companies, including through start-up loans. In addition, more than 1,600 companies in Scotland benefit from the enterprise finance guarantee scheme.
Rebecca Pow (Taunton Deane) (Con)
Small and medium-sized enterprises are the backbone of the south-west, and much effort is being put into upping productivity in the region. We in Taunton Deane welcome recent Government investment in a lot of infrastructure and the work that is being done on skills. However, to give us a real fillip, will the Minister, or perhaps someone else from the Department, agree to come to Taunton’s annual business conference on 6 June to give a boost to the things that the Government can help us with?
Margot James
I thank my hon. Friend for such a wonderful invitation. Although I have already been to the south-west, I am sure I can find an occasion on 6 June to do so again.
Mr Speaker
The hon. Member for Taunton Deane (Rebecca Pow) looks as though her cup has runneth over. What a happy day for her and, indeed, for Taunton Deane—not to mention the Minister.
Mr David Nuttall (Bury North) (Con)
One advantage for small businesses of the United Kingdom leaving the EU is that the House will be free to repeal unwanted EU regulations. What steps is the Minister taking to consult small businesses so that she can identify those regulations?
Margot James
I assure my hon. Friend that we consult small businesses all the time. The Department for Exiting the European Union regularly engages with the Federation of Small Businesses. We will, in due course, ask that Department to hold a roundtable for small businesses to discuss the very issues that he raises.
Mark Pawsey (Rugby) (Con)
Margot James
I am glad that the hon. Lady is so keen to hear my answer to this question.
We support small business growth by ensuring that small businesses can access finance and wider support. The British Business Bank is already supporting more than 54,000 smaller businesses with £3.4 billion of finance, and I am leading a taskforce to enable SMEs to accelerate their growth potential and realise their growth prospects quicker.
Mark Pawsey
I know that Rugby is a great place to run a business, but many small businesses continue to tell me that an obstacle to their expansion is still a shortage of suitable industrial premises. At a time when our authority is preparing its local plan, what discussions has my hon. Friend had with her counterparts in the Department for Communities and Local Government to ensure that adequate land is allocated for the development of business units?
Margot James
We work closely with the Department for Communities and Local Government, and I recently co-chaired a successful roundtable with my hon. Friend the Minister for Housing and Planning and providers of finance. We will be having a further meeting, and I shall obviously consider the needs of businesses in Rugby for more space.
Dame Rosie Winterton (Doncaster Central) (Lab)
Small businesses in Doncaster have expressed concern to me about how they can access apprenticeship schemes. Will the Minister work with the Department for Education and draw up a regional analysis—especially for Yorkshire and the Humber—of how small businesses can access those schemes effectively, particularly in the light of the apprenticeship levy?
Margot James
We will certainly talk to businesses in the Doncaster region, as well as to those elsewhere in Yorkshire, but I am delighted to say that only 1.3% of businesses will actually pay the apprenticeship levy. For all other businesses, particularly small businesses, the Government will fund 90% of training costs following the introduction of the levy proper next month.
Ben Howlett (Bath) (Con)
Last week’s announcement on business rates by my right hon. Friend the Chancellor will provide welcome relief to hundreds of independent small businesses in my constituency. Will the Minister join me in congratulating our tourist management organisation, Visit Bath, as it focuses more attention on the marketing of our independent small businesses in Bath in domestic and international markets, which will bring jobs and growth to my constituency?
Margot James
I absolutely join my hon. Friend in congratulating Visit Bath on all the trade and ideas that it brings to SMEs in his constituency.
Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)
As chair of the all-party group on disability, I have been hearing from disabled entrepreneurs that they still have to face far too many barriers, including with regard to access to affordable loans, peer mentoring and information, even through the Government Gateway. What specific measures are the Government taking to support disabled entrepreneurs and what more can be done to address these very important issues?
Margot James
I thank the hon. Lady for her excellent question. I work closely with the Minister for Disabled People, Health and Work, who is leading huge initiatives to improve opportunities for people with disabilities. I will raise with my hon. Friend the specific question of entrepreneurs with disabilities.
Richard Fuller (Bedford) (Con)
The truth is that the Government have to show a lot more love for small businesses to reinforce the truth that the Conservatives are the party for entrepreneurs. Will my hon. Friend start that by eliminating the time limits on the enterprise investment scheme for small businesses, and by finding a way, after we leave the EU, of reducing the compliance with regulations for small businesses to a single check mark?
Margot James
As my hon. Friend knows, I am a great lover of small businesses and entrepreneurs, and I think that I can speak for the rest of the Government in that regard. He knows that the EU governs time limits and caps on the EIS at the moment. What happens following the Brexit negotiations will be a matter for the Treasury.
Bill Esterson (Sefton Central) (Lab)
I do not think that small businesses are really feeling the love after last week’s Budget. A report by the Federation of Small Businesses entitled “37 problems and tax is one” states that the
“proposed National Insurance tax grab on this group is an absolute kick in the teeth, just at a time when we need to create more entrepreneurs, not fewer.”
The Minister says that the Government consult the Federation of Small Businesses, but perhaps they might listen to it in future and do what it suggests as well.
Margot James
The small business world must feel more love from this Government than it would from Labour, were it to take our place in government.
On the hon. Gentleman’s specific question, I know that the FSB lobbied hard on a number of points, including national insurance, business rates and the quarterly reporting of tax accounts. On the latter two, it was very pleased with what the Chancellor provided. With regard to national insurance, the hon. Gentleman knows that more than 60% of people who are self-employed will actually benefit from the changes mooted by the Chancellor last week.
Chris Green (Bolton West) (Con)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Jesse Norman)
Just yesterday I was a few miles away from my hon. Friend’s constituency in Carrington, opening a new combined-cycle gas turbine plant. A few weeks before that, I was in Folkestone to see the new interconnectors being built through the channel tunnel. Both schemes remind us of the Government’s commitment to the UK’s energy infrastructure, underscored by a capacity market and contracts for difference. We are also investing £320 million in new heat infrastructure, which underlines the size of our whole commitment.
Chris Green
Base load energy supply is fundamental to delivering our energy needs. Solar and wind power do not provide base load, and there is a pressure not to increase the consumption of hydrocarbons, so does my hon. Friend agree that, in the absence of energy storage capacity, future investment must go to the nuclear industry, especially small modular reactors?
Jesse Norman
As my hon. Friend knows, we are spending a great deal of time working with developers, with new investment, alongside the plans that are already being executed at Hinkley. Small modular reactors could be part of that conversation. However, there are many possible storage technologies that might come on stream over the next decade or two; undoubtedly, they will also be an important part of the picture.
Albert Owen (Ynys Môn) (Lab)
The country needs 21st century systems such as smart metering. Will the Minister update the House on the progress of the roll-out, and will he have a word with the energy companies to stop them blaming the Government for smart metering being part of the hike in energy prices that is ripping off the consumer?
Jesse Norman
We are in no doubt at all about the need for energy companies to bear down on prices. As they will be aware, the costs of policy are a relatively small part of those prices.
Mrs Flick Drummond (Portsmouth South) (Con)
Tidal energy gives the UK an opportunity to provide a clean and predictable source of renewable energy. It is a sector in which we have world-leading business expertise in the Solent region. Will my hon. Friend consider giving tidal a higher priority in the UK energy strategy so that we can maintain our competitive edge?
Jesse Norman
My hon. Friend will know that we are looking at tidal energy and related issues closely in the context of our consideration of the Hendry review.
John Pugh (Southport) (LD)
Following on from that question, will the Minister tell the House when a final decision will be made on the Swansea tidal lagoon?
Jesse Norman
It is fair to say that we have stated that we will come to the House as soon we can and that the matter is presently under consideration.
Dr Alan Whitehead (Southampton, Test) (Lab)
The Minister mentioned the capacity market. I am sure he will agree that the prime purpose of that market has been to procure new infrastructure capacity. Will he tell me how many new gas-fired power stations have been procured with the £3.4 billion that has been spent so far on the capacity market? What plans does he have to improve that number?
Dr Whitehead
To be helpful, the answer is: one new power plant in King’s Lynn.
Jesse Norman
Well, I am all in favour of the self-answering question, but I remind the hon. Gentleman that the last capacity market procured energy at a cost of £7 per kilowatt, which is cheaper than any conceivable alternative.
Jess Phillips (Birmingham, Yardley) (Lab)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Margot James)
With no common definition of the “gig economy”, numbers vary in terms of how many workers are involved in it. We have commissioned new research, to be published this summer, which will look at the number of individuals working through digital platforms in the UK and at their experiences.
Jess Phillips
The number of freelancing moms has increased by 79% since 2008. Although I welcome the Government’s announcement that they will consult further in the summer on fairer maternity pay for self-employed moms, this was recommended 13 months ago. Why has it taken the Government so long to act on this crucial issue for these women when it took a stroke of a pen to increase their taxes?
Margot James
As I said in my previous answer on national insurance, the increase in taxes, which itself is under review, will be ruling out—[Hon. Members: “Ah!”] In terms of the maternity and paternity issues raised by the hon. Lady, I should hasten to add, the consultation will run its course this summer and she will have an answer before the end of the year.
Jack Dromey (Birmingham, Erdington) (Lab)
Does the Minister begin to understand the sense of grievance on the part of the growing army of the self-employed who are reluctant conscripts to self-employment in the gig economy? They work in a twilight world of insecurity without basic rights, but they will now have to pay more in tax although there was not one measure in the Budget to put the burden on the shoulders of those truly responsible: the Ubers of this world.
Margot James
The hon. Gentleman knows that the Taylor review is currently examining all the issues that he raises. I am very concerned about the plight of some low-paid workers—they may well actually be workers, rather than self-employed. That is up to the courts and the Government to conclude later this year, but I assure him that we take the issues he raises very seriously.
Lucy Allan (Telford) (Con)
James Morris (Halesowen and Rowley Regis) (Con)
The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)
Last week, we published the midlands engine strategy. It is further demonstration that this Government are committed to investing in the midlands, a region that has seen over 180,000 more people in employment since 2010.
Lucy Allan
I thank the Minister for his reply. Telford is seeing increasing inward investment from businesses in the automotive supply chain such as Polytec and Magna’s Cosma, bringing real jobs and growth to Telford. Does he agree that Telford, with its reputation for innovation and advanced manufacturing, is set to play a key role in the midlands engine strategy, and will he congratulate those businesses on helping to build a successful future for Telford?
Greg Clark
I will indeed. My hon. Friend’s constituency, which includes Coalbrookdale, has a good claim to be the cradle of the first industrial revolution—[Interruption.] It is perhaps a disputed claim, but I think Abraham Darby, in 1709, was fairly early. However, now, Telford is at the heart of the fourth industrial revolution, as my hon. Friend says. The T54 site is proving to be a very important location for automotive sector supply chain.
James Morris
Does the Secretary of State agree that one pivotal thing that needs to be in an industrial strategy for the west midlands is closing the skills gap that has held back the west midlands for too long, so that areas such as the black country can continue to work to become leading specialists in things such as aerospace, automotive and advanced manufacturing, which are critical to the agenda of the Conservative candidate for west midlands Mayor, Andy Street?
Greg Clark
I agree with my hon. Friend—he is absolutely right. The reputation of the black country is very strong. There is the phrase
“Made in the Black Country, Sold around the World”,
but to fulfil that we need good skills. Andy Street, being a person of great business experience, is the best person available to bring that business acumen to bringing more businesses to the whole of the west midlands.
Mr Speaker
Order. This is supposed to be about an industrial strategy, rather than an electoral strategy, but there you go.
Rob Marris (Wolverhampton South West) (Lab)
In passing, may I say that it was the black country that was the birthplace of the industrial revolution, not Coalbrookdale? However, on transport spending, which is key to the industrial strategy for the west midlands, when does the Secretary of State expect to persuade his colleague the Secretary of State for Transport to spend as much per capita in the west midlands as in London?
Greg Clark
The hon. Gentleman, who is an assiduous reader of these things, will see that, in the industrial strategy, we propose a commitment to upgrade infrastructure right across the country. I hope he will respond to that so that when we have the Budget later in the year, we will be in a position to make further such announcements.
Craig Tracey (North Warwickshire) (Con)
Greg Clark
The self-employed have an important role to play. One trend that colleagues on both sides of the House will know of is that the development of supply chains is one of the key sources of innovation in many industries. Within that, start-up businesses, including those run by the self-employed, can make a big contribution to making us attractive for jobs and new businesses.
Christian Matheson (City of Chester) (Lab)
Louise Haigh (Sheffield, Heeley) (Lab)
The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)
We have had great success over the years in developing key sectors, including aerospace and the automotive sector. To build on this, we have set out proposals for new business-led sector deals in the industrial strategy. The first set of deals is already under development. We are taking steps to drive growth in sectors across the economy, including with funding for science, infrastructure and technical education.
Christian Matheson
Does the Secretary of State share my concern that the implementation of an industrial strategy led by the big players will focus solely on the big players? What is he doing to ensure that the small and medium-sized enterprises in those sectors, which are often the engine rooms, get their fair say and their fair share?
Greg Clark
I assure the hon. Gentleman that that is not the case. I have regular discussions with the Federation of Small Businesses, the British Chambers of Commerce and smaller businesses right across the country. The supply chain, and making our country more attractive to supply chain businesses, are absolutely foundational to our industrial success, and that involves a particular regard for small businesses.
Louise Haigh
Cyber-security is one of the most important sectors for this country’s growth, but the UK has the highest skills gap in cyber-security in the world. Does the Secretary of State think that the Government’s current commitment to educate 1% of our students in cyber-security by 2021 is anywhere near good enough?
Greg Clark
The hon. Lady makes a very good point. If we are to take advantage of the opportunities that exist, we need to upgrade our technical education. That is why in last week’s Budget the Chancellor made such a clear commitment, prominent in the industrial strategy, to transform the level of technical education, including to increase by 50% the hours of tuition that are available. Cyber-security is one of the areas in which I would expect that to be applied.
Lucy Frazer (South East Cambridgeshire) (Con)
Greg Clark
Yes. I would expect all competitive areas to make a bid for these places. The University of Cambridge and Anglia Ruskin University in Cambridgeshire, and other institutions more broadly across the country, will be in a good position to benefit from that.
Andrew Stephenson (Pendle) (Con)
Greg Clark
My hon. Friend is absolutely right. This is an important sector, as has been evident from our discussions this morning. That reflects the track record of working together that will continue and be reinforced. I think that all Members across the House will have been as delighted as I was that Boeing made its commitment to its first ever UK plant in Sheffield, showing how attractive we are to advanced manufacturing businesses such as that.
Rebecca Long Bailey (Salford and Eccles) (Lab)
The BEIS Committee’s recent report stated that the industrial strategy Green Paper
“provides little clarity on how…sectoral deals will work in practice”,
and that it appears to lack “political will”, falling short of
“providing a clear framework for decision making in the long term.”
Is it lack of clarity or lack of political will that has led to a bespoke Brexit deal for certain manufacturers while leaving others, and indeed other industries, in a state of uncertainty?
Greg Clark
May I welcome the hon. Lady to her first BEIS oral questions? I see her predecessor behind her. She is, I think, my third opposite number in the eight months that I have had this job. The first was appointed in the summer, the second in the autumn, and she was appointed in the winter. I noticed this week that the birds were singing and the sun was out, so I hope that is not bad news for the hon. Lady. On her points about the industrial strategy, the sector deals that we have proposed have been widely welcomed. We have set out a number of initial deals in, for example, life sciences and the creative industries. We are already talking to other sectors such as the steel sector, and a lot of colleagues in the House will want to see that taken forward.
Rebecca Long Bailey
Oh, the Secretary of State is cheeky! He might want to refer to the report, because it also states that the White Paper on exiting the EU failed to meaningfully refer to an industrial strategy
“and reinforces a lack of coordination between the Government’s major challenge and its principal plank of business policy.”
Given that last week’s Budget failed to mention Brexit or the industrial strategy, does the Secretary of State agree with the recent Foreign Affairs Committee report that the Government have provided “no evidence” of industrial contingency planning in the event of no deal? If that is so, what is his no deal plan?
Greg Clark
I say gently to the hon. Lady that she will have to do a bit better than that. I have the Budget here. She says that it does not mention the industrial strategy. I can tell her that it is mentioned in the first paragraph on the first page, and throughout. Given her interest in this, she ought to read the Budget.
Mary Robinson (Cheadle) (Con)
Greg Clark
In my hon. Friend’s area, as in every area of the country, the opportunities for the supply chain to be attracted to and to locate in this country—to supply the major manufacturers and service providers, but also to export around the world—is one of the key themes emerging from the sector deals that are being negotiated.
Pat Glass (North West Durham) (Lab)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Jesse Norman)
Nearly £56 billion has been invested in renewable energy since 2012. In the Budget last year, my right hon. Friend the former Chancellor of the Exchequer announced £730 million of annual support for less established renewable energy projects, including offshore wind. In the previous autumn statement, the renewable heat incentive was announced, at £1.15 billion by 2021.
Pat Glass
We have heard a lot about the importance of small business this morning. There are 44,000 small businesses that have their own solar microgenerators. Currently, they are exempt from business rates, but from 1 April they face an 800% increase in business rates, which is clearly damaging for them and for the solar industry. I hope that that is not deliberate, so will the Minister meet the Chancellor to see what can be done to relieve the situation?
Jesse Norman
Of course, the impact of rates differs from company to company as regards their solar panels. Three quarters of businesses are projected to have rates that fall next year and there is of course transitional rates relief, but the Department has long recognised the problem in some cases to which she refers, and we are in active discussion with other Departments about it.
Sir Desmond Swayne (New Forest West) (Con)
No. 24—or is it No. 22? [Hon. Members: “No. 23!”]
Sir Desmond Swayne (New Forest West) (Con)
The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)
I will respond shortly to the Competition and Markets Authority report, and I will take steps to increase competition and help consumers.
Sir Desmond Swayne
If the Secretary of State is successful in engendering much greater competition, will we need a regulator at all?
Greg Clark
The aim of Government policy must be to have such vigorous competition in markets that that takes care of itself. Unfortunately, I do not think we are in that position, so I am determined to make sure that customers are treated fairly.
David Rutley (Macclesfield) (Con)
The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)
As well as continuing the consultation on our industrial strategy Green Paper, we are acting on its diagnosis. Last week’s Budget set out our plan to transform technical education—increasing the hours students are taught by 50%, increasing funding for technical education by £500 million a year and establishing new institutes of technology. We announced in the Budget the first £270 million of projects under the industrial strategy challenge fund, including a world-leading investment in the development, design and manufacture of batteries to power the next generation of electric vehicles, and we announced a £100 million fellowship fund to attract the world’s brightest minds to come and work in the United Kingdom.
David Rutley
I am pleased that my right hon. Friend is planning to visit AstraZeneca’s Macclesfield site, the largest pharmaceutical site in the United Kingdom, in the near future. Will he tell the House what plans the Government have to support the life sciences further as part of its northern powerhouse strategy?
Greg Clark
My hon. Friend, who is a great champion of the life sciences as well as of the Cheshire economy, knows that the opportunity to negotiate a sector deal for life sciences, which is being led by Sir John Bell, will be good for the whole country, but will have particular relevance to Cheshire and Macclesfield. I am looking forward to visiting his constituency to see the facilities for myself.
Ian Austin (Dudley North) (Lab)
Greg Clark
Having dipped my toes into controversy by talking about places with claims to be the cradle of the industrial revolution, I am certainly not going to nominate the best local newspaper in the country—suffice it to say that I gather the Foreign Secretary began his illustrious career on the Express & Star, although I do not know whether that shows its prescience, or whether it has recovered from that particular judgment. Local newspapers make a vital contribution to the success of local business, and I am delighted to hear about the initiative that the Express & Star is promoting.
Kelly Tolhurst (Rochester and Strood) (Con)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Margot James)
The new phase of the “Get in Go Far” campaign focuses on helping small employers understand the benefits of apprenticeships. The National Apprenticeship Service supports that by contacting small businesses that have previously engaged with the programme. That will be of great benefit to small and medium-sized enterprises in my hon. Friend’s constituency.
Bridget Phillipson (Houghton and Sunderland South) (Lab)
Greg Clark
Making ourselves attractive as a country to the workforce and making sure that we are the best place to operate a business and to work is an important theme of the strategy. I look forward to the hon. Lady’s contribution to the consultation, and if that issue does not have the emphasis that she thinks it needs, we will have the opportunity to address that.
Jeremy Lefroy (Stafford) (Con)
Margot James
I quite agree with my hon. Friend. That demonstrates the need for all businesses, especially SMEs, to take advantage of our target of 3 million apprenticeships and the huge improvement in the quality of apprenticeships that the National Apprenticeship Service supports.
Ms Angela Eagle (Wallasey) (Lab)
Tom Tugendhat (Tonbridge and Malling) (Con)
The Minister for Universities, Science, Research and Innovation (Joseph Johnson)
The UK is the No. 1 place in Europe for inward investment in technology, and the Government’s industrial strategy will deliver the Prime Minister’s vision of Britain as a magnet for international talent and a home to the pioneers and innovators who will shape the world ahead. We are making sure that our regulatory landscape and visa system are up to that challenge through a range of measures, including the tier 1 exceptional talent visa.
Carol Monaghan (Glasgow North West) (SNP)
Joseph Johnson
The Government have made it clear on many occasions, including at the highest level, that we value tremendously the important contribution that EU nationals make to the success of our higher education institutions and scientific establishments across the country, including in Scotland, and we have every intention of that continuing in the years ahead.
Tom Pursglove (Corby) (Con)
When I visited the Corby steelworks on Friday, there was real enthusiasm for a sector deal for the steel industry and a real commitment to ongoing partnership working. Is my right hon. Friend the Secretary of State willing to visit the Corby works to discuss those opportunities?
Greg Clark
I would be delighted to visit Corby with my hon. Friend. He is absolutely right—my discussions with the steel industry show a real appetite for a long-term sector deal to secure the future of the steel industry.
Richard Arkless (Dumfries and Galloway) (SNP)
The Minister for Climate Change and Industry (Mr Nick Hurd)
I have already emphasised in earlier answers the importance of a diverse energy supply, which is at the root of energy security. There is no question about this Government’s commitment to ongoing investment in renewables.
Mr Alan Mak (Havant) (Con)
Many of those focused on driving forward the fourth industrial revolution are in new sectors such as robotics and 3D printing. Can the Minister ensure that the industrial strategy’s sector engagement includes new, innovative challengers, not just incumbents?
Joseph Johnson
I certainly can. Through our industrial strategy, we are backing Britain’s innovators with the biggest investment in science and technology since 1979 and a new industrial strategy challenge fund to bring cutting-edge ideas out of the lab and into the wider economy.
Gavin Newlands (Paisley and Renfrewshire North) (SNP)
Joseph Johnson
Yes, this country does recognise that it has been under-investing in research and development, and that is why at the autumn statement and in the Budget we have made the biggest investment in R and D for more than 40 years. Public investment in R and D helps to bring in private sector investment at the rate of about £1.36 for every £1 of public investment.
Amanda Milling (Cannock Chase) (Con)
Can my right hon. Friend outline what measures are included in the midlands engine strategy to support small businesses and enterprises such as those in Cannock Chase?
Greg Clark
As my hon. Friend knows, in the growth deals that are part of the midlands engine there is support, through local enterprise partnerships, for small businesses—both start-ups and growing businesses.
Mr Iain Wright (Hartlepool) (Lab)
Following npower’s 15% price hike last month, the Government pledged that
“where markets are not working we are prepared to act.”
E.ON raised its prices by 14% last week and SSE by 8% yesterday. How many more companies need to raise their prices before the Government actually act to stop energy customers getting fleeced?
Greg Clark
The hon. Gentleman is absolutely right that that behaviour is unacceptable. It has been reported by Ofgem that there is no reason to increase prices. We have committed to a Green Paper on consumer markets, which will be published very shortly. The time is up for these companies.
Robert Courts (Witney) (Con)
As the recently elected chair of the all-party group for small and micro business, I know that access to finance in the early years is a real challenge for small businesses. What advice could the Minister give to those in my constituency who are looking for access to finance in the early years?
Margot James
I can advise my hon. Friend that the Start Up Loans Company has already helped 44,000 small start-ups and will be on hand to support start-ups in his constituency.
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)
What plans does the Secretary of State have to encourage new innovation support for SMEs in our key foundation industries, which make materials such as glass, ceramics and steel for cars, including those needed for Nissan in my constituency? This could help to create hundreds of jobs in the supply chain that are actually made in Britain.
Joseph Johnson
Support for innovation has received its biggest boost since 1979 in the autumn statement and in the Budget that was just announced. The industrial strategy challenge fund has just seen the first allocation of £270 million, which will help to boost innovation in key areas across the economy.
Mark Pawsey (Rugby) (Con)
Diesel-powered generators add to poor air quality. Will the Minister welcome the contribution of Off Grid Energy, a small, innovative business in my constituency, whose mobile hybrid units provide green energy to the construction and event sectors?
David Simpson (Upper Bann) (DUP)
What positive impact will the Government’s plans to improve the energy infrastructure have on small businesses when it comes to electricity costs?
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Jesse Norman)
Of course, the primary effect of success in that area will be to keep costs down for small business, as well as for large.
Andrew Stephenson (Pendle) (Con)
On Friday, I visited Graham Engineering, in Nelson. It is an excellent company in the nuclear supply chain that currently has 30 new vacancies, which will be on offer at my seventh annual Pendle jobs fair on 24 March. What more can we do to support the nuclear supply chain?
Greg Clark
One of the things that we have done to support the nuclear supply chain is to have a continuing commitment to nuclear power in this country, and that will benefit my hon. Friend’s constituents. Through our network of training colleges, we will make sure that we grow the nuclear skills that we need for this industry.
Steve McCabe (Birmingham, Selly Oak) (Lab)
I thought the Minister was a touch complacent in his earlier answer on smart meters given that this will cost the taxpayer £11 billion by the end of the Parliament. What is he going to do about the fact that they do not work when a customer switches supplier?
Jesse Norman
The smart meter programme should be judged on its long-term effect. It will save £47 billion by the end of that decade.[Official Report, 15 March 2017, Vol. 623, c. 5-6MC.]
Rachael Maskell (York Central) (Lab/Co-op)
When will the business rate review commence and report? The sticking plasters offered last week will do little for small businesses in York.
Margot James
The review will report in due course and in the not-too-distant future.
Melanie Onn (Great Grimsby) (Lab)
The digital strategy is a key component of the Government’s industrial strategy. Can the Secretary of State do better than the Department for Culture, Media and Sport and tell me which companies have committed to work in Great Grimsby as part of the digital skills partnership?
Greg Clark
The whole of the industrial strategy is an invitation to businesses in every sector to come forward and propose to the Government what is required to grow jobs and skills. That is the invitation to all digital companies.
Greg Mulholland (Leeds North West) (LD)
The Pubs Code Adjudicator Paul Newby failed to declare a much more fundamental direct conflict of interest than Charlotte Hogg, yet Ministers are ignoring it. Tomorrow, tenants will protest outside his office. How long will Ministers keep failing to do their duty and not face up to this situation?
Margot James
The hon. Gentleman knows that the Commissioner for Public Appointments stated that the panel considered there were no conflicts of interest in this case that would preclude Mr Newby from doing his job.
Several hon. Members rose—
Mr Speaker
I am sorry to disappoint the remaining troika, but we must now move on.
European Council
(7 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Prime Minister (Mrs Theresa May)
With permission, Mr Speaker, I would like to make a statement on last week’s European Council, and the next steps in preparing to trigger Article 50 and beginning the process of leaving the European Union.
The summit began by re-electing Donald Tusk as President of the European Council. I welcomed this because we have a close working relationship with President Tusk and recognise the strong contribution he has made in office. In the main business of the Council, we discussed the challenge of managing mass migration; the threats from organised crime and instability in the western Balkans; and the measures needed to boost Europe’s growth and competitiveness, which will remain important for us as we build a new relationship between the EU and a self-governing global Britain. In each case, we were able to show once again how Britain will continue to play a leading role in Europe long after we have left the European Union.
On migration, I welcomed the progress in implementing the action plan we agreed at the informal EU summit in Malta last month. This included Italy strengthening asylum processes and increasing returns, and Greece working to implement the EU-Turkey deal, where the UK is providing additional staff to support the interviewing of Iraqi, Afghan and Eritrean nationals.
At this Council, I argued that we must do more to dismantle the vile people-smuggling rings who profit from the migrants’ misery and who are subjecting many to unimaginable abuses. With co-ordinated and committed action, we can make a difference. Indeed, just last month an operation between our National Crime Agency and the Hellenic coastguard led to the arrest of 19 members of an organised immigration crime group in Greece. As I have argued before, we need a managed, controlled and truly global approach, and that is exactly what the Council agreed. We need to help to ensure that refugees claim asylum in the first safe country they reach, and help those countries to support the refugees so they do not have to make the perilous journey to Europe. We need a better overall approach to managing economic migration, one which recognises that all countries have the right to control their borders. Engaging our African partners in this global approach will be crucial, and this will be an important part of the discussions at the Somalia conference which the UK will be hosting in London in May.
Turning to the deteriorating situation in the western Balkans, I made clear my concerns about the risks it presents to the region and to our wider collective security. Organised criminals and terrorists are ready to exploit these vulnerabilities, and we are seeing increasingly brazen interference by Russia and others. In light of the alleged Montenegro coup plot, I called on the Council to do more to counter destabilising Russian disinformation campaigns and to raise the visibility of the western commitment to this region.
The UK will lead the way. The Foreign Secretary will be visiting Russia in the coming weeks, where I expect him to set out our concerns about reports of Russian interference in the affairs of the Government of Montenegro. We will provide strategic communications expertise to the EU institutions to counter disinformation campaigns in the region, and we will host the 2018 western Balkans summit. In the run-up to that summit, we will enhance our security co-operation with our western Balkans partners, including on serious and organised crime, anti-corruption and cyber-security.
More broadly, I also re-emphasised the importance that the UK places on NATO as the bedrock of our collective defence, and I urged other member states to start investing more, in line with NATO’s target, so that every country plays its full part in sharing the burden. For it is only by investing properly in our defence that we can ensure we are properly equipped to keep our people safe.
Turning to growth and competitiveness, I want us to build a new relationship with the EU, as I have said, that will give our companies the maximum freedom to trade with and operate in the European market, and allow European businesses to do the same here. So a successful and competitive European market in the future will remain in our national interest. At this Council, I called for further steps to complete the single market and the digital single market.
I also welcomed the completion of the free trade agreement between the EU and Canada and pressed for an agreement with Japan in the coming months. For these agreements—[Interruption.] Yes, just wait for it. These agreements will lay the foundation for our continuing trading relationships with these countries as we leave the EU.
At the same time, we will also seize the opportunity to forge our own new trade deals and to reach out beyond the borders of Europe to build relationships with old friends and new allies alike. This weekend, we announced a two-day conference with the largest ever Qatari trade delegation to visit the UK, building on the £5 billion of trade we already do with Qatar every year. We will also strengthen the unique and proud global relationships we have forged with the diverse and vibrant alliance of the Commonwealth, which we celebrated on Commonwealth day yesterday.
Finally, last night the Bill on article 50 successfully completed its passage through both Houses unchanged. It will now proceed to Royal Assent in the coming days, so we remain on track with the timetable I set out six months ago. I will return to this House before the end of this month to notify when I have formally triggered article 50 and begun the process through which the United Kingdom will leave the European Union. This will be a defining moment for our whole country, as we begin to forge a new relationship with Europe and a new role for ourselves in the world.
We will be a strong, self-governing global Britain with control once again over our borders and our laws. We will use this moment of opportunity to build a stronger economy and a fairer society, so that we secure both the right deal for Britain abroad and a better deal for ordinary working people at home.
The new relationship with the EU that we negotiate will work for the whole of the United Kingdom. That is why we have been working closely with the devolved Administrations, including the Scottish Government, listening to their proposals and recognising the many areas of common ground that we have, such as protecting workers’ rights and our security from crime and terrorism.
So, Mr Speaker, this is not a moment to play politics or create uncertainty and division. It is a moment to bring our country together, to honour the will of the British people and to shape for them a brighter future and a better Britain. I commend this statement to the House.
Jeremy Corbyn (Islington North) (Lab)
I thank the Prime Minister for an advance copy of the statement. The passing into law of the European Union (Notification of Withdrawal) Bill marks an historic step. The triggering of article 50 later this month is a process that will shape this country’s future. There is no doubt that if the wrong decisions are made, we will pay the price for decades to come.
Now, more than ever, Britain needs an inclusive Government who listen and act accordingly. However, all the signs are that we have a complacent Government—complacent with our economy; complacent with people’s rights; complacent about the future of this country. I urge the Prime Minister to listen to the collective wisdom of this Parliament, and to give the House a full opportunity to scrutinise the article 50 deal with a meaningful final vote. The people’s representatives deserve better than “take it or leave it”. If we are to protect jobs and living standards, and if we are to protect the future prosperity of the country, the Government must secure tariff-free access to the single European market.
The Prime Minister has already made the threat to our negotiating partners to turn Britain into a deregulated tax haven. Is that what she means by “global Britain”? When the Foreign Secretary says that no deal with the EU would be “perfectly OK”, it simply is not good enough. Far from taking back control, leaving Britain to World Trade Organisation rules would mean losing control, losing jobs, and, frankly, losing out. The Prime Minister says that no deal is better than a bad deal. Let me be clear: no deal is a bad deal. Such a complacent strategy would punish business, hit jobs, and devastate public services on which people rely.
The Prime Minister says that she is seeking to secure a future free trade deal with the EU, after initial negotiations have been completed. If that is the strategy, it is essential that the Government stop being complacent and focus on securing a transitional agreement with the EU at the earliest opportunity. That would at least give the British people and businesses some short-term clarity during this period.
The Prime Minister said that she wanted to provide certainty on the issue of EU nationals as soon as possible. Why, then, have the Government voted down every Labour attempt to bring certainty to EU nationals, who make such a massive contribution to our community and our society? These people are not bargaining chips; they are mothers, fathers, wives and husbands. They are valued members of our community. The Government could and should have acted months ago. I agree with the Prime Minister that now is not the time to create uncertainty or play politics. She should tell that to the EU migrants in Britain who have no idea what their future holds because of the decisions made by her Government.
Is the Prime Minister saying that she is content for refugees to remain in camps in Libya—is that a safe country?—or for Greece, Italy and Malta to shoulder the entire burden of refugees from north Africa and the middle east? While we welcome the conference on Somalia that she is proposing, we need to know what support Britain is offering to all those countries. Does the Prime Minister still believe that we have a collective responsibility on the issue of refugees?
The Prime Minister said that she had argued about tackling vile smuggling rings, and about people being subjected to unimaginable abuse. Does she not agree that her argument would be so much stronger if her Government had been prepared to accept some of the victims of that unimaginable abuse; for example, the children who should have been accepted through the Dubs amendment?
As we move towards the triggering of article 50, there is much uncertainty about Britain’s future. A responsible Government would set a positive tone with our negotiating partners, and would move to protect our economy, workers and citizens at the earliest opportunity. Instead, we have a reckless Government who are playing fast and loose with the British economy. We will fight for jobs and the economy, using every parliamentary mechanism that is available, and the Government should welcome that scrutiny.
The Prime Minister
The right hon. Gentleman mentioned a range of issues. He spoke again about the issue of EU nationals. As I have said in the House and as has been said by others from this Dispatch Box, we do want to ensure that the issue of the status of EU nationals who are living in the UK is dealt with at an early stage in the negotiations, but we also have a consideration for the UK nationals who are living in the EU. He said that the EU nationals living here are individuals who have contributed to our society. Indeed they are, but UK nationals living in EU member states are individuals who have contributed to their society and economy. I want to ensure that their status is also ensured. We hope and expect that this will be an issue that we can address at an early stage.
The right hon. Gentleman talked about the need to come forward and be very clear about the need for a transitional period. I refer him to the speech I gave in Lancaster House in January and to the White Paper that we published. The need for an implementation period so that we have a smooth and orderly Brexit process is one of the objectives that was set out in that speech and in that document.
The right hon. Gentleman talked about refugees from north Africa and the middle east. What we want to ensure is that people do not feel the need to make the often dangerous, life-threatening journey across the central Mediterranean. Many of these people—more than three quarters of the people who are doing this—are not refugees; they are economic migrants. We need to ensure that we are providing facilities and working with countries in Africa—which the EU and other countries are doing—to ensure that the circumstances are such that people do not try to make a life-threatening journey. We also need internationally to be able to make a better distinction between refugees and economic migrants, so that we can give better support to those who are refugees.
The right hon. Gentleman appeared to suggest that the UK Government are doing absolutely nothing to break the vile smuggling rings. In my statement, I quoted a recent example of the work of the National Crime Agency; I might add that it was a Conservative-led Government who set up the NCA and the Organised Immigration Crime Taskforce. The Government are dealing with these issues. He talks about abuses and the movement and trafficking of people, but it is this Government who brought in the Modern Slavery Act 2015. I am very proud that it is this Government who did so.
The right hon. Gentleman referred to global Britain and what it means. I will tell him what it means. It is about a strong, self-governing Britain, a Britain that is trading around the world with old friends and new allies alike, and a Britain that is proud to take its place on the world stage.
Sir William Cash (Stone) (Con)
I congratulate my right hon. Friend not only on her statement and the way in which she dispatched the Leader of the Opposition, but on the passage of the European Union (Notification of Withdrawal) Bill. Does she accept that now is the time for the UK to do all the things that she has recommended in her statement and, in addition to that, to take urgent legal advice in respect of the legal warnings that have been given by Lord Hope of Craighead to be sure that we do not have any unforeseen further attempts to undo that Bill in the courts?
The Prime Minister
I can assure my hon. Friend that, as we move ahead with this, as we have at every stage, we will take appropriate legal advice, but as he will know we do not discuss that on the Floor of the House.
Angus Robertson (Moray) (SNP)
I thank the Prime Minister for advance notice of her statement. I agree with her about how valuable it was that a large part of the EU Council was given over to jobs, growth and competitiveness. That is hugely welcome for the whole of the UK. It really matters that there is economic growth across all 27 member states. The single European market matters to all of us, given it is the largest single market in the world.
The last time the Prime Minister came to the Dispatch Box following an EU Council meeting, I asked her what issues she had raised on behalf of the Scottish Government and their priorities. She could not give a single example then, so I am going to try the same question again. Given that this was the last EU Council before the invoking of article 50, can she give an example—just one, please—of a single issue that was raised on behalf of the Scottish Government and their priorities at the Council meeting? [Interruption.] Goodness, there is a lot of hubbub from the Government Benches on this issue. Perhaps they are also keen to hear from the Prime Minister on that. She did not make a single mention during her statement of what she raised on behalf of the Scottish Government. We will all wait with bated breath to hear the Prime Minister answer that question.
While the Prime Minister was in Brussels, what discussions did she have about her Brexit timetable? Can she confirm that the plan is to negotiate a deal and that, after that, there needs to be time—time for ratification and for agreement across the EU and its institutions? Will she confirm from the Dispatch Box that that is indeed her plan?
The Prime Minister has decided, for one reason or another—I cannot imagine why—to delay the invoking of article 50. Last July, we were told by the Prime Minister herself—I am sure that she remembers saying these very words—that she would not trigger article 50 until she had a “UK-wide approach”. She knows that she has no agreement with the devolved Administration, despite months of compromise suggestions from the Scottish Government. Will the UK Government, even at this very late stage, use the next days to secure a compromise UK-wide approach, or does she still plan to plough on regardless, even though she knows what the consequences of that will mean?
The Prime Minister
The right hon. Gentleman asks what issues of relevance to the Scottish Government and to the Scottish people were raised at the European Council. I can answer him—jobs, growth and competitiveness. Those are issues that matter to the Scottish people. They matter to the people of the whole of the UK. He asked whether at the Council there was a discussion of the timetable for the negotiations in respect of article 50. As I said early on in my statement, in the main business of the Council, we discussed the challenge of managing mass migration; the threats from organised crime and instability in the western Balkans; and the measures needed to boost Europe’s growth and competitiveness. This was a Council at which we focused on those issues. I was presenting the case for the UK’s concerns in relation to those issues, including jobs, which, as I have said, matter to the people of Scotland.
The right hon. Gentleman talked about the importance of access to the single market of the European Union. I simply remind him and his colleagues once again that the most important single market for Scotland is the single market of the United Kingdom.
John Redwood (Wokingham) (Con)
Should not friendly democracies with decent values rush to reassure British citizens that they can stay on the continent, and is it not strongly in the economic interests of our partners to accept our generous offer of continuing with tariff-free trade on the same basis as today?
The Prime Minister
My right hon. Friend makes an important point. The issue of EU nationals and UK nationals, and the question of the trading relationship we have in the future, is not a one-sided argument; it is about the benefits for the EU as well. I very much think that that is the case in relation to trade. As I have said before, this is not about something that works just for the UK. I believe the right trading deal for the UK, the sort of free and open access that he talks about, will be good for the rest of the EU as well.
Hilary Benn (Leeds Central) (Lab)
The Prime Minister has spoken many times about the importance of achieving a good deal from the negotiations that the country is about to embark upon, yet in recent days the Foreign Secretary has said that leaving with no deal would be perfectly okay, while the Secretary of State for International Trade has said that not achieving a deal would be bad. Would the Prime Minister care to adjudicate and tell the House which of those Ministers was speaking for the Government?
The Prime Minister
I am optimistic that we are going to get a good deal for the UK on trading with the EU.
Crispin Blunt (Reigate) (Con)
No deal may be a bad deal for both the EU 27 and for the UK, but it is very far from the worst deal for the UK if there were no route to a future free trading arrangement with the EU. The deal is in the gift not of the Prime Minister’s Government, however hard they are trying to deliver it, or of this Parliament, but of the European Parliament and our partners. So no deal remains a real possibility. It seems that her Government and Departments are now preparing for it. Will that preparation include the opportunity for individuals and businesses to make their own dispositions for that possibility?
The Prime Minister
I was clear in the Lancaster House speech that no deal was better than a bad deal. I am optimistic that we will be able to negotiate a good deal, but my hon. Friend is absolutely right of course that there are other parties to this, and it is not just about what we say. There will be a negotiation about that trade arrangement, and I can assure him that in coming to an agreement on that arrangement I and others in Parliament—the Secretary of State for Exiting the European Union, the Secretary of State for Business, Energy and Industrial Strategy—are talking to businesses across the United Kingdom to understand the issues that are most important to them.
Emma Reynolds (Wolverhampton North East) (Lab)
The Prime Minister said again just now that no deal is better than a bad deal, but what possible deal is worse than no deal, and can she describe it?
The Prime Minister
We are about to enter into a negotiation with the remaining 27 members of the European Union. As part of that, we will be negotiating a trade deal for our future relationship with the European Union. I confidently expect that we will get a good deal. [Interruption.] Somebody says “You hope” from a sedentary position. It is precisely because of the answer I gave to my right hon. Friend the Member for Wokingham (John Redwood): this is not a one-sided negotiation. It is not just about what is going to suit the UK; it is about what is right for the future relationship between the UK and the EU, and a good trade deal for the UK is a good trade deal for the EU.
Mrs Cheryl Gillan (Chesham and Amersham) (Con)
I welcome the Prime Minister’s announcement that the UK is strengthening its contribution to cyber-security and countering disinformation and also the Foreign Secretary’s forthcoming visit to Russia, but with Russia spending over a billion dollars on media outlets and troll factories, is she satisfied that the EU’s East StratCom organisation, which counters fake news and misinformation from the Kremlin, is sufficiently resourced? Also, what progress was made on setting up the further centres to identify and counteract Russian propaganda that were mentioned in the pre-briefing to the Council?
The Prime Minister
My right hon. Friend raises a very important point. The UK has particular expertise and experience when it comes to the whole issue of strategic communications around these sorts of areas, and we will be making that expertise available to the EU in order to be able to enhance the work it is doing to counter the disinformation campaigns.
Andy Burnham (Leigh) (Lab)
May I tell the Prime Minister that it is not just in Scotland where there is a fear that the right wing of her party is dictating the terms of this debate and pushing us towards a Brexit deal that favours London and the south over the north? May I ask her to dither no more, and to establish a Brexit committee of the regions and nations, and give places like Greater Manchester equal and fair representation in this crucial debate?
The Prime Minister
As I have repeatedly said in this House, this Government will be negotiating a deal that will be good for the whole of the United Kingdom. That is why we have been listening to businesses and others from across the whole of the UK—yes, the devolved Administrations, but also people from the regions of England and businesses from across the whole of the UK—to understand the interests and what we need to take into account as we negotiate the deal.
Mr Jacob Rees-Mogg (North East Somerset) (Con)
As my right hon. Friend launches into the negotiations, I wonder if she has had time to consider the excellent House of Lords report that says we have no legal obligation to pay any money whatsoever to the European Union. Does she share my view that that is an excellent basis for beginning the negotiations?
The Prime Minister
I can assure my hon. Friend that I have noted the House of Lords report on this particular matter. As he will know, when people voted on 23 June last year they were very clear that they did not want to continue year after year paying huge sums of money into the European Union.
Tim Farron (Westmorland and Lonsdale) (LD)
I thank the Prime Minister for advance sight of her statement. Given that she is interpreting the will of the people and not enacting it, history will declare that last night she demonstrated contempt for this place and for the British people. The Brexit deal is an unwritten, unknown deal, and it is a deal that will be signed off by someone. The only question is: will it be signed off by a handful of politicians or by the whole of the people? Does she agree that it should be signed off by the whole of the people?
The Prime Minister
What the hon. Gentleman says comes a little strange from his party: I seem to remember the time when the Liberal Democrats were going around telling everybody that they were going to have an in/out referendum on membership of the EU, yet now that we have had an in/out referendum on membership of the EU they are not willing to accept the result the British people gave them. We are, and that is why we are putting it into practice. We are delivering the will of the British people.
Conor Burns (Bournemouth West) (Con)
My right hon. Friend the Prime Minister has been very clear that the United Kingdom is leaving the European Union, but we are not leaving Europe. A strong and prosperous EU remains in the interests of the United Kingdom. Does my right hon. Friend agree that a strong, stable united United Kingdom is also in the interests of the EU, and will she vigorously resist anyone who uses this moment to try and destroy our precious United Kingdom?
The Prime Minister
I absolutely agree with my hon. Friend. As he has said, and as I have said before, a strong remaining EU of 27 will be in the best interests of the UK. We want to see the EU remaining strong, but we also want to see a strong UK playing its role as a global Britain. It is important that we keep the Union of the United Kingdom together; there is much that binds us, and I do not want to see anybody engaging in constitutional game-playing with the future of the United Kingdom.
Alex Salmond (Gordon) (SNP)
I congratulate the Prime Minister on bringing the country together and uniting Scotland behind our First Minister. The Prime Minister was asked by my right hon. Friend the Member for Moray (Angus Robertson) about what was said last year, so let me cite the Tory Bible The Daily Telegraph on 15 July:
“Theresa May has indicated that…she will not trigger the formal process for leaving the EU until there is an agreed ‘UK approach’ backed by Scotland.”
Was that misreporting by The Daily Telegraph, misspeaking by the Prime Minister, or is she still working on it?
The Prime Minister
As the right hon. Gentleman knows full well, we have been in discussions with the Scottish Government and the other devolved Administrations, recognising the issues they have raised, and recognising the concerns and the common ground between us. The right hon. Gentleman refers to the views of the Scottish people in relation to the announcement made yesterday by the Scottish First Minister; I might remind him that the evidence in Scotland is that actually the majority of the Scottish people do not want a second independence referendum.
Mr Bernard Jenkin (Harwich and North Essex) (Con)
I commend my right hon. Friend for her very measured response to the provocation of the calling of a second independence referendum in Scotland: she is not ruling out a referendum in the future, but now is not the right time. Will she also point out that the Scotland Act 2016 reserves all the single market issues to the United Kingdom Government? These are matters that we should share with Scotland in the discussion, but they are matters reserved to the United Kingdom.
The Prime Minister
As I have just said in response to the right hon. Member for Gordon (Alex Salmond), at the moment the evidence is that the Scottish people do not want a second independence referendum. As we negotiate issues in relation to access to the single market through the free trade deal that we will be negotiating, we will be taking into account the interests of the whole of the United Kingdom—of every part of it—and ensuring that that deal works for everybody across the UK, including the people of Scotland.
Mr Nigel Dodds (Belfast North) (DUP)
Following the successful conclusion of the article 50 Bill last night, there are some in Northern Ireland who would add to the uncertainty and division by calling for a border poll. They have already created enough uncertainty and division by collapsing the institutions in Northern Ireland. Will the Prime Minister take this opportunity to tell people that there has never been more support for the Union in Northern Ireland across all communities, and that in fact such a call is outside the terms of the Belfast agreement, and the very point that Sinn Féin keeps harping on about is that it wants the implementation of the agreements?
The Prime Minister
The right hon. Gentleman is right: obviously there is a set of circumstances, but the Secretary of State for Northern Ireland has looked at this issue and it is not right to have a border poll at this stage. What we should all be focusing on is bringing the parties together to ensure that we can continue to see the devolved Administration in Northern Ireland working, as they have done, in the interests of the people of Northern Ireland. We want to see that devolved Administration being formed, and that is what all the parties should be looking for at the moment.
Mr Mark Harper (Forest of Dean) (Con)
Is it not clear from the European negotiations that a lot of the detail will not be finalised until the end of the process, and therefore that the timetable set out yesterday by the First Minister for a premature second independence referendum is an excuse, not a reason? Should we not listen to the right hon. Member for Gordon (Alex Salmond), who referred to the last independence referendum as a “once in a generation opportunity”?
The Prime Minister
My right hon. Friend rightly points out that we have a timetable of up to two years for the negotiations, and it is possible that the details will not be finalised until close to the end of that period. He is also entirely right to suggest that those in Scotland who talk about having a second referendum should remember what the right hon. Member for Gordon said: it was a once in a generation vote that took place in September 2014. It seems that a generation is now less than three years.
Ms Angela Eagle (Wallasey) (Lab)
The Prime Minister has said that no deal is better than a bad deal. We all wish her well in getting the best possible deal for the UK, but will she now publish what the effects would be of crashing out of the European Union on World Trade Organisation rules, so that we can have a debate in this country about her assertion that no deal is better than a bad deal?
The Prime Minister
I am grateful to the hon. Lady for her support for the Government as we look ahead and try to negotiate the best possible deal for the United Kingdom. That is precisely what we will be doing.
Antoinette Sandbach (Eddisbury) (Con)
I welcome the Prime Minister’s positive approach to establishing a new, co-operative relationship with Europe and the sensibleness of contingency planning. Will she tell us how much that contingency planning will cost?
The Prime Minister
It is important that contingency planning should take place, and we obviously have to look at a variety of scenarios. A lot of work is being done by the Department for Exiting the European Union and will be done by other Departments as well. It is important that that work is done properly so the Government can have the best possible information on which to negotiate our relationship for the future.
Chris Leslie (Nottingham East) (Lab/Co-op)
After lecturing the other European leaders on how they should complete the single market, did the Prime Minister remember that she had already thrown in the towel on Britain’s membership of the single market? Will she admit what an error it was for her to give the Scottish First Minister exactly the excuse she was looking for for an opportunistic second referendum?
The Prime Minister
First of all, no lecturing took place. There was a view around the table—I encouraged it, and others contributed—that it was important for the European Union to continue to complete the single market. The hon. Gentleman talks about the single market, but actually there is work yet to be done. It is also important for the EU to continue to work on trade arrangements with other areas. The reason that I ask the EU leaders to do that is that it will be good for the United Kingdom in our future relationship with the European Union. This is something that will be good for us. I have always been clear that we will trigger article 50 by the end of March, and that is exactly what we will do.
Mr Peter Bone (Wellingborough) (Con)
There has been much speculation about the divorce from the European Union and about how much money would need to be paid in the process. I am afraid that I am going to disagree with my hon. Friend the Member for North East Somerset (Mr Rees-Mogg) on this point. Since we joined the EEC in 1973, we have paid in £184 billion. That is the net contribution—the actual amount that we have paid in after taking into account any money that we got back. When people get a divorce, do they not split the net amount in two? That would mean that £92 billion should be paid back to us. Did the Prime Minister have a chance to bring that up at the summit?
The Prime Minister
I am tempted to say to my hon. Friend: “Nice try, but I don’t think that was an application for a job at the Treasury.”
Caroline Lucas (Brighton, Pavilion) (Green)
Not everyone shares the Prime Minister’s enthusiasm for the imminent application of the EU-Canada agreement, not least because the comprehensive economic and trade agreement’s new investment court system still fails to address serious concerns about the investor-state dispute settlement process. Does she regard CETA as a blueprint for the trade deals that she thinks the Government can so easily agree, once the UK has left the EU? What reassurance can she give us about protecting key social and environmental standards and our public services if that is the case?
The Prime Minister
There is no blueprint. I have said consistently over the past seven months or so that we are not looking to adopt another country’s model for our relationship with the European Union. We will negotiate the deal that is right for the UK.
David Rutley (Macclesfield) (Con)
In the EU Council, did my right hon. Friend detect any strong support for a separatist Scotland remaining in the EU, no questions asked?
The Prime Minister
I can honestly say to my hon. Friend that I did not detect any such support in the European Council.
Mr David Winnick (Walsall North) (Lab)
The country is almost evenly divided about leaving the EU, so how will the Prime Minister try to resolve that? I have not known the country to be so divided since Suez in 1956.
The Prime Minister
This House chose to give a vote to the British people in the referendum on 23 June, and the people of the United Kingdom voted in that referendum. The majority voted for the UK to leave the European Union. When I talk to people who voted to leave and to those who voted to remain, the overwhelming message is that they now want the Government to get on with the job of delivering on that vote.
James Cleverly (Braintree) (Con)
My right hon. Friend the Prime Minister has made it clear at the Dispatch Box and in the country that she wishes to prioritise certainty for UK nationals living in the EU 27 and for EU nationals living here in the UK, but I have it on good authority that the EU negotiators want to prioritise the so-called divorce settlement. Will she make it clear to the people with whom she is negotiating that we will not countenance British and EU citizens being used as bargaining chips in such a way?
The Prime Minister
My hon. Friend is right. We want to ensure reciprocal arrangements for EU citizens living here and for UK citizens living in the EU in terms of their future status, and I want to see that discussion taking place at an early stage in the negotiations. I recognise his point about some of the things that are being said, but I will simply say that, following my conversations with other European leaders, I believe that there is an extent of goodwill to deal with this issue at an early stage.
Alison McGovern (Wirral South) (Lab)
The Prime Minister lectures nationalists on the importance of staying in unions, but all the while she is advocating leaving one. She lectures our European partners on the importance of the single market, but all the while she is hellbent on our leaving it. Does she think that this incoherence in her position might be dealt with—and make her life easier—if she thought again about our staying within the single market?
The Prime Minister
I have said this on a number of occasions in the House, and I will repeat it here today: we want to negotiate the best possible trading arrangements. My right hon. Friend the Member for Wokingham (John Redwood) has talked about a tariff-free, frictionless and seamless movement of goods and services. It is wrong to think of the single market as a binary issue, in which we are either in it or have no access to it. We want to ensure that we have good access to the single market and the best possible trade deal, which will allow frictionless and, as far as possible, tariff-free access.
Sir Julian Brazier (Canterbury) (Con)
I particularly welcome my right hon. Friend’s comments on the Balkans, an area that has plunged Europe into horror several times over the past few centuries. Will she confirm that it is Britain that has insisted that we keep the mission there going, despite the opposition of several of our European partners?
The Prime Minister
My hon. Friend is absolutely right. The United Kingdom has been playing a key role in relation to the western Balkans. There was a good discussion at the European Council and clear recognition around the table of the need for us to continue to be involved in the western Balkans and of a number of steps that can be taken to ensure that we stabilise the region, which is in the interests of not only the countries in the western Balkans but the rest of us in Europe.
Ms Tasmina Ahmed-Sheikh (Ochil and South Perthshire) (SNP)
In the spirit of the so-called UK-wide approach to Brexit, will the Prime Minister confirm how much notice she intends to give to the First Ministers of Wales and Scotland and to the leadership in Northern Ireland of the date upon which she intends to invoke article 50?
The Prime Minister
We will invoke article 50 by the end of March, and a number of processes will happen in advance of that invocation. As I have said, I will come to the House when we have decided to make the notification.
Kevin Foster (Torbay) (Con)
Did the Prime Minister have the chance to take up with the European Commission and the Spanish Government their attitudes to the border with Gibraltar and to the separatists who claim that their countries could break away and then just rejoin the EU?
The Prime Minister
In our negotiations, the Spanish Government have been concerned and clear that it is not possible for a country to break away from a member of the European Union and immediately rejoin the European Union—the Barroso doctrine, which has been reaffirmed by the European Commission. As for Scotland, independence would not mean membership of the European Union. Scotland would remain outside the European Union.
Kate Hoey (Vauxhall) (Lab)
I am sure that the Prime Minister will be pleased to know that millions of Labour supporters across the country will be delighted and will share her and my pleasure at the legal decision taken by Parliament. Did the right hon. Lady have any chance at the Council to discuss informally with EU leaders the position of British citizens in other countries? Are those leaders sticking up for our citizens there in the way we are sticking up for their citizens here?
The Prime Minister
I have had several discussions with European leaders on that point. That is why I said in response to an earlier question that there is good will on both sides about dealing with the issue and about recognising the needs not only of UK citizens living in other EU member states but of EU citizens living here in the UK. There is good will, but, as has been made clear in the past, no discussion can happen until the negotiations have been formally triggered.
Alberto Costa (South Leicestershire) (Con)
I welcome the Prime Minister’s statement that politics is not a game, but those of us who have fought the SNP know that it is a game to them. Yesterday’s announcement by the First Minister is just the first of many that we will hear in the coming weeks and months. Does the Prime Minister agree that it is imperative that her Government and every Member of this House who believes in Great Britain and Northern Ireland reaffirm to our constituents outside of Scotland why it is that the United Kingdom is important to us all?
The Prime Minister
I absolutely agree with my hon. Friend. It is vital for us to continue to confirm and reaffirm the importance of the United Kingdom. He says that we should reaffirm that importance to constituents outside Scotland, but we should also reaffirm the importance of the United Kingdom to Scotland and to Scotland’s economy, which I did recently when I was in Glasgow.
Hywel Williams (Arfon) (PC)
I was glad to hear the Prime Minister say that she has been working with the devolved Administrations, but I was also slightly puzzled because the
“Joint Ministerial Committee on Exiting the EU is less organised than a community council”.
Those are not my words, but those of an actual participant: the Welsh Government Minister Mark Drakeford. How is she ensuring that the interests of the devolved Governments are reflected in the article 50 notification?
The Prime Minister
The Joint Ministerial Committee process has been operating for some months at various levels and has brought UK Government Ministers together with the three devolved Administrations to discuss issues that have been raised on both sides, including looking at the Welsh Government’s paper on Wales’s particular concerns, which are being taken into account.
Sir Desmond Swayne (New Forest West) (Con)
The Premier of Luxembourg apparently believes that we might yet be persuaded to stay in the EU. Are there others like him? If yesterday’s emphatic proceedings did not disabuse him, will the Prime Minister do so in the nicest possible way?
The Prime Minister
I think we can be reassured that the votes that took place in this House and in the House of Lords last night and the granting of Royal Assent to the European Union (Notification of Withdrawal) Bill will send a clear message to everybody in Europe that we mean business.
Mike Gapes (Ilford South) (Lab/Co-op)
The practice and experience in complex negotiations, such as in Northern Ireland, is that nothing is agreed until everything is agreed. Does the Prime Minister agree that that will be the case here? If so, and given that she said that no deal is preferable to a bad deal, how can British citizens living in EU countries or EU citizens living in the UK believe that there will be any resolution of the uncertainty?
The Prime Minister
The hon. Gentleman cites experience as the model for what will happen in our negotiations, but I do not look at these matters in that way. When we invoke article 50, we will start those negotiations, and we have already been in discussions with other European leaders about the importance of reassuring UK citizens living in the 27 member states and EU citizens living here on their status and their future. As I have said in answer to several questions, including one from the hon. Member for Vauxhall (Kate Hoey), I believe that there is genuine good will on both sides on this issue, and that is why I want it to be an early part of the negotiations.
Oliver Dowden (Hertsmere) (Con)
The Prime Minister rightly talked about the need to reassure EU nationals in this country. Does she agree that the biggest reassurance we can give is that their rights will remain completely unaltered until this House chooses to change them?
The Prime Minister
My hon. Friend makes an important point. Of course, we will still be members of the EU until we exit the EU, but it is clear that any changes to our immigration rules that need to happen will have to come before this House.
Joanna Cherry (Edinburgh South West) (SNP)
The Prime Minister has said several times today that she is in discussions with the Scottish Government. She has also confirmed that she wants to trigger article 50 by the end of the month. By my calculations, she has less than two weeks to finish those discussions and to agree and announce the UK-wide approach that she promised in July last year, so when does she expect to finish her discussions with the Scottish Government and to announce the outcome?
The Prime Minister
As the hon. and learned Lady knows, when we trigger article 50 and enter negotiations, we will be negotiating as the UK Government. We have been in discussions with the Scottish Government and the other devolved Administrations, and those discussions continue. However, I have of course already set out our broad objectives for the negotiations, which included a reference to the sort of trade deal that she and her colleagues have said they want for the United Kingdom and for Scotland.
Nadhim Zahawi (Stratford-on-Avon) (Con)
There were smirks and laughter from the Opposition Benches when my right hon. Friend spoke of the single market and digital. Will she remind the House that we want to continue to trade with the single market and that we inject £60 billion-worth of demand into that market? With investment from Snap, Facebook and SoftBank, this country is a powerhouse in digital.
The Prime Minister
My hon. Friend is absolutely right about this country’s important role in the market for digital services, which is why my right hon. Friend the Secretary of State for Culture, Media and Sport has set out a digital strategy. I was rather surprised by the derision from the Opposition at the suggestion that we should encourage a single market in digital services in the European Union, which we can trade with and sell into. They seem not to want us to develop that market in a way that is good for the United Kingdom.
Owen Smith (Pontypridd) (Lab)
A moment ago, the Prime Minister repeated without a hint of irony or comedy that she is encouraging the European Union to complete the single market in services because that is in our national interest. Will she explain to the House and to the country how it is not in our national interest to be a part of it?
The Prime Minister
The hon. Gentleman has said in the past that he has a different view on the result of the vote and of where the Government should be going in relation to membership of the European Union.
The Prime Minister
Yes, I know that the hon. Member for Pontypridd (Owen Smith) asked about the single market, and I have answered many questions about that. My response to him is the same as my response to my hon. Friend the Member for Reigate (Crispin Blunt), which is that it is important for us to encourage the market—the market that we are going to be working with, that we are going to be trading with, that we want the best possible access to and that we want our services to be able to operate within—to be a free market with which we are able to work.
Mr David Nuttall (Bury North) (Con)
I thank my right hon. Friend for her statement. As we do not pay to sell our goods and services to any other country around the world, will she confirm that we will not accept any deal that requires us to pay the European Union for access to the single market?
The Prime Minister
My hon. Friend may have been looking at the same report as my hon. Friend the Member for North East Somerset (Mr Rees-Mogg) in relation to the sums that we pay. As I said in my response to him, the vote on 23 June 2016 was about many things. Obviously, in terms of leaving the European Union, one of the things that people were clear about is that we would not continue paying huge sums into the EU every year.
Mark Durkan (Foyle) (SDLP)
Is it the Prime Minister’s intention that both the common travel area and the Good Friday agreement will be specifically named as features in the framework for future relations between the UK and the EU? Does she accept the Taoiseach’s point about the signal importance of having the consent provisions of the Good Friday agreement specifically reflected in a new UK-EU treaty to make it clear that Northern Ireland, as one part of the UK, could elect to rejoin the EU without necessitating article 49 negotiations and that the Barroso doctrine would not be an impediment?
The Prime Minister
We have been very clear about the importance of maintaining and delivering on the agreements that have been made in relation to Northern Ireland, and that issue is very clear to other member states of the European Union. Of course the common travel area existed long before either the Republic or the United Kingdom were part of the European Union, and one of the objectives I set out as we look to the future negotiations is that we will be looking to maintain the common travel area.
Ben Howlett (Bath) (Con)
Following the last few months of debate, I am assured by the Prime Minister and her Government that they are striving to achieve a zero-tariff trade deal on goods and services with the EU as they enter formal negotiations. Will she outline the potential impact on European markets of not agreeing a trade deal with the UK following its departure from the European Union?
The Prime Minister
My hon. Friend raises an important point, because all too often people act as if somehow we are just a supplicant in this relationship and that anything that is decided will have an impact only on the United Kingdom. Of course a trade deal will have an impact on companies within the remaining 27 member states, as they want to trade with and operate within the United Kingdom. That is why I am confident that, when we come to the negotiations, people will see the benefit to both sides of getting a good trade deal.
Stella Creasy (Walthamstow) (Lab/Co-op)
The Prime Minister has said that, in the deal she wants with the European Union, she would like associate membership of the customs union—a membership that does not as yet exist.
On 6 February, after the last European Council, I asked the Prime Minister whether she had raised that idea with her European counterparts, and she overlooked the question—I am sure it was an oversight—so I ask her the question again. Has she raised the idea, and what was the response? Or should we take her evasiveness as meaning that there is no deal?
The Prime Minister
First, the hon. Lady is slightly misinterpreting the speech I gave at Lancaster House, in which I said that there are certain elements of the customs union that we would not wish to be part of because they prevent us from negotiating trade deals on our own, as the United Kingdom, with other countries across the world. I said that the relationship we want with the customs union is to have
“as seamless and as frictionless a border as possible”.
I indicated that that might be called “associate membership” or it might be something else, but we need to do that as part of the negotiations. Our relationship with the customs union will be part of the negotiations that will start when we trigger article 50.
Rehman Chishti (Gillingham and Rainham) (Con)
I welcome the Prime Minister’s statement. Paragraph 9 of the conclusions on security refers to the EU working together to fight terrorism. One of the biggest challenges facing Europe and the UK in the next five to 10 years, according to experts such as Peter Neumann, is terrorist fighters returning to their host countries from Syria and Iraq as Daesh is defeated. Was that discussed at European level, and is there an agreed strategy across Europe to deal with it?
The Prime Minister
That was not one of the issues that we discussed within the business of the European Council last week. However, it is an issue that I have discussed with other member states on a number of occasions in the past, and we are all well apprised of the need to ensure that we have a means of identifying those who are returning. We are working to deal in the most appropriate way with those individuals who are returning. Of course, so far as the United Kingdom is concerned, individuals will be looked at on a case-by-case basis.
Mr Chuka Umunna (Streatham) (Lab)
On single market membership, in their 2015 manifesto the Prime Minister and her party made an unconditional commitment to
“safeguard British interests in the Single Market.”
She castigated my hon. Friends the Members for Wirral South (Alison McGovern) and for Pontypridd (Owen Smith) for raising that issue, but on 26 May 2016 she told an audience of Goldman Sachs bankers, in relation to single market membership, that
“the economic arguments are clear. I think being part of a 500-million trading bloc is significant”.
Why is she waving the white flag and starting these negotiations without even trying to keep our membership of the single market, with the reforms she seeks? We are the second-biggest economy in Europe and the fifth-biggest military power in the world, and she is waving the white flag before the negotiations have started.
The Prime Minister
I am doing nothing of the sort. The hon. Gentleman needs to recognise that there is a difference between access to the single market, protecting our ability to operate within the single market, and membership of the single market. Membership of the single market means accepting free movement, accepting the jurisdiction of the European Court of Justice and, effectively, remaining a member of the European Union. We have voted to leave the European Union, and that is what we will be doing.
Tom Tugendhat (Tonbridge and Malling) (Con)
My right hon. Friend needs no lessons in her primary duty, which is the defence of this great realm. I welcome enormously the efforts she has made with our European partners to work together to counter the Russian threat that is sadly growing in the east. Will she please comment a little on how the threat would affect the United Kingdom should parts of our own great United Kingdom secede from the Union? What vulnerabilities would that put into our defence?
The Prime Minister
It is right that we are looking very carefully at the impact that the activity of Russia and others can have across the European Union, but it is also right that we are stronger as a United Kingdom in our collective defence and that every part of the United Kingdom benefits from being part of the UK through our collective defence and security against crime and terrorism.
Wes Streeting
Membership of the single market and the customs union gives our country barrier-free, tariff-free access to the biggest single market in the world and, through the customs union, more trade deals with other countries across the world than any other leading economy outside those institutions. Why is the Prime Minister therefore determined to pull us out? Is it because she genuinely believes it is the right thing to do, which she did not just a matter of months ago, or is it because she has been taken hostage by the right wing of her party? Once more, another Conservative Prime Minister is not only putting her party political interests before the economic interests of our country but is putting at risk the integrity of the United Kingdom.
The Prime Minister
On 23 June 2016, the majority of people in the United Kingdom voted to leave the European Union, and there are consequences of leaving the European Union. We want to negotiate a comprehensive free trade agreement with the European Union that gives us the best possible access to the single market.
The Prime Minister
We have membership of the single market because we are a member of the European Union, which involves—[Interruption.]
Mr Speaker
Order. Somebody is overexcited. The question has been asked, and the Prime Minister should not have to fight to be heard. The right hon. Lady must be heard.
The Prime Minister
Being a member involves accepting certain other requirements from the European Union, requirements that people voted not to be part of when they voted on 23 June. That is why I have consistently said that Members of this House must stop thinking that the only option is membership of the single market or nothing—it is not. There is an option of having a comprehensive free trade agreement that gives us the sort of access that we want to have.
Jason McCartney (Colne Valley) (Con)
I commend the Prime Minister on her strong leadership. Latvia will host NATO’s Supreme Allied Commander Europe in meetings tomorrow. I represent a considerable Ukrainian community in Huddersfield. It is clear that there are currently real and present threats from Russian aggression throughout the whole of Europe, the Baltics and the Balkans; will the Prime Minister continue to put NATO at the forefront of our efforts to tackle the worries and concerns resulting from Russian aggression?
The Prime Minister
I absolutely assure my hon. Friend that we will continue to put NATO at the forefront of those efforts. I am pleased that the UK is able to make a specific contribution this year to NATO’s efforts in relation to the eastern border of the European Union and NATO countries with Russia. For example, we will soon see UK troops going to Estonia as a very visible sign of our commitment.
Lady Hermon (North Down) (Ind)
Fears about the consequences of Brexit were undoubtedly exploited by Sinn Féin in the recent Northern Ireland Assembly election. Sinn Féin increased their first-preference votes by somewhere in the region of 58,000, which means they are just one seat behind the Democratic Unionist party in the new Assembly, as elected. I wonder—as, I am sure, does the rest of the country, and particularly those in Northern Ireland—what additional steps, including visiting Northern Ireland, the Prime Minister is going to take to turn back the tide of support for Sinn Féin.
The Prime Minister
The hon. Lady is obviously correct in the facts she sets out about the voting in the election. The focus we must all have now and in the coming couple of weeks, because there is limited time set aside in the legislation, should be on bringing the parties together to form a devolved Administration. I believe it is absolutely essential that we do everything we can to ensure that a devolved Administration are maintained in Northern Ireland.
On the impact of Brexit, we have been very clear about the relationship we want to ensure with regard to the border with the Republic of Ireland, and we continue to work with the Republic of Ireland and others to deliver on that. Nevertheless, over the next couple of weeks the focus of us all must be on bringing the parties together to ensure a devolved Administration are formed in Northern Ireland.
Matt Warman (Boston and Skegness) (Con)
Previously as Home Secretary and now as Prime Minister, my right hon. Friend has paid particular attention to the scourge of modern slavery in economies such as Lincolnshire’s agricultural sector. Will she confirm that, as she negotiates our way out of the European Union, she will prioritise a collaborative approach to continuing to tackle this vile trade, and that she will take the same approach when it comes to designing a scheme for seasonal workers, who may still have to come to work in this country?
The Prime Minister
We will certainly continue to prioritise the work we do in relation to modern slavery, not only to support the victims of that vile trade but to break the criminals who make so much money out of it and stop the damage and abuse they bring to individuals. As my hon. Friend says, we have looked at the issue in particular in areas such as the agricultural sector in his part of the country, and we want to continue to co-operate on the issue as we leave the European Union. We will continue to co-operate on these sorts of issues because they are not just about membership of the European Union; we need to do something about them, whatever international organisations we are part of.
Ian Blackford (Ross, Skye and Lochaber) (SNP)
The Prime Minister talks about listening to the Scottish Government, but that is of course on the back of the people of Scotland voting overwhelmingly to remain in the European Union. Given the UK Government’s intransigence, it is little surprise that the Scottish National party is proposing a motion in the Scottish Parliament to ask for a mandate for a second referendum. Will the Government allow that to take place, or will she attempt to veto the democratic wishes of the Scottish people and the Scottish Parliament?
The Prime Minister
There was a referendum in Scotland in September 2014 in which the people of Scotland voted to remain part of the United Kingdom. Sitting next to the hon. Gentleman is the right hon. Member for Gordon (Alex Salmond), who said at the time that it would be a once-in-a-generation vote.
Lucy Frazer (South East Cambridgeshire) (Con)
The right hon. Member for Moray (Angus Robertson) quite rightly started his questions by emphasising the importance of jobs and the economy. Given the circumstances, with Scotland’s trade with the UK being worth £50 billion—four times less than its trade with the EU—does the Prime Minister think there is a good economic case for Scotland to remain in the UK and to ensure that together we work for the best deal with Europe?
The Prime Minister
My hon. and learned Friend is absolutely right, and the figures are very clear: the single market that is most important to Scotland is the single market with the United Kingdom. [Interruption.] The right hon. Member for Gordon shouts “frictionless borders” at me; of course, Scotland has a frictionless border with the rest of the United Kingdom, which is the most important single market it is a member of.
Stephen Timms (East Ham) (Lab)
In recent discussions I have taken part in, it has been clear that there is no support among any of the parties represented in the German Parliament for the UK to retain barrier-free access to the single market if we no longer operate free movement. The Prime Minister has asserted her optimism, but does she recognise that that is the reality of the starting point we are at?
The Prime Minister
The reality of the starting point we are at is that we are going to sit down with the European Commission and, obviously, representatives of the European Council and the European Parliament, to negotiate the relationship that is going to be right for the United Kingdom and right for the rest of the European Union. The discussions I have had so far indicate that there is a recognition on both sides of the negotiation of the importance of making sure that we get a very good free trade agreement.
Henry Smith (Crawley) (Con)
I commend the Prime Minister on her statement. Does she agree that now is a good time to consider raising environmental and animal welfare standards as we leave the European Union? For example, we currently cannot stop the export of live animals.
The Prime Minister
The position we have taken is that, when we leave the European Union the acquis will be brought into UK law through the great repeal Bill, so that at that point everybody will know where they stand in relation to the various rules and regulations we have abided by as members of the European Union. Thereafter, of course, it will be open to this Parliament to determine the standards we require and the regulations we wish to see across a whole raft of areas, including those my hon. Friend mentions.
Kate Green (Stretford and Urmston) (Lab)
The Prime Minister will know that under the Dublin rules the UK has returned more asylum seekers to other European Union countries than we have received from them. What are her intentions post-Brexit? Does she intend for us to continue to participate in that aspect of the Dublin agreement?
The Prime Minister
We will obviously look at the relationship we will have with the European Union on matters such as asylum seekers. I have broadened the discussion on this issue; it is about not only the UK’s relationship with the EU but how the whole international community deals with asylum seekers and economic migrants. I am clear that, as an international community, we should accept that individuals should claim asylum in the first safe country they reach.
Richard Drax
I congratulate my right hon. Friend the Prime Minister on her clarity of purpose. Does she agree that nothing is of greater importance today than the United Kingdom standing together? Those calling for a second referendum in Scotland are behaving totally irresponsibly and will potentially lead the people of Scotland over a cliff like lemmings to economic ruin.
The Prime Minister
My hon. Friend is right that as we start on the negotiations for our future relationship with the European Union, it is important for us to do so as a United Kingdom. We should come together, recognise the interests of all parts of the United Kingdom, and ensure that we get absolutely the right deal for the whole United Kingdom.
Mr David Hanson (Delyn) (Lab)
Last week, the European Council agreed to speed up proposals for European travel authorisation and the sharing of information on travel. In the context of Brexit, are we planning to be part of that system? If not, what will it mean for visa fees or access to Europe for British citizens?
The Prime Minister
The European Union was indeed negotiating the arrangements for the sort of European tariff or visa system it would put in place. As a member of the EU, we were able not to be part of that arrangement, but as we look forward to the post-Brexit arrangements, one issue we will discuss in the negotiations is how we exchange border information. The right hon. Gentleman will know from his experience in previous positions he has held that it is a question not only of issues such as that, but of access to things like Schengen Information System II and Eurodac, as well as other issues. All that will be part of the negotiations.
Simon Hoare
As the third of the Dorset trio in the Chamber this afternoon, may I say that, like my right hon. Friend the Prime Minister, I am a Unionist to my fingertips? Will she and her Cabinet colleagues consider that, as we see a dwindling of EU financial contributions to capital programmes in this country, we should explore very vigorously the opportunity to present to all of our constituents the fact that, where capital projects are undertaken in all parts of the kingdom, they are funded, supported and delivered by UK taxpayers from a UK Treasury?
The Prime Minister
My hon. Friend raises an interesting point. He will be aware that the Treasury has offered reassurances on the funds that are currently received from the European Union while we are still members of the European Union and, in some cases, thereafter as well. Leaving the European Union gives us an opportunity to look at how support can best be provided by the United Kingdom Government.
Paula Sherriff (Dewsbury) (Lab)
Last December, just 101 EU nurses came over to work in our NHS. That is a decrease of more than 90% from pre-referendum months. How does the Prime Minister intend to tackle that so we do not have any more hospital wards—like many in my own constituency—that are dangerously understaffed?
The Prime Minister
I recognise the contribution that nurses from the European Union have made to the NHS over the years, and that is one group of EU citizens whom we will be thinking of when we start those negotiations on EU citizens living here and their rights. The Government also recognise that there are many people here in the United Kingdom who wish to train as nurses but who have not been able to do so because of the cap on numbers. We have removed that cap, which will enable more to take up those training positions.
Peter Grant (Glenrothes) (SNP)
Nobody knows what the answer will be when the people of Scotland are asked the simple question of whether they will choose hard Brexit as part of the UK, or full partnership with 27 sovereign states in the European Union. Does the Prime Minister agree that that question should be asked at a time when, whatever the democratic answer from the people, it can be seamlessly implemented, which means that the question should be asked within the timeframe indicated by Nicola Sturgeon yesterday?
The Prime Minister
First, as the hon. Gentleman will know—I am sure that he has been present in the Chamber in previous statements and debates on this topic— I do not accept his terminology that what we will be negotiating is a hard Brexit from the European Union. We shall be negotiating a good trade deal, which will be good for all parts of the United Kingdom, including Scotland.
Heidi Alexander (Lewisham East) (Lab)
In the Prime Minister’s desperation to do the UK Independence party’s bidding, she has determined that we will be leaving the single market as well as withdrawing from the European Union. Will she tell me whether there will be stand-alone legislation to repeal the European Economic Area Act 1993, or does she intend to use the EEA as the basis for her transitional implementation period?
The Prime Minister
I expected better from the hon. Lady in terms of the description that she has given. I say simply this: what this Government are doing is the bidding of the British people, and the British people alone.
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
Turkey is an exceptionally important partner in Europe’s attempts to deal with mass migration. Turkey is also an exceptionally important partner in NATO. Given the events of the past week, did the European Council have any discussions about how we can ensure that there is no rowing back on democracy in Turkey, and, at the same time, that it remains the important partner that it has been so far?
The Prime Minister
The Council recognises the important role that Turkey plays, particularly in the areas of migration and the EU-Turkey deal that was negotiated some while ago, which has led to a significant reduction in the number of people moving from Turkey, across the Aegean, into Greece. I am very clear, as are other European leaders, that we want to see Turkey maintaining its democratic institutions and the rule of law and respecting international human rights.
Angela Smith (Penistone and Stocksbridge) (Lab)
There has been a lot of emphasis on the trade deal, but the divorce deal is very important, too. At the heart of any divorce deal is a fair financial settlement. What will the Prime Minister do if there is no fair financial settlement at the end of the article 50 period? What will happen then to the divorce deal and our exit from the European Union?
The Prime Minister
The hon. Lady will be aware that, as we enter the negotiation, there is a wide range of issues that we will be considering and discussing with the European Union. I did not respond to this issue earlier, but a number of Members have used the term “divorce”. I prefer not to use that term with regard to the European Union, because, often, when people get divorced, they do not have a good relationship afterwards. Hon. Members need to stop looking at this as simply coming out of the European Union and see the opportunity for building a new relationship with the European Union, as that is what we will be doing.
Alan Brown (Kilmarnock and Loudoun) (SNP)
In the jumble of words that formed the Prime Minister’s statement—“global Britain”, “leading role in Europe” and “not a moment to play politics or create uncertainty and division”—she missed out the two key words of “hypocrisy” and “irony” given her actions today. However, my real question is this: after Brexit, what are the Government’s plans with regard to the 1964 London fisheries convention?
The Prime Minister
The 1964 London fisheries convention is one issue which the Government are looking at, and we will be looking at it in relation to our future relationship with Europe as we come out of the European Union and therefore out of the common fisheries policy. [Interruption.]
Mr Speaker
Yes indeed. It is a very important matter. I think that we will learn more about it. The hon. Member for Kilmarnock and Loudoun (Alan Brown) obviously knows all about it.
Ian Murray (Edinburgh South) (Lab)
When the First Minister announced her drive for a second divisive Scottish independence referendum yesterday, one of her manufactured grievances was the fact that Brexit gives the UK Government an opportunity to muscle in on the powers of the Scottish Parliament. Does the Prime Minister agree that the fundamental overriding principle of any EU repatriated powers should be that they are transferred to the devolved Administrations?
The Prime Minister
I have been very clear with all the devolved Administrations that Brexit will not involve any powers that have currently been devolved to those Administrations being returned to the United Kingdom Government. As we look at the transfer of powers that are currently in Brussels back to the United Kingdom, we may very well see more powers being devolved to the Administrations.
Dr Rupa Huq (Ealing Central and Acton) (Lab)
A total of 43% of publications from the UK’s 47 biggest universities come from collaboration with at least one EU firm—it is even higher in London institutions. Did the discussions that the Prime Minister engaged in with her European counterparts touch on any kind of safeguards for our university sector given that level of dependency on European industry? Furthermore, on page 75 of her party’s manifesto, there is a commitment not only to remain in the single market, but to expand it. How is that going?
The Prime Minister
The hon. Lady might have noticed that we also promised the British people a referendum and a vote on whether to stay in the European Union. We gave them that vote, and they decided. We are now acting on the results of that vote. Although the vast majority of questions have been on Brexit this afternoon, Brexit was not formally discussed in the EU Council, as I indicated earlier. On the issue of universities, we have already given some comfort to universities in relation to research funding agreements that they enter into before we leave the European Union. If she looks at the Lancaster House speech I gave and the White Paper that came off the back of that, she will see that science and innovation was one issue that we put forward as a negotiating objective.
Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)
The Prime Minister has welcomed the completion of the free trade agreements between the EU and Canada, and the pending free trade agreement between the EU and Japan. When it comes to the benefits of the single market and free trade, will the EU not be getting the full jammy doughnut while the UK will be left behind with nothing but an empty hole?
The Prime Minister
No. We will be negotiating free trade agreements with not just the EU, but other countries around the world. Crucially, other countries around the world are eager to work with us to negotiate free trade agreements. There are discussions with countries such as America, Australia, Mexico and India. We are already looking at the agreements that we can have as a United Kingdom outside the European Union.
Clive Efford (Eltham) (Lab)
Does the Prime Minister accept that her intransigence over amendments to the European Union (Notification of Withdrawal) Bill and her pandering to the Brexit fanatics on her Back Benches, which have diminished the role and sovereignty of this Parliament over the Brexit process, have opened up the door to threatening the future integrity of the UK?
The Prime Minister
Amendments were put before this House; this House voted and took a decision. From the description that the hon. Gentleman has given, he seems to be saying that every time that this House takes a decision that he does not agree with, it is somehow a disrespect of Parliament. I have to tell him that that is not how this place works—we put our arguments and then vote on them; one sides wins and the other loses.
Christian Matheson (City of Chester) (Lab)
Does the Prime Minister accept that if we crash out of the European Union with a bad deal or no deal at all, it will be entirely the failing and responsibility of our chief negotiator and her team—the Prime Minister and her Ministers?
The Prime Minister
I have already said that I am optimistic that we will be able to negotiate a good deal for the United Kingdom.
Stewart Malcolm McDonald (Glasgow South) (SNP)
I agree with the Prime Minister on one thing: politics is not a game. That is why I will not sit back and just hope for the best from her Government, as she seems to wish me to do. Given the way in which she has handled the compromises put forward by the Scottish Government and the situation she now finds herself in, may I offer her a moment of reflection? Is there anything she regrets about the way in which she has responded to those compromises, or does dogma still reign in Downing Street?
The Prime Minister
We have had extensive discussions with the Scottish Government and the other devolved Administrations on the issues that they have raised with the United Kingdom Government and the concerns that they wish us to take into account. As I said in my statement and yesterday, there are many areas of common ground between us and the Scottish Government. For example, we both agree on the protection of workers’ rights once we have left the European Union. We have been looking at those areas of common ground, but we have also been looking, as we will in the negotiations, at ensuring that we get a deal—an arrangement and relationship for the future—that is good for the whole United Kingdom, including Scotland.
Jim Shannon (Strangford) (DUP)
I thank the Prime Minister for her statement and refer her to the Somalia conference that she mentioned. A Nigerian MP was a guest speaker at yesterday’s meeting of the all-party group on Nigeria. He informed all of us present that Nigeria has become the biggest centre for illegal arms smuggling in the whole of Africa. Will the Prime Minister assure me that she will raise that issue, which affects all of Africa, when the Somalia conference is hosted in the UK in May?
The Prime Minister
I assure the hon. Gentleman that the Government will look at the issue very seriously. Obviously there are a number of concerns in respect of what he has said, and I will certainly look at the issue carefully.
Mr Speaker
I am extremely grateful to the Prime Minister and all 66 Back-Bench Members who questioned her following the Leader of the Opposition.
Point of Order
Mrs Maria Miller (Basingstoke) (Con)
On a point of order, Mr Speaker. The European Court of Justice has announced today that any employer can ban the wearing of religious symbols at work, including headscarves. This overturns important existing case law from the European Court of Human Rights. What mechanisms are open to the House to obtain a swift clarification of what this means here in the UK, particularly so soon after the Prime Minister’s clear statement in this House that what a woman wears is her choice and nobody else’s?
Mr Speaker
I am grateful to the right hon. Lady for her point of order, which she raises not only in her capacity as a constituency Member of Parliament, but with the strength of her interest and experience as Chair of the Women and Equalities Committee. I had not been familiar with the development until the right hon. Lady notified me a few moments ago, not least because I have been in the Chair attending to my duties. I imagine that the issue will be of considerable interest and concern to a great many people in all parts of the country with a variety of different views.
The short answer is that it is open to the right hon. Lady to table a question on the matter. I have certainly received no indication of an intention by a Government Minister to come to the House to make an oral statement, but the right hon. Lady has the recourse of a question. If, as seems possible, she judges the matter to be urgent, she knows the mechanism that is available to her to bring the matter to the attention of the House and to secure a ministerial response sooner rather than later.
Diplomatic Service (United Kingdom Wines and Sparkling Wines)
Tuesday 14th March 2017
(7 years, 9 months ago)
Commons ChamberRead Full debate Diplomatic Service (United Kingdom Wines and Sparkling Wines) Bill 2016-17 View all Diplomatic Service (United Kingdom Wines and Sparkling Wines) 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
Nusrat Ghani (Wealden) (Con)
I beg to move,
That leave be given to bring in a Bill to require Her Majesty’s Diplomatic Service in certain circumstances to purchase wines and sparkling wines produced in the United Kingdom and to serve such wines at overseas functions and events; and for connected purposes.
The triggering of article 50 is on its way, and this could be seen as the first post-Brexit Bill. As we leave the EU, we must grasp every opportunity to find new markets for our products around the world, and to be imaginative in supporting and promoting them. British viticulture is an industry whose future is golden, much like the colour of its best known sparkling vintages. It will play an increasingly important role in our rural economic powerhouse.
For those who think that our weather and terroir cannot support vines so that we can compete with France, Italy and Spain, think again. Chalky soils, south facing slopes and warmer temperatures provide ideal conditions for producing wine and sparkling wine, and we produced 5 million bottles of English wine last year. Even Scotland, Wales and Northern Ireland, warmed by the sun, produce wine. We bottle to everyone’s taste and budget. Admittedly, our wine production is a fraction of the global total, but that means that we have market share in our sights. In fact, speaking of France, we have been beating it at its own game. At a tasting held in Paris last year, English wine not only was mistaken for champagne, but beat respected champagne houses all round. That was not just a one-off. English wine won more than 175 UK and international awards in 2016 alone.
One of the great characteristics of modern Britain is that someone who was not exactly brought up with a champagne flute in their hand—unlike several hon. Members I could mention—has the opportunity to represent and promote such a fantastic, blossoming British industry. My constituency of Wealden in East Sussex has not one or two vineyards, but well over a dozen, several of which boast international awards. I have to report that my husband is doing his single-handed best to support this local industry, judging by the contents of our fridge.
It is a hugely exciting time to be a part of the English wine industry. There are now 133 wineries and more than 500 vineyards dotted across our beautiful English countryside. Some 150 of them are open to the public, including one of our local vineyards, Downsview, which is set in an area of outstanding beauty and has far-reaching views to the South Downs in the distance. Sussex Fox & Fox Vineyards, run by the visionaries Jonica and Gerard Fox, sits either side of the hilltop village of Mayfield, among the rolling hills and woodlands of the Sussex High Weald. One would be forgiven for thinking that a photo of harvest time in Mayfield was taken in Champagne.
Set amid bluebell-strewn woods at the edge of Ashdown forest is Bluebell Vineyard Estates. Like many of our vineyards, it specialises in the production of award-winning, estate-grown English sparkling wines using the traditional method—the same method used to create champagne. Boasting the Hindleap range, Bluebell Vineyards picked up an impressive haul of 16 medals at international wine competitions last year. Similarly, Davenport, which has vines in my constituency, has won a whopping 35 awards since its establishment. Most impressively, both winemakers received silver medals at the prestigious International Wine and Spirit Competition last year—something that would have been unheard of 20 years ago.
Last month, I celebrated the English wine industry’s success in Parliament, where top wine critic, Matthew Jukes, hosted a tasting and took the opportunity to boast about its stunning quality. It is no wonder that last year, for the first time, English wineries became official suppliers to No. 10. Chapel Down and Ridgeview are now official suppliers for Downing Street receptions, and I believe that Her Majesty the Queen serves English sparkling wine at state banquets, showing commitment to, and confidence in, our wine industry.
UK-produced wine accounts for around 1% of the wine purchased in the UK, but the sector has high aspirations and great potential. It is no longer just a few people growing vines in their back gardens. Bluebell Vineyard has more than doubled in size since opening in 2005, and now has 70 acres and 100,000 vines. Just on my doorstep, in the constituency of my hon. Friend the Member for Lewes (Maria Caulfield), is the Rathfinny wine estate. The estate was established in 2010 and has the potential to produce more than 1 million bottles of Sussex sparkling wine annually within a decade. Rathfinny could develop into one of the largest vineyards in England and even the largest in Europe.
There is a real appetite to invest in British soil, and the industry has seen significant overseas investment over recent years. Champagne houses such as Taittinger and Pommery have already invested in growing English grapes, and such ventures show no signs of stopping.
In 2015, sales of English sparkling wine hit £100 million, and overseas markets grew by one third. There is a huge appetite in the industry to continue that trend; indeed, our winemakers have pledged to produce 10 million bottles by 2020, with 25% of those for export. In a post-Brexit world, we must do all that we can to get behind industries that show the sort of potential of our wine industry. What better way to support our wine industry than by giving the world a taste and by serving UK-produced wine and sparkling wine in our 268 embassies, high commissions and consulates around the world? What could be a more appropriate setting to promote English wine than the famed ambassador’s reception?
However, the lack of consistency in embassy policies on hosting and serving British products means that we are missing opportunities to show those products off in new markets that should be fertile territory for exports, such as China, Japan, Singapore and even India, where wine consumption among the professional classes is growing exponentially. Last week, I was told that our Rome embassy asked the UK wine industry to sponsor a wine tasting for Tuscan wines. That just is not good enough. I doubt that Italy’s outposts here in London serve anything other than Italian wine.
The Bill would enable us to have a consistent top-down policy from the Foreign and Commonwealth Office to require embassies, where possible, to serve British wines and thus to promote British exports. Our embassies, high commissions and missions abroad are an extension and projection of our country’s brand. Showing support for high-quality and high-profile indigenous products such as our award-winning wines will demonstrate a confidence in our country and a belief in the opportunities ahead of us.
Britain’s largest wine producer, Chapel Down in Tenterden, Kent, has just signed a distribution deal in France, of all places. I look forward to the very best of our wines creating a splash in Paris—and in Berlin, Madrid and Rome, for that matter—and perhaps helping to oil the wheels of the Brexit negotiations to come. I commend the Bill to the House.
Question put and agreed to.
Ordered,
That Nusrat Ghani, Sir Peter Bottomley, Nick Herbert, Tim Loughton, Neil Parish, Mr Nigel Evans, James Duddridge, Mrs Anne-Marie Trevelyan, Sir Julian Brazier, Chris Bryant, James Heappey and James Cartlidge present the Bill.
Nusrat Ghani accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 24 March, and to be printed (Bill 154).
Ways and Means
Budget Resolutions
Tuesday 14th March 2017
(7 years, 9 months ago)
Commons ChamberRead Full debate Finance Act 2017 View all Finance Act 2017 Debates Read Hansard Text Read Debate Ministerial Extracts
18:59 - The House divided: - Ayes: 319 / Noes: 275 - Question accordingly agreed to.
19:14 - The House divided: - Ayes: 309 / Noes: 286 - Question accordingly agreed to.
19:29 - The House divided: - Ayes: 313 / Noes: 276 - Question accordingly agreed to.
The Secretary of State for Education (Justine Greening)
This Government are about delivering opportunity—the opportunities that matter to ordinary working people up and down this country: the opportunity to work in a skilled, well-paying career; the opportunity to send their children to a good school; and the opportunity to contribute to a shared, fairer society, where everyone is empowered to do their best for their community.
Those ambitions are not too much for us to ask—they are not unreasonable—but the truth is that, for too long, too many people in our country have felt cut off from opportunity. They see doors open for others, but stay closed for them. What they want is the chance to show their worth and reach their potential. This Government want them to reach their potential, too, so we will work with the grain of human nature to spread opportunity to every village, town, city and region in our country and to give everyone a chance to succeed and to contribute to a strong, united nation.
A strong economy is a vital part of that mission. A strong economy provides the careers and jobs that equip people with financial independence, protect them by providing financial security over the course of their life, and fill them with a sense of self-worth—the knowledge that we all have a role and a valued place at the heart of our society. A strong economy is at the heart of how people can contribute to our country as a whole.
This Government are in the business of building a strong economy and creating great careers and jobs—over two million jobs since 2010. This year, there are more people working than ever before. The employment rate for women is at its highest level since records began, with 70% of 16 to 64-year-olds now in work. That represents more than 1 million more women in employment since 2010.
Mrs Maria Miller (Basingstoke) (Con)
Does my right hon. Friend agree that one of the most important things the Government can do is support women returners to work, particularly when we have record numbers of women in the workplace?
Justine Greening
My right hon. Friend is absolutely right. I hope she will welcome the element of the Budget that saw £5 million invested in returnships, specifically looking at how we can help women who have been out of the workplace—often starting and having a family—to go back into it and rebuild their careers. I will come on to that later in my speech.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
I believe absolutely that wealth creation is important to give us the resources we need to provide a good education, but is the Secretary of State aware that so many schools have seen cutbacks? We in Huddersfield are the 64th worst-hit area out of 650. We do not feel the affluence she is talking about.
Justine Greening
We have record investment coming into our schools now.
To secure and build a strong economy, we need sustained investment in human capital—the skills, knowledge and technical excellence that drive productivity and growth. It is people who will lift our country, and we are investing in people. We need to do that now more than ever, because we know there is a productivity gap between the UK and other advanced economies, and we know that part of that gap is caused by skills shortages.
Nick Thomas-Symonds (Torfaen) (Lab)
On the issue of human capital, does the Secretary of State agree that it is a mistake by the Government to cut the work allowance under universal credit, which will particularly affect women and deny them work opportunities?
Justine Greening
We cut the taper rate on universal credit at the last autumn statement. As I said, the strong economy that this Government’s policies have helped to create means that more women are now in work than ever before. I was talking about how skills and plugging skills shortages for employers is so important. Top employers and businesses are telling us that the skills they need, particularly in science, technology, engineering and maths, are in too short supply.
Mrs Flick Drummond (Portsmouth South) (Con)
On the point made earlier about women returners, is my right hon. Friend aware that just 5% of women returning to work would generate an extra £750 million in the economy—a very good return?
Justine Greening
Absolutely. Women’s economic empowerment is one of the most powerful levers we have to help drive growth in our economy and, more broadly, around the world over the years ahead.
Looking at how we are going to plug the skills gap, only 10% of adults in our country hold a technical qualification as their highest educational achievement. Germany currently produces twice as many science, engineering and technology technicians. Driving these skills will power innovation and growth and, in turn, our economy. That benefits everyone, so we cannot afford to wait. Other economies have been ahead of us in developing the skills of the future, and this Government are clear that we will not fall further behind. We should recognise that globalisation and automation are changing the modern workplace. Thirty-five per cent. of our existing jobs are at a high risk of being replaced in the next 10 to 20 years, not through competition but by technology.
George Kerevan (East Lothian) (SNP)
The Secretary of State mentions Germany’s lead in training in technical positions. Does she link that in any way with the fact that Germany consistently has a much higher level of corporation tax in order to fund that?
Justine Greening
Germany has its own approach to corporation tax. Ours has been steadily, and dramatically, to reduce it in order to make sure that companies can retain the profits they are making to be able to reinvest in growing their companies. The proof of the pudding is in the substantial and significant job creation that we have seen in our economy, by comparison with many other countries, over recent years. That is why we are able to put money into our public services.
As we prepare to leave the European Union, we will need to be more self-sufficient in our workforces, in our skills and in the training of our young people to set ourselves up for success. We will need new ideas, new jobs and new investment to confidently meet every challenge and grasp the opportunities ahead of us. We want a global Britain strong at home and strong abroad. It is now time for Britain to step up a gear to begin the shift up to the high-skill, high-productivity economy that we can be. This Government are ready to act.
John Mann (Bassetlaw) (Lab)
Is it not a fact that under this Government, while the Secretary of State has been in office, we have fallen two places in the research and development international league tables, behind Slovenia and the Czech Republic?
Justine Greening
The autumn statement saw us provide further investment for R and D. Indeed, the national productivity fund has been set up to make sure that we can fund infrastructure, including R and D, more broadly. However, it is not just through physical infrastructure that our country will be successful—we need to invest in our people and in human capital as well. Through this Budget we are investing in human capital in skills, education and training to create a strong economy that works for everyone.
Justine Greening
If I can make a bit more progress, I will give way.
This Government are rightly focused on apprenticeships because of the huge difference that they can make to individuals, boosting a person’s lifetime earnings by 11% on average. Eighty-three per cent. of apprentices tell us that they believe it is improving their career prospects. This is already making a big difference to individuals. Last year 900,000 people were enrolled in an apprenticeship, which means that more than 3 million people have started an apprenticeship since 2010. They include apprentices such as Adam Sharp, last year’s advanced apprentice of the year, who moved 150 miles to take up a mechanical design apprenticeship in Sellafield and dreams of becoming that nuclear power plant’s chief mechanical engineer; and Becky King, who went to train at the National Physical Laboratory in London straight after college in order to develop her passion for science.
Last week I kicked off National Apprenticeships Week with Barclays in the City. I met young people on apprenticeships at Barclays who were inspiring because they were finding out just how well they could do. Apprenticeships are bringing out the underlying talent of our young people. It is cathartic for them to be able to discover their potential.
Mims Davies (Eastleigh) (Con)
Earlier I met Nationwide representatives from my area keen to support women in getting more maths skills to lead businesses. Recently apprentices from Lloyds met the all-party women in Parliament group. One area where we really need to keep up momentum is with the maths skills that will make sure that our women can lead companies as well. The apprenticeship work at Eastleigh College is doing exactly that in building the basic skills for the gas fitters and plumbers we need—
Madam Deputy Speaker (Natascha Engel)
Order. We are already going to have to impose a time limit of eight minutes on Back Benchers right from the beginning. This debate is very heavily subscribed. If people are going to intervene, they must keep it very brief.
Justine Greening
I pay tribute to the work that my hon. Friend’s local college is doing. She is absolutely right. In order to see a change in the workplace and in careers, we have to start in early education to build the pipeline to make sure that girls, and subsequently women, are going into these careers, which have traditionally often been more male dominated.
This is not just making a difference to the people who are doing apprenticeships; apprenticeships are making a difference to our country. Employers tell us that apprenticeships increase quality and increase productivity, so investing in an apprenticeship pays out for them and their business, and it is paying out for our wider economy. This is only the beginning of our apprenticeship reforms. Next month, we are introducing the apprenticeship levy, which will ensure that by 2020 over £2.5 billion is available to support apprenticeships. Contributing to the levy will mean that employers are, for the very first time, truly fully invested in apprenticeships. This keeps us on track to meet our manifesto commitment of delivering 3 million apprenticeships by 2020.
Apprenticeships will play a key role in delivering the skills that our modern economy needs to level up, but we need to do more to meet the broader challenges that our economy faces. The most successful countries do not just rely on apprenticeships—work-based routes—to get skilled professionals. They also depend on more college-based routes—on technical courses with workplace experience and training as a crucial element. So we will up our game, looking at reforming our technical education system to make it a central plank of how to sustain a growing economy. For decades, our country has neglected technical education, despite the fact that a substantial proportion—over half—of our young people who choose not to go to university take this path. We have never achieved a sustainable strategy because it has never been truly led by employers. We need a strategy that asks businesses what a world-class technical curriculum should look like—that invests in the tools, the teaching and the skills expertise that help young people to navigate the complex web of choices on careers to find the skills and the career that is right for them.
Over many years, we have allowed the technical curriculum to emphasise quantity rather than quality. There are currently around 13,000 separate technical qualifications. In plumbing alone, a young person has the choice of 33 different courses. How on earth are they supposed to know which course is the highest quality, which one is valued by businesses, and which option is the right fit for them? This cannot be right. In recent years, we have made some important steps forward in tightening the requirements for qualifications included in school and college performance tables, but we need to go much further to ensure that technical education is high quality and meets employers’ needs. In place of complexity, this Government are following the advice of Lord Sainsbury and replacing the current system with a streamlined set of just 15 technical skills routes. Each route will be a pathway to skilled employment—from construction to digital, whether bricks and mortar or lines of code—and our standards for each route will be designed and agreed by our best businesses to make sure there is a direct flow through to the skills that our economy needs.
We know that we need investment as well as reform. At the moment, a young person working towards a technical qualification receives a programme of about 600 hours a year, but in countries with the best technical education—Germany, Denmark, the Netherlands, Norway —students train for far more hours per year. If we really are serious about becoming world-class on skills, we need to rival the commitment and investment of the world’s leading countries.
That is why my right hon. Friend the Chancellor announced last Wednesday over half a billion pounds a year of new funding for technical education. It will be used to increase the number of teaching hours for students. As the Sainsbury panel recommended, it will also fund institutions to organise a substantial, high-quality work placement for every technical education student, helping them to apply their skills in the workplace and to prepare for a successful move into employment. In total, this will mean that a student’s programme hours will increase by more than 50%, from 600 hours per year to more than 900. It is no surprise that the CBI has called this Budget a “breakthrough Budget for skills”.
The funding for extra hours will be rolled out alongside the new technical routes, beginning with the first programmes in autumn 2019. Each of the routes will lead to a new certificate, the T-level, which will be a gold standard for technical and professional excellence. The name will remind Members of another prominent qualification, and that is very deliberate. I want there to be no ambiguity whatsoever: this is the most ambitious reform of post-16 education since the introduction of A-levels 70 years ago. The investment announced by my right hon. Friend the Chancellor shows that the Government are committed to making it a success.
Graham Evans (Weaver Vale) (Con)
I am very privileged to have my constituency office based at Sci-Tech Daresbury, which is all about technology, innovation and skills. Will the T-level be significantly stronger than existing technical qualifications?
Justine Greening
The qualification will be stronger on a number of fronts. First, it will have the commitment of, and its design will be led by, employers. Secondly, it will have more hours, so the student will simply have had a more comprehensive programme of education in achieving the T-level. Thirdly, its quality will be much higher, with more time spent in the classroom and, critically, more time spent on a quality work placement with an employer. Once the person finishes the T-level, they will come out of it ready to work and to begin their career with a high-quality qualification that employers truly value. That I why we feel this is such a significant step forward.
Building such a world-class technical education system will not just generate the skills and productivity that are the foundations of a strong economy; it will also spread opportunity and increase social mobility, helping to break the link between a person’s background and where they get to in life. It will be no surprise to the House that many young people from disadvantaged backgrounds are more likely to be on technical courses than their peers, yet such an education has not been at the level that they deserve or that our economy deserves. A report by the Boston Consulting Group and the Sutton Trust suggests that greater social mobility could boost our economy by a staggering £140 billion every year. Different young people have different talents, and if we can successfully put technical education on a par with academic routes, it will not just be good for those young people, but it will be exactly what our economy needs.
Improving the quality of technical education will boost the life chances and future earnings of those young people. This is not about designing a second chance system for the disadvantaged. I do not want technical education to be seen as a back-up to the academic path; I want parity of esteem. I want technical education to take its rightful place alongside the academic track as a totally credible path to a professional career, but we are not there yet.
Madam Deputy Speaker (Natascha Engel)
I call Lucy Allan to make an intervention.
Lucy Powell
Did you call me Lucy Allan, Madam Deputy Speaker? I am very much a Powell.
Labour Members very much welcome any attempt to raise the status of technical and vocational education and the esteem in which it is held, something we began during our time in government. Does the Secretary of State agree that it is often a mix or blend of the technical and the academic—in engineering, digital opportunities, the creative industries or even health and social care—that will be important in the global world of the future, and will she assure the House that people will not be separated at the age of 16?
Justine Greening
The key to success is strengthening the technical education routes, as I have said. Having longevity in the strategy, as was done in Lord Sainsbury’s work, is absolutely critical in giving us an architecture around which we can now build a strategy and, as we saw in the Budget, in which we can now invest. As the hon. Lady says, it is important to ensure that the whole education system fits together. That is why it is so important, as we create more national colleges and institutes of technology, that we talk with further education colleges—they will be at the centre of all this—and also with universities. Universities of course already offer degrees in areas such as engineering, but they can clearly offer more applied learning and more technical education routes for many young people. As she says, we have to make sure that that fits together.
Indeed, we want to increase the quality and availability of higher-level technical education, so that technically gifted students can continue their studies beyond the age of 19. One of our challenges is that not only are the lower rungs of the technical education ladder not as high quality as on the academic route, but there are not really the higher rungs for young people to aim for and to climb successfully. The Government’s new national colleges and institutes of technology will make sure that there are world-class institutions at which to study higher level technical qualifications.
From September 2019, we will introduce maintenance loans for students studying level 4 or higher qualifications at these institutions. This will mean that for them, just as for university students, our best technical minds will not be limited by financial circumstances or place. This approach is just as much about parity between places as it is about parity between people. Nearly three quarters of young people in Barnsley follow a technical path, while less than one quarter do so in Kensington and Chelsea. By levelling up technical education—putting it on a par with academic routes, with reform, investment and focus—we can steadily erase regional inequalities and make sure that the door of opportunity for young people in all parts of the country, whatever education route they choose that fits them, is firmly kept open.
Building opportunity and a strong economy is about having good school places as well as skills. Good schools are the foundation of economic success and social mobility. This Government are resolute in our pursuit of more good school places in every part of the country, especially where they are most needed, to power higher educational attainment. That is why almost 1.8 million more children are in good or outstanding schools compared with 2010. That means, critically, that 1.8 million more young people are getting a better start in attempting to reach their potential. However, 1 million pupils are still in schools judged by Ofsted to be inadequate or to require improvement, so there is more work to do.
Alongside the £5 million a year of investment in skills, the Budget delivers £320 million of investment to fund over 70,000 places in up to 110 new free schools, on top of the 500 free schools we have committed to deliver by 2020. That includes funding for specialist maths schools, building on the successes of the outstanding Exeter Mathematics School, which I had the privilege of being able to visit recently, and King’s College London Mathematics School, which the Prime Minister has visited. Every child in every part of the country needs access to a fantastic school place, so we have to plan ahead and leave no stone unturned in pursuit of those places.
Mrs Miller
My right hon. Friend is making a powerful case for the importance of education, but does she not share my concern about the current funding system in this country, which is based more on a postcode lottery than on the needs of schools in a particular location?
Justine Greening
Absolutely. Our current approach is not just outdated but, in places, extremely unfair. We want our schools to be able to achieve the same outcomes, but we are funding them fundamentally differently in different places. There are differences for children often for no other reason than where they are growing up. No one who wants social mobility to get better should accept that, so we have to move to a more equitable funding approach. That is what we are consulting on right now.
We have to make sure that school places are there for children as they move through the system, but this is not just about the extra school places and new schools that we need; it is also about investing in the schools and school places that we already have. My right hon. Friend the Chancellor has therefore put forward an additional £216 million to help to refurbish existing schools and make them fit for the 21st century. Of course, that is on top of our existing plans to invest more than £10 billion improving the condition of the school estate by 2021.
Maria Eagle (Garston and Halewood) (Lab)
Does the right hon. Lady accept that academic A-levels are one way in which young people can ensure that they get a good start in life, from which they can perhaps go on to great success through our university system? What will the proposals that she is outlining do for young people in Halewood and Knowsley, who have no option in the entire borough for doing academic A-levels and must leave the borough in order to study?
Justine Greening
The hon. Lady raises a profound and important point. There are parts of the country where, for far too long, young people’s educational attainment has simply not been good enough. I know that the situation she highlights is part of the much broader challenge that her local community faces in seeking to raise educational attainment steadily. It is important that alongside the investment in technical education that we have set out in the Budget, we make sure through approaches such as opportunity areas that we zone in on the places that most need additional support so that we can shift outcomes there.
The Government’s focus on opportunity does not end when someone leaves full-time education. In a dynamic, modern economy we need to foster a culture of lifelong learning, in which all of us—adults from every walk of life—are passionate about continuing to upskill ourselves.
John Pugh (Southport) (LD)
Before the Secretary of State moves off the issue of the fabric of schools, may I say that although the money from the Chancellor for school repairs is welcome, there is a £6.7 billion backlog of repairs to bring schools up to satisfactory condition? What does she think that backlog will be by the end of this Parliament?
Justine Greening
The investment that we have brought forward in the Budget will enable us to go further and faster on that backlog, but as I said earlier, it is also important that we plan ahead. We need to make sure that the demographic bulge of people who have been in our primary schools and are moving through to our secondary schools have school places and classrooms to go to when they need them. That is why balanced investment was announced in the Budget, not just in refurbishing existing schools and school places, with a particular focus on those that need it the most, but in ensuring that we have the extra good school places that our country will need in the future.
I touched briefly on why lifelong learning and the investment in it in the Budget are so important. Lifelong learning needs to become the norm in our country, and I want to ensure that people have the tools to do it. The reality is that many of us will never study again after leaving school, yet we know that in the economy of the future, readapting to new skills and continuing to learn will be vital. That is why we are making available up to £40 million over the next two years to fund lifetime learning trials. That will help us to ensure that we know what works, where it is needed and how we can change our country so that we have a culture in which more adults seize opportunities to upskill and take control of their lives.
As I said earlier, we have the highest level of female employment on record, which is a fantastic achievement, and the gender pay gap is at a record low of 18.1%, but there is still a gap. The Government are implacable in our commitment to close that gap to zero within a generation, and we know that some women find it hard to return to work after taking time out to care for young children. Many feel that they come back to work at a lower level or have to expect less progression in their work and pay. That is not good enough, and our economy cannot afford to miss out on that talent. Some employers are already running schemes to help women return to work, and we want to learn from those businesses and work with them to support more women to be able to do so. We also want to apply the same lessons in the public sector, together with improving people’s ability to take up lifelong learning.
I want to see people coming back to work better skilled than when they left to take a career break, rather than somehow having to struggle to get their career back on track. That is why I have announced that my Department will work with business groups.
Mr Iain Wright (Hartlepool) (Lab)
On labour market participation, the Red Book shows that funding for returnships will be £5 million, as opposed to £655 million for extending the free schools programme. Does the Secretary of State think that is an appropriate balance?
Justine Greening
Returnships are not widely used at the moment—in fact, they are used by just a few companies—but we know that where they have been invested in, they have made a real difference. We are at the beginning of bringing forward some pilots so that we can better understand what works and get a clearer sense of the broader strategy that we should have for the long term. That comes alongside the investment in lifelong learning, which ties into that work. Critically, we will consider how we can ensure that, as we develop those policies and ideas, they are informed by evidence. That was the reason for the investment that we announced in the Budget.
Mims Davies
On returners, will the Secretary of State also consider people who have stepped out of the workplace because of caring responsibilities? They are not necessarily youngsters, but include people who have given up a career thinking that it would be for the long term, but have found that it is for a shorter time.
Justine Greening
My hon. Friend raises an important point. We need to understand that flexible working must be able to adapt to the different lives that people lead today, not just at one point in their life but as it changes, which happens to all of us through our working lives and careers.
Of course, International Women’s Day was last week, and I thought it was a sign of how important that day has become in our calendar that the Chancellor chose to mark it by making it Budget day. We have our second woman in No. 10 Downing Street, and I am proud that both female Prime Ministers have been Conservative Prime Ministers. There is a long way still to go, but we should celebrate the important progress that has been made. Nearly 100 years after women were first given the vote, the Chancellor has set aside £5 million to celebrate that historic event.
This Budget continues the Government’s mission to spread opportunity to every part of the country. That mission rests on a strong, stable economy that provides the careers and jobs that will lead to financial independence and success for a new generation, and a sense of place and meaning in people’s lives. We cannot be complacent. There will be more challenges to come, but by investing in a world-class system of technical education, alongside schools, lifelong learning and returnships, the Government have taken a crucial step in underwriting the flow of skills that our country and our businesses need. We will level up opportunity. We will lift our country by lifting up our young people, and this breakthrough Budget on skills and schools merits the support of this House.
Angela Rayner (Ashton-under-Lyne) (Lab)
It is a pleasure to respond to the Secretary of State, and it is quite right that we have a day in this year’s Budget debate dedicated to education and skills. This Budget comes at a time when Britain has a deep social mobility problem that is getting worse, not better. That problem is the result of an unfair education system, a two-tier labour market, an unbalanced economy and an unaffordable housing market. That is not my accusation, but the conclusion of the Government’s own Social Mobility Commission.
The commission made a number of policy recommendations, most of which seem to have been ignored. It also made a recommendation against a policy: the Government’s proposals for new grammar schools. Sadly, that recommendation has also been ignored. Instead, the Chancellor used the Budget to announce plans to spend another £320 million on the next tranche of new free schools. The Prime Minister wrote in The Daily Telegraph that that money would provide 70,000 new places, as the Secretary of State reiterated today. That would be the equivalent of £4,571 per pupil, but the Secretary of State will know that her Department’s most recent figures showed that the cash cost of a primary free school place was £21,100 and the cash cost of creating a secondary free school place was £24,600.
That huge underfunding is coupled with a slightly curious detail hidden in the back of the Red Book: a further £715 million of capital funding for free schools in the next Parliament. Perhaps the Secretary of State can answer this maths question. If Philip gives Justine £320 million for new free school places, and each school place costs at least £21,000, how many school places will Theresa end up with? I look forward to marking the Government’s homework later.
Justin Tomlinson (North Swindon) (Con)
Will the hon. Lady join me and local parents in Swindon in congratulating the Government on providing the funding for two free schools and helping us to tackle the lack of school places after the last Labour Government reduced the number of school places in the noughties?
Angela Rayner
I will come to the hon. Gentleman’s points about the cost-efficiency of free schools later in my speech.
Either the Prime Minister has made an announcement without the Chancellor actually funding it, or they are simply disguising yet another eye-watering overspend on their staggeringly inefficient free schools programme and pretending that it is new money for new places. That would not be much of a surprise. The National Audit Office has helpfully reminded the Chancellor and the Secretary of State:
“In 2010 the Department estimated that it would cost £900 million by March 2015 to open 315 schools.”
By March 2015, the Department had spent double that initial budget and not even managed to hit its target for new schools. The NAO found that the Department had already spent around £3.4 billion on the land alone for free schools and it was on course to be Britain’s largest land purchaser, even before this Budget sank yet more money in. The NAO also showed that new places in free schools were far more expensive than those in conventional schools. Will the Minister tell the House and the British people how much money her Department will actually spend on delivering these new free schools, and will she guarantee that they will open in places where there is a clear need for spaces?
The Chancellor pledged £216 million for every other school over a three-year period, as the Secretary of State mentioned in her speech, but the NAO has found that, as the hon. Member for Southport (John Pugh) said, £6.7 billion is necessary just to return all existing schools to a satisfactory condition. The NAO also found that 85% of schools that applied to the priority schools building programme were rejected in the last round, and that that investment was cheaper than the free schools programme.
Of course, we know why the Chancellor focused on free schools despite the cost—because it
“will enable the creation of new selective free schools.”
It was the former Education Secretary who said that he had “had enough of experts”, but not even he tried to bring back grammar schools, let alone pretend that it was a policy for social mobility.
Angela Rayner
I am not giving way. Only one in every 25 pupils at a grammar school is eligible for free school meals, while one in every eight pupils at grammar schools previously attended an independent school. Even among the highest-achieving 20% of pupils, those from the most affluent backgrounds are 45% more likely to get into a grammar school than those from the most disadvantaged. Of course, the Government have suggested —again, not to this House, but in leaks to the press—that they intend to take action to change that in existing grammar schools; that has not gone down very well on the Conservative Back Benches. Given that the Government have been happy to jump the gun on the rest of their consultation, perhaps the Secretary of State could be as forthcoming to the House about those plans as she was to the press?
Angela Rayner
The Secretary of State has spent a huge amount of time speaking and I have a lot of Back Benchers who want to speak, so I am going to carry on.
The Chancellor announced one other measure in the Budget to address the issue: £5 million a year for the Government’s cash-for-cabs scheme, bussing children to grammar schools. Of course, the Chancellor forgot to mention that the Government had just cut £6 million out of the schools transport budget for every other child. Those cuts left no statutory provision for disabled 16 to 18-year-olds and others, who were forced to change school. They are paying the taxi tax so that a handful of pupils can be ferried up to 15 miles to the nearest grammar school by cab, at a cost of thousands of pounds each. Apparently, the comprehensive school bus is out, and the grammar school Uber is in. That is all to give the Government a fig leaf of social mobility. The Chancellor said:
“We are committed to that programme because we understand that choice is the key to excellence in education”.—[Official Report, 8 March 2017; Vol. 622, c. 818.]
I remind the Government that good teaching, school leadership, proper funding, the right curriculum and many other things are also key to that excellence.
It is also a rather obvious point that the Government’s proposed system is not one in which parents or pupils choose the school; instead, the schools choose the pupils. Parents are unlikely to have the choice they have been promised on childcare either. The Chancellor told the House that
“from September, working parents with three and four-year-olds will get their free childcare entitlement doubled to 30 hours a week.”—[Official Report, 8 March 2017; Vol. 622, c. 816.]
But the Secretary of State has already admitted in written answers that only a small minority of the parents receiving 15 hours will be eligible for the 30 hours. Fewer than 400,000 families will qualify, despite the Government’s promise at the last election that more than 600,000 would benefit.
The Chancellor’s plans for adult education are no closer to reality. He announced £40 million to trial new ways of delivering adult education and lifelong learning, but his own Government have cut the adult skills budget by 32% since 2010, taking out more than £1 billion. I know that the Chancellor’s aides have referred to their neighbours in No. 10 as “economically illiterate”, but surely even they realise the absurdity of trying to reverse the damage caused by £1 billion of cuts with £40 million in trials.
It is a similar story with the £500 million a year to deliver the new T-levels. That amount of new investment would be welcome—after all, further education budgets were cut by 7% in the last Parliament, and the Institute for Fiscal Studies found that between 2010 and 2020, funding per pupil in further education would be cut by 13%—but the briefing lines do not quite match the Budget lines. The Red Book shows that in 2018-19 the new funding will be only £60 million. Even by 2021-22, the new funding will not have risen to the promised half a billion a year.
John Mann
Is my hon. Friend aware of the consequences for the productivity gap? Since the Tories came in, and even under the coalition Government, the productivity gap between this country and the rest of the world has worsened in every single year. It is now at its worst since 1991.
Several hon. Members rose—
Angela Rayner
I make that one-all from each side of the House, so I will move on.
That brings us back to the context for the other announcements, which is the funding crisis facing our schools. We learn from The Times today that the Government are now in retreat over the new funding formula. Perhaps the Secretary of State will use this opportunity to clarify the Government’s position to the House, rather than to Conservative Members in private meetings. They might say that they are still consulting and have not seen the results, but we still have not yet had the results of the “Schools that work for everyone” consultation and that did not stop the Prime Minister using the Budget to announce most of the forthcoming schools Bill to the press.
It was the same story with the initial plans for new grammar schools, the new school improvement funding, the new capital spending on free schools and every other education announcement made in last week’s Budget. Announcements are being made behind closed doors or behind the paywalls of the Prime Minister’s favoured newspapers, rather than to this House. It is no wonder they would rather avoid our scrutiny, because the Budget failed to mention the pledge the Conservative party made in its manifesto:
“Under a future Conservative government, the amount of money following your child into school will be protected…there will be a real-terms increase in the schools budget in the next Parliament.”
The last Prime Minister made it clear what he meant:
“the amount of money following your child into the school will not be cut. In Treasury-speak, flat cash per pupil.”
The Conservatives were clear: not a single pupil in the country would see their funding cut by a single penny. That was their promise. Yet the National Audit Office has found that there will be an 8% drop in per pupil funding this Parliament, leaving schools forced to make cuts worth £3 billion. Up and down the country, we hear that schools are seeing less money in their budgets. They are being forced to cut hours or subjects, or to ask parents to chip in. Yesterday, on Europe, the Government were clear that their justification was the mandate of the British people, yet they had a mandate when it came to funding our schools too. I know the Tories would like to airbrush the last Prime Minister from history, but will they tell us today whether that pledge still stands, and, if so, when the Treasury intends to meet it?
The Government had much to say about education in this Budget, but when it came to meeting their own promises they were selective with their facts and comprehensive in their failure. They must do better.
Chris Philp (Croydon South) (Con)
It gives me some pleasure to follow the shadow Secretary of State for Education, the hon. Member for Ashton-under-Lyne (Angela Rayner).
Let me start by welcoming the Budget and congratulating the Secretary of State on her speech. I am delighted that she has managed to secure protection for the schools budget, which will continue to grow in real terms, and I congratulate the Chief Secretary on facilitating that. I also welcome the national funding formula, which the Secretary of State for Education has been working on with a forensic attention to detail. It will ensure that funding follows need, rather than being an accident of postcode. Croydon, the borough I represent, has historically been underfunded. We will now see that injustice corrected, so I congratulate the Secretary of State on her work and welcome the national funding formula.
The shadow Secretary of State for Education gave us a blizzard of statistics. I wanted to intervene on her to say that the most important statistic on education is this: 1.8 million more children are being educated in good or outstanding schools than in 2010. The hon. Lady can quote all the sums she likes, but the fact remains that the Government are delivering a better education for more children than ever before. Conservative Members are proud of our Government, and our free school and academy programme, and I am delighted that the Government are expanding it.
I was pleased that the Chief Secretary, the Chancellor and the Education Secretary found an additional £1.035 billion over the next five years—up until 2021-22—to fund further new schools. New schools give choice to parents and, as the statistics I quoted show, they encourage higher standards. Some of those schools might well be new grammar schools, which the hon. Member for Ashton-under-Lyne criticised. I should declare to the House that I am a grammar school boy. I know from my experience in a south London grammar school that such schools help children from ordinary backgrounds to fulfil their potential. All the studies show that children from ordinary backgrounds who go to grammar schools do a great deal better than those who go to other schools.
Sir Edward Leigh (Gainsborough) (Con)
I am sorry that the hon. Member for Ashton-under-Lyne (Angela Rayner) did not give way to my hon. Friend, although she did give way to the hon. Member for Bassetlaw (John Mann), many of whose constituents attend a grammar school in my constituency. The question she failed to answer was this: why, since the abolition of grammar schools, has there been a catastrophic fall in social mobility in the most deprived areas?
Chris Philp
My hon. Friend raises an important point. Grammar schools can and should be an engine for social mobility. The Government’s White Paper and the Education Secretary’s proposals include new measures to ensure that grammar schools take on a higher proportion of pupils on free school meals. There is a very successful case study: the King Edward VI grammar schools in Birmingham. They have taken a number of steps, including offering outreach to local primary schools in deprived areas, free tuition for their tests, and bursaries to fund school uniforms and travel. Together, they have increased the grammar schools’ free school meal intake from 3%, which is a very low figure, to about 22%. This shows that the Education Secretary’s proposals work in practice, and I strongly welcome them.
George Kerevan
In the interests of joined-up thinking, may I ask what proportion of qualifications the new grammar schools will give over to T-levels?
Chris Philp
It is up to individual schools to set their own individual curriculums, and to offer their pupils and parents a choice. That is what localism means. Of course grammar schools, by their nature, tend to be more academic in flavour—[Hon. Members: “Ah!”] Well, that is what a grammar school is—that should hardly be a surprise to Opposition Members. Other kinds of school have a more technical specialisation. Diversity of provision, choice for parents and variety in our system are signs of success, which Conservative Members celebrate.
Let me turn to other measures in the Budget, starting with business rates. Like several hon. Members, I was concerned about the effect of the business rates revaluation on smaller businesses. The town of Purley in my constituency was particularly affected by some quite significant upward revaluations. In that context, it is welcome that the Budget announced £435 million of discretionary relief to help small businesses in towns such as Purley. I would suggest, particularly to the Chief Secretary to the Treasury, that it might be worth reconsidering the profiling of that £435 million over time. The lion’s share of that money comes in the first two years: £180 million in 2017-18; and £85 million in 2018-19. That is welcome, but the transitional relief—the upward caps on rates increases—for small businesses is 5% in 2017-18, and 7.5% in 2018-19, so most small businesses will not feel too much of an effect in the next two years. It is really in three, four and five years’ time that increases will be most powerfully felt. Would the Chief Secretary consider changing the profile of that money so that, instead of being front-loaded in the next one or two years, it can be back-loaded into years 3 and 4, when the effects of the business rate increases will be felt most heavily? The total amount of money would remain the same—£435 million—but the profile would be shifted over time better to match the effect of the business rates increases.
I offer a second thought on transitional relief for the future, which again relates to the upward and downward caps. Bills have been sent out for 2017-18. There is an upward cap of 5% for small businesses, so no small business will face an increase of more than 5%, and there is a downward cap for large businesses of 4.1%, so no large business gets a decrease greater than 4.1%. I accept that that is now fixed.
Looking into the future, however, and particularly to 2019-20 and 2020-21, I wonder whether the autumn statement might consider fine tuning those upward and downward caps so that the largest businesses, such as the big four supermarkets, have a lower or even a zero further downward cap, so that they get no further decreases beyond next year’s decrease. That could fund a more generous upward cap for the smallest businesses, meaning that the upward cap of 10% to 15% in 2019-20 and 2020-21 could be reduced. This approach would be fiscally neutral. It would not affect arrangements for the coming financial year, which I accept are fully set in stone, but it would help small businesses in three or four years’ time, including businesses in Purley. I have noticed that the cumulative upward cap for such small businesses over the five-year period accumulates to 64.2%, which represents quite a high cap. If we could find a way of softening the blow, it would be very welcome indeed.
The Chancellor’s Budget statement also touched on pollution, particularly due to diesel cars. My constituency, like all London constituencies, is profoundly affected by this problem. The Chancellor mentioned that a plan would be delivered over the summer, in response to the European Union court case, and that fiscal measures would be introduced in the autumn Budget.
I have significant reservations about Sadiq Khan’s proposed diesel scrappage scheme, which would cost £515 million over two years in London. The cost of such a scheme nationally would be £3.5 billion a year over two years, which would be unaffordable and would, in fact, simply cause one set of diesel cars to be replaced by another. I do not support the diesel scrappage scheme proposed by the Mayor of London, but one fiscal measure that the Government might consider, bearing in mind that diesel cars now burn 10 million tonnes of fuel a year—a three times increase over the last 10 years —is introducing a significantly increased registration tax for new diesel cars. I am talking about cars, not vans and lorries, because I accept that including them would have an impact on business. That approach would help to deter people from buying new diesel cars, which now make up about half of all new car purchases in this country. Such a measure would have no retrospective effect on people who have already bought a diesel car, but it would encourage people to switch away from diesel cars, which would do a great deal to help to ease pollution problems in cities such as London in the months and years ahead.
I see that I am rapidly approaching the time limit, so let me conclude—[Interruption.] I am glad I have said something that is popular among Opposition Members. I welcome the Budget, which continues the Government’s record of job creation and growth. I congratulate the Education Secretary and the Chief Secretary again on protecting and growing education funding, and on committing to fund more excellent schools in our country.
George Kerevan (East Lothian) (SNP)
This was a dull Budget, although I do not necessarily say that as a criticism, because it was meant to be dull. The Chancellor did most of his heavy lifting in the autumn statement, in which he amassed a war chest by borrowing more than £120 billion. The criticism of the Budget is that rather than using that war chest now to raise productivity and improve education, he has put it aside because he does not know what will happen after the Brexit deal is done.
The Secretary of State for Education made a reasonable fist of trying to explain the new T-levels. If her explanation had lasted for two or three minutes, I would have believed her, but after half an hour, I began to think that she was arguing a little bit too hard, as if she did not really believe it herself. The T-levels were one of the more innovative parts of the Budget—I do not demur from that—but if we want a technical education of the standard that exists in Germany or the Netherlands, we must have the schools, and the workshops, computers and machinery in those schools, to do the teaching. In fact, the equipment in the schools has to be better than what people will find in the factory after they have graduated. The way to raise productivity is by training in schools at the highest and most advanced technological level.
If the money that the Budget gave to increasing selective education had been put into technical schools in line with the investment that takes place in Germany and the Netherlands, I might just have believed what the Government said. However, the T-levels are yet another blind by a Government who want to pursue selective academic education for a very narrow stream of people, which will not solve the problem of productivity.
The one significant change in the Budget that had the biggest impact was the rise in national insurance for the self-employed, so let us try to connect that to the whole question of educational productivity. Rather than Members listening to me, let us take the evidence of two companies: a construction and investment company called Chiswell; and a building company called Castlemead. Does anyone know who these companies are? They are both owned by the Chancellor of the Exchequer. To give him his due, he put those companies into a blind trust in 2010. He is an honourable man, so there is no question of him influencing these companies at the moment, unlike certain Presidents of the United States who we might mention.
It is interesting to see what these companies are thinking about the economy, productivity and skills. The 2016 accounts of Castlemead say that the building industry is
“suffering from supply bottlenecks, particularly of skilled tradespeople, driving up costs.”
What does the building company Chiswell say? It states:
“The scarcity of good quality and committed subcontractors is still an issue”.
The company is considering going back into house building. Of course, this skills and supply bottleneck is largely seen among the self-employed. To sum up, the Federation of Master Builders says that 60% of SME construction firms are struggling to hire bricklayers and carpenters.
The Secretary of State claims that the increase in technical training will help to supply some of this much-needed skill demanded by Chiswell and Castlemead. At the same time, however, the Chancellor is removing the incentive to work and to take up training because he is raising the taxes of the very workers whom his companies say they need. In other words, the Chancellor is so short-sighted that he is hurting not only his own businesses but, sadly, everybody else’s.
This is not just a dull Budget because, at its heart, there is a ticking timebomb. The OBR forecast about what happens next is interesting, as it relates to whether the money will be there to provide the training about which the Secretary of State has spoken. The Chancellor was concerned to tell us that, under his chancellorship, growth has been very strong in the past 12 months. Growth in this country has been powered by consumer borrowing. If we drill into this, we find that the OBR says that in 2016 the savings ratio in the UK hit a historical low—it has gone to zero and below. People are dissaving. If people are not saving, ultimately the funds are not there to finance the investment that will raise productivity. Moreover, because saving has collapsed, the OBR does not think that there is a potential for consumer borrowing and consumer expenditure to continue to carry the economy. The OBR predicts a downturn in the availability of consumer funds over the next 12 months, so the dissaving cannot continue.
Most of the boost to consumer spending last year was a hangover from 2015, when inflation was fairly low. As real incomes were rising—a rare occurrence in the previous 10 years—people felt that they were a bit better off. However, now that inflation is rising, because the pound has tanked, we can expect consumer borrowing to disappear, so how will the economy meet its growth targets? The OBR says that the borrowing will be replaced by a rise in business investment. When I asked the OBR officials who appeared before the Treasury Committee yesterday why they thought that—where was the evidence that business investment would rise?—they had a wonderful answer, which quite took my breath away: “Business investment has been so low for so long that it is bound to go up some time.” [Laughter.] That was what they said; Members can go and read the transcript.
George Kerevan
Indeed, but I will believe that when I see it, and I will believe that pigs can fly.
Ian Blackford
May I amplify the point that my hon. Friend is making? On page 7 of its book, the OBR states that investment intentions have been put on hold, but when we turn the page, we find that business investment is forecast to grow by between 3.7% and 4.2% between 2018 and 2021. It simply does not add up, does it?
George Kerevan
Not only does it not add up, but it means that we will not have the investment in plant and machinery that will raise productivity. We will miss our productivity targets yet again. Since the Chancellor has amassed his war chest, he should be using it. He should not wait for two or three years to see what happens after Brexit—no general does that. What is needed is investment now. Let us get on with the T-levels. Let us invest in English schools. I think that that would be a good thing to do, but it is not what the Budget says.
Richard Drax (South Dorset) (Con)
I am listening carefully to the hon. Gentleman’s speech. As I understand it—a Minister may be able to confirm this—the Government have invested £300 million. Colleges can apply for technical status, and the money will help to provide all the equipment, which I entirely agree is needed.
George Kerevan
I accept that proposition but, having spent 25 years of my life teaching in further education, I know that £300 million for the whole of England and Wales becomes a tiny amount when we drill down to all the individual institutions. Can the Government not confront reality? If we want the productivity levels of Germany, we should not be talking about £300 million; we should be talking about £30 billion. If the Government do not want to spend £30 billion, that is fine, but they should not pretend that small amounts of money somehow solve the problem.
Ian Blackford
I learned a lot from my hon. Friend because about 35 years ago he was my economics lecturer.
We have delegated responsibility to the Bank of England through the quantitative easing programme, and that has led to a lack of balance. We have seen £435 billion of QE that simply has not worked, but we have not seen enough fiscal responsibility from the Government to create the circumstances that will deliver sustainable growth.
George Kerevan
My hon. Friend is right. However, it is important to pin the blame where it is deserved, because perhaps the Chancellor gets too much of it. The blame actually lies in Downing Street with the Prime Minister. When she launched her bid for leadership of the Conservative party on 30 June 2016, she said:
“If before 2020 there is a choice between further spending cuts, more borrowing and tax rises, the priority must be to avoid tax increases since they would disrupt consumption, employment and investment.”
Yet now we have a Budget that will raise the taxes of the self-employed and entrepreneurs—the people whose motivation is required for growth in the economy and an increase in productivity. It is the Prime Minister who has reneged on her leadership promise; the Chancellor is only doing her bidding.
This Budget claims to address the questions of education and productivity, but it is actually about selectivity and privilege for the narrow few. Let me tell the House what it has not done. For the first time in 100 years, the millennial generation is earning less than its parents. The Budget does not deal with that, because the Chancellor has sat on his war chest. Home ownership among middle earners is falling for the first time in 50 years. Mrs Thatcher would be turning in her grave if she heard that that was happening under a Conservative Government. By 2020-21—the end of the forecast period—average incomes will be a fifth less than they would have been if growth had continued at pre-crisis levels. There will be £5,000 less for every household.
The Conservative Government have not delivered a return to wealth for the ordinary person. The Chancellor’s freeze on universal credit and housing benefits means that one person in seven will have a lower real income in five years’ time. This is a Budget that does not address the real issues of inequality in this country. It is a Budget for inertia and complacency, and I will vote against it.
Sir Edward Leigh (Gainsborough) (Con)
It is a pleasure to follow the hon. Member for East Lothian (George Kerevan). He rightly had a lot to say about education in England, but we might have liked to hear more from him about education or health outcomes in Scotland.
Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)
Will the hon. Gentleman give way?
Roger Mullin
I can tell the hon. Gentleman that the outcomes of Scottish education, in terms of the number of people entering work and higher education, are significantly higher than they are in this part of the United Kingdom.
Sir Edward Leigh
I am very grateful for being informed. Before the hon. Gentleman stood up, I did want to say to him and his colleague the hon. Member for East Lothian that the events of the last 24 hours had convinced me more than ever that I was right to table an amendment, at the beginning of the present Parliament, to give full fiscal autonomy to Scotland, with a modern equalisation formula which would ensure prosperity throughout the nations of the United Kingdom and replace the outdated Barnett formula. Perhaps SNP Members should not intervene on me too often, because basically I am on their side when it comes to these matters.
I want to say a few words in defence of the Government. I am aware that that is sometimes an unpopular thing to do, but I feel that the Chancellor was courageous. I know that that is what Ministers are sometimes told by their civil servants when they are doing radical things—“It is a very courageous thing that you are doing, Minister”—but I think that this was the right thing to do. A storm has broken about the Chancellor’s head over the last few days. Why was it the right thing to do to try to plug the funding gap and to increase national insurance contributions? It was the right thing to do because this is, I think, about honesty in politics. Too often in Budgets we have seen gimmicks and little giveaways. We have only learnt the full story the next day, and we have realised that successive Chancellors have pretty well taken back from us what they have given to us. The Chancellor was trying to say, “We have to have a mature, grown-up debate in this country about how we are going to meet the funding gap in adult care.” That debate will run and run. We have a few months to think about it and to come up with a solution.
People say to me, “You made a manifesto commitment.” Sometimes, circumstances change, and one has to do what is right for the country. It is a difficult thing to do. Manifesto commitments are not written in stone—[Interruption.] I did not mean that to be a joke. We all know the history of that particular Labour party manifesto commitment and what might have happened to those words written in stone if the Labour party had won the election.
We have to have a mature debate about how we are going to pay for the NHS. Why do I say that? I am going to be completely honest about it. A lot more needs to be done for our NHS. I rely, as do my family, entirely on the NHS. We have no other providers. People of my age are deeply worried about the funding crisis. We have seen what has happened on A&E—targets have been missed. We have seen the report that puts the UK just ahead of Slovenia, Croatia and Estonia. As a country, we should be doing better than that. What is worse, England was ranked 30th for accessibility because of our exceptionally long waiting times for treatment. The 2013 figures from the OECD show the Netherlands, Sweden, Germany and France at the top, with their spending hovering at around 11% of GDP, while the UK’s stands at just 8.5%. Therefore, we need to have a mature debate about how we are going to meet the funding gap for all our people.
The King’s Fund estimates that, if we wanted to close that gap solely by increasing NHS funding from central Government, by 2021 we would need to increase our spending by 30%—a whopping £43 billion increase in real terms. That would push NHS spending to £185 billion overall.
Are there any alternatives to those scenarios? I pose that question. I know that that is unpopular. I know that people do not necessarily want to debate this, but we cannot raise this money from general taxation—there is not the political will and we cannot afford to do it—not if we want to maintain the NHS as universal, non-contributory and entirely free at the point of use. Something has to give.
The 2015 Euro health consumer index points out a contrast between two styles of health care: the “Bismarck” systems and the “Beveridge” systems. Bismarck systems are based on citizens taking out insurance available from a range of providers, whereas Beveridge systems such as ours have one body that provides all the care. The ECHI says that the largest Beveridge countries—the UK, Spain and Italy—
“keep clinging together in the middle of the index.”
The ECHI rated the Dutch health system as the best performing in Europe. The Netherlands happens to have a contributory Bismarck-style system. I believe—I know that it is controversial and that colleagues do not necessarily want to debate it because it is politically very sensitive—that, without appointing a royal commission and wasting years, Ministers, and the Opposition, have to have an open mind about how we are going to raise money for people not from general taxation, but by moving gradually, for parts of our healthcare, to a social insurance-based system.
We also have to have the courage to think radically about following the German and French example and indeed the Australian example. If you go to see a GP in Australia, you have to pay some money; if you do not turn up, you lose the money. In France, if you go to see a doctor or go to A&E, you have to pay a “facture”. If you cannot afford to pay, all that will be returned to you; if you can afford to pay, you have to make a contribution.
I know that these are radical ideas. However, if people are going to dismiss them, and dismiss the need for an open debate about how we are going to fund our healthcare system, they have to explain to us how they will raise the money from general taxation. There is no point simply attacking for Government for increasing national insurance contributions without proposing how they are going to tax to have a world-beating healthcare system, which is in all our interests. We want an open debate on that.
We need to have a realistic debate about education, too, on both sides of the Chamber. I do not think the way to approach the debate is to say, “I believe in grammar schools,” or “I oppose selective education in any shape or form.” The Opposition have to ask themselves a serious question: why has social mobility declined so catastrophically in our most deprived areas? The solution may not be to have grammar schools in our deprived areas. It may be to have more academic streams in our comprehensive schools. It may be to set up some selective schools only in deprived areas. It may be to provide places only for academically gifted children who come from deprived backgrounds. If politically and ideologically one says that we are not going to go down that route at all and believes in neighbourhood comprehensives in deprived areas, one has to ask oneself why social mobility is declining, has declined and will go on declining.
The Prime Minister is trying to open up a serious and interesting debate, and the Health Secretary is starting to open up a serious and interesting debate about how we are going to fund the NHS, and the Chancellor is opening up a serious and interesting debate about how we are going to find the money to meet all our future needs. In those terms and on that basis, I welcome the Budget speech.
Mr Iain Wright (Hartlepool) (Lab)
It is a pleasure to follow the hon. Member for Gainsborough (Sir Edward Leigh); he made a thoughtful and forward-looking speech, although I have to say that I could not disagree with him more on the matters of insurance-based payments to fund our NHS and selective education; those are the wrong approaches for this country to take.
I want to mention three key points. The first is the position of the national debt. This year’s “Economic and fiscal outlook” document from the Office for Budget Responsibility states that
“the fiscal mandate has targeted different measures of the deficit at different horizons”,
which is a beautifully diplomatic way of saying that the Government keep moving the goalposts and still fail to score the goal. The OBR goes on to state that
“the Government does not appear to be on track to meet its stated fiscal objective to ‘return the public finances to balance at the earliest possible date in the next Parliament’.”
So the Government have failed on the deficit, but they are failing catastrophically on the debt.
In 2010, the Government expected public sector net debt to be falling as a share of GDP; it was forecast to reach a high of 70.3% in 2013-14, falling to 67.4% by 2015-16. However, in every single year that the Tories have been in No. 11 net debt has risen in actual and relative terms, reaching 83.7% of GDP last year, and it is going to rise through this Parliament, with the Red Book forecasting that it will reach 88.9% this year.
When the coalition took office, public sector net debt was £771 billion. This year it reached £1.6 trillion, and the Red Book forecasts it is to rise again throughout this Parliament to £1.9 trillion. This is my first key point: in little over a decade, the Tories will have increased public sector debt by 146%, with it rising by over £1 trillion.
In his statement, the Chancellor said that they
“will not saddle our children with ever-increasing debts.”—[Official Report, 8 March 2017; Vol. 622, c. 811.]
However, when Tory Chancellors have increased the public debt by almost 150% in a decade, saddling our children with ever-increasing debts seems to be precisely what this Government are doing.
Chris Philp
Will the hon. Gentleman join me in welcoming the fact that the deficit has gone down from 11% of GDP when Labour left office to 3% of GDP today?
Mr Wright
But the public sector debt is almost touching £2 trillion. The hon. Gentleman cannot be satisfied with that situation when the whole nature of Tory Governments since 2010 has been not only to reduce the deficit, but also to get the debt down to manageable proportions.
On that point, having debt on a low and falling proportion of GDP provides some scope to absorb the impact of any future economic shock. That was the case with the Labour Government in the run-up to 2008, and in many respects it was the case with the Thatcher Government in 1988, ’89 and ’90, to hit the recession of the early 1990s. But this Government are failing to do the same thing: we will hit any economic turbulence or downturn with public sector debt being about 80% to 85% of GDP. That does not give us the flexibility to be able to respond and help firms and families in a robust and strong way.
The second point I want to make is about the nature of the economic recovery. Seven years ago a Tory Chancellor’s first Budget for 13 years stated that the British economy had become unbalanced, too reliant on growth and, as the 2010 Red Book said,
“driven by the accumulation of unsustainable levels of private sector debt and rising public sector debt.”
Growth was confined to a limited number of sectors and regions. I have mentioned public sector debt, and it is true to say that the British economy has performed well; the UK was the fastest-growing G7 economy last year. However, if we scratch beneath the surface, it is questionable precisely who is benefiting from that growth and what sort of growth we are having. Of course, growth is growth, and it has to be welcomed, but the British economy seems to be reverting to type, which could leave us vulnerable to long-term challenges and mean that we fail to take advantage of great opportunities.
Who is benefiting from the growth? The UK has been the only big advanced economy in which wages have contracted while the economy has expanded. Households are facing a period of 15 years in which average real wage growth simply does not happen. Average earnings in real terms are expected to be the same in 2022 as they were in 2007. Such a long period of wage stagnation is unprecedented since before the industrial revolution. Yet despite the lack of wage growth, household consumption is powering the economy, as the hon. Member for East Lothian (George Kerevan) mentioned in his powerful contribution. This has led to an expansion in the dominant services sector, but if consumption growth is running faster than wage growth, it must mean that people are either reducing their savings or increasing their borrowing.
The Governor of the Bank of England said in a speech in January that
“the UK expansion is increasingly consumption-led. Evidence from the past quarter century across a range of countries suggests episodes of consumption-led growth tends to be both slower and less durable.”
The household debt-to-income ratio has increased from 140.8% to 143.9% this year alone. These are worrying trends, and we are not seeing an increase in investment or an export-led recovery. Business investment has constantly undershot expectations, and there was a year-on-year fall in business investment of 1.5% last year. Despite the drop in sterling’s value against the dollar by about a fifth since 23 June, we have not seen the boom in exports that we might have expected. In fact, the trade deficit widened to £13.6 billion in the third quarter of 2016. That was due predominantly to a trade in goods deficit getting larger by £8.5 billion.
My third point is that we need a new model for the economy. To be fair to the Prime Minister, she said when she first came into No. 10 that she wanted to see an economy that worked for everyone, and that she wanted to see private sector reform to ensure that growth was rebalanced and reached all parts of the UK. However, that is not what we saw in last week’s Budget. The Government have referred to an industrial strategy as the path by which such growth could be achieved, yet the Chancellor failed to mention the term “industrial strategy” once in his financial statement, which demonstrates the buy-in from the Treasury to the concept. We talk about rebalancing across the regions, but as a north-eastern MP, I could find no reference whatever to the north in the Budget statement, let alone an assurance that we could have an economy that worked for everyone.
In our recent Select Committee report following our inquiry into the industrial strategy, we noted that the Government tend to operate in silos, and this Budget sadly reveals business as usual and more of the same. The Government intervene in the economy every single day, through taxes and regulations, as the Red Book shows. They can do that in an ad hoc, piecemeal way, or they can do it as part of a co-ordinated, strategic purpose. Sadly, the Budget seems to stress the former. It is true that the industrial strategy talks about skills as being essential, and the Chancellor’s announcement on technical education is welcome, but we will not see the fruits of those proposals until 2020-21. The industrial strategy also talks about ensuring that we are one of the most competitive places in the world to start and grow a business, yet the national insurance contributions debacle will result in a tax on enterprise, on ambition and on personal risk-taking by entrepreneurs.
The Committee would have liked to see a more ambitious, mission-based approach in which the Government, working with business, set a long-term direction for the economy in the pursuit of tackling global and national challenges. Where in the Budget was the vision on decarbonisation? Where in the Budget was the ambition to be the leading economy to exploit the fourth industrial revolution? Sadly, we got the same short-term tinkering, which will not address issues such as low productivity, skills deficiencies and massive regional imbalances. If the Prime Minister is serious about an economy that works for everyone, we need to see a step change in the way the economy works. An industrial strategy could be the means by which we achieve that but, sadly, in this Budget we saw business as usual.
Lucy Allan (Telford) (Con)
Thank you for calling me to speak in this important debate, Madam Deputy Speaker. It is a pleasure to follow the considered speech of the hon. Member for Hartlepool (Mr Wright). I congratulate the Secretary of State for Education on her passion and commitment to social mobility. We saw that today and we see similar themes in the Budget. I am so pleased that she is doing everything possible to ensure that my constituents have the opportunity to realise their potential. I particularly welcome the Government’s commitment to technical education, the introduction of the T-levels and the fundamental reform of education for 16 to 19-year-olds. It is truly a Budget for skills. I care so much about that because it represents an important investment in the future of my constituency. Telford has a proud industrial past as the birthplace of the industrial revolution.
Lucy Allan
I know that the hon. Gentleman disagrees with me, but I will continue to say that Telford is indeed the birthplace of the industrial revolution. We have our foundries, ironmasters such as Abraham Darby, the invention of the inclined plane, the Ironbridge—I could go on, but we are here to talk about skills. Over the years, through innovation and the indomitable Telford spirit, we have been able to overcome obstacles and find solutions to many problems. As a result of that innovation and spirit, Telford has become a dynamic, vibrant centre of the modern industrial revolution. From polymers and plastics to the high-tech automotive supply chain and advanced manufacturing, high-skilled, high-paid jobs are on offer to Telford’s young people.
Some years ago, I addressed sixth-form students at Abraham Darby Academy, which is in Madeley in my constituency, and said that university is not for everyone, that many graduates feel ill-equipped for the world of work on graduation and that some find themselves highly in debt in low-paid jobs. There was a bit of shuffling and an awkward silence and the teachers looked at each other and at the floor, and it became clear that almost all the students were being actively encouraged to go to university, which is what they planned to do. At that stage, however, they did not have the choice that is now being offered to students. We now have a clear-cut quality alternative for students who want to spend their post-16 years preparing for the world of work, which has to be a good thing. We have to ensure that the young people of Telford have the right skills and the work-readiness abilities to take full advantage of the opportunities presented by the high-skilled, high-tech jobs that are now coming to Telford.
Employers in Telford frequently talk to me about the skills gap being a major challenge, and the Budget’s measures on technical training will address that. Telford already has some fantastic organisations that are working hard to upskill our young people. Juniper Training and the Telford College of Arts and Technology do fantastic things on work readiness and skilling young people up with technical skills. Equally important, however, is the skills training offered by primary schools in Telford. We may be doing something unique, so I want to tell the House about it because it is a model that other primary schools should look to follow.
At Dawley C of E Primary Academy, which I visited recently, every single child uses technology in the classroom in amazingly innovative and advanced ways. Children are acquiring skills that will equip them for the jobs of the future. I got to see 7-year-olds using 3D printing and computer-aided design to make flowerpots and benches for an outdoor area as if it were second nature. The school is giving children the skills to thrive in the Britain of tomorrow—skills for success in a modern economy. Pupils from Newdale Primary and Nursery School visited me in Parliament today, and one young boy told me all about how they are learning to code. Many schools do that, but we need to build on the technical skills that children learn at a young age. It is fantastic that we can build on that with a complete overhaul of 16-to-19 provision to create a workforce of tomorrow for jobs that have not even been created yet, which is vital for a vibrant economy and for our global competitiveness.
I say “Well done” to Dawley C of E Primary Academy and to Richard Smith from Amazing ICT, who goes around all the primary schools in Telford helping pupils to discover technology at the youngest possible age. They are giving students the skills they need to thrive in the modern economy and equipping them for the jobs of tomorrow. A particular “well done” goes to the Secretary of State for Education for introducing that transformative approach to skills. As with the new T-levels and the technical education routes, we are helping children to do what they wish to do, and we are boosting UK productivity and UK competitiveness in a post-Brexit world.
I welcome many of the Budget’s other measures, too. I particularly want to mention the measures for women, including the £5 million for the centenary of votes for women in 1918, as it is important that we mark that incredible milestone. I welcome the £5 million for returners and the £20 million for the victims of domestic violence, and I am glad to see those important measures.
Hannah Bardell (Livingston) (SNP)
I also welcome that funding, but does the hon. Lady share my dismay that, on the same page as her Government talk about giving support to victims of domestic violence, they refuse to get rid of the repugnant rape clause?
Lucy Allan
I am glad that the hon. Lady, like me, welcomes the money for victims of domestic violence. It is extremely important that the Government continue to recognise those victims, and I believe our Prime Minister is 100% behind doing exactly that.
I welcome the Budget, and I specifically welcome the Secretary of State’s commitment to social mobility. I know that my constituents in Telford will benefit from the measures that she has set out.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
I have heard a few Budgets in my time. The first was delivered by Sir Geoffrey Howe, who was a thoroughly decent man. Denis Healey unkindly said that Sir Geoffrey had been round the country stirring up apathy, but he was a decent man and I remember his Budget.
This Budget is deeply, deeply disappointing. In the context of the miserable votes last night, with this country heading headlong into a hard Brexit, I expected an imaginative Budget that prepares the country for what Harold Macmillan called, “Events, dear boy, events.” Well, we have already seen one such event from the First Minister of Scotland, and there will be many more from left field and right field. This country is going to be rocked by events over the coming years, and this Budget does not help anyone—nationally or regionally.
I represent Huddersfield, which is almost the average town in Britain, and it is in a dreadful state. They are going to close the accident and emergency services at our local hospital, and they are going to close the whole hospital. There is chaos across our country, not just in Huddersfield. Two thirds of the health services in our country are in dreadful trouble.
Most of the local authorities I know, especially the ones with indecent levels of deprivation and poverty—the ones in the average, real parts of our urban communities in Britain, not the ones in the leafy suburbs that some Conservative Members represent—are in deep trouble and are unable to bear the cost of social care and health. I was expecting something imaginative from the Budget, and we did not get it.
We also got very little indeed on education. Some earlier speakers asked where we could get alternative funding. The hon. Member for Gainsborough (Sir Edward Leigh) and I used to sit together on the Liaison Committee, and I used to call him, very unkindly, a member of the “barmy army,” but he actually thinks a lot. He has always been quite provocative, and he always has something to say. The fact of the matter is that we need imagination and passion to solve our country’s problems, but I heard little passion from the Government Front Bench today. I feel passion because I believe that every little child in this country has a spark of potential. If we, as politicians, cannot create a system that liberates that spark, we are not doing our job.
As Sir Michael Wilshaw said, the disaster of our education system is that we find bright little kids in our primary schools and we lose them after the age of 11. What sort of country and what sort of school system is that? All parties have underachieved, but we have seen some real change. There are signs of improvement, and I shall briefly give the test that most primary school teachers use to assess a young person’s work. They use “two stars and a wish,” and these are my two stars. First, I give a star for the good fundamental policy approach to skills in this Budget. We have been languishing on skills policy for so long, but there is now some imagination there. Who would have thought it? They used to say that John Prescott was a crazy man of the left who wanted a levy for training. Conservative Members used to say that was an absolutely disgraceful left-wing horror. Well, we now have an apprenticeship levy, as we should. It comes in in April and I hope it will succeed.
The Government actually went about policy making in a sensible way. They took evidence and consulted. They put Lord Sainsbury in charge, along with the former Minister the hon. Member for Grantham and Stamford (Nick Boles), who actually got to know something about skills and training. He has gone now, but some of us will miss him, because he listened. He introduced Lord Sainsbury to the skills commission that I chair, and I gave evidence to them both about what I wanted to see in skills policy. Some of that stuff is in the policy that came through in the Budget. I welcome such evidence-based policy. When I was Chair of the Education Committee, we used to applaud evidence-based policies, along with policies that seemed to work in countries like ours. So, there is something in the Budget in terms of skills, Alison Wolf’s recommendations to the Select Committee, and the work done by the Sainsbury review to talk to businesses, employers and practitioners on a cross-party basis. That is the way to make policy.
Sir Edward Leigh
The hon. Gentleman is speaking with great passion and is doing his best to provide some solutions. May I give him another one? Perhaps we should end the fiction that national insurance contributions can pay for all social care. We should merge national insurance and taxation, simplify things, and try to raise more money that way.
Mr Sheerman
I have already complimented the hon. Gentleman on being a good, out-of-the-box thinker, and that is another interesting suggestion to debate.
My second star is for productivity. Actually, it is only half a star, because we cannot really check. The Budget includes additional high-value investment, the national productivity investment fund and world-class infrastructure investment. I like most of that, except I am one of those quirky people who still cannot believe in High Speed 2 and in the fact that all that national treasure is being put into a railway that will be out of date by the time it opens in 2033. I think the money should be spent on the national health service, but I know I am in a minority on that.
The Budget also includes £300 million for the future development of the UK’s research talent and to attract talent from the research powerhouses of China, Brazil and Mexico. I like all that—it is all quite good stuff, so it gets half a star. All the stuff about disruptive technology investment to transform the UK economy, electric vehicles, artificial intelligence and robots is good stuff, but there has not been enough private sector research and development for a number of years. Co-operation between business and universities has not been good enough. We will never get the levels of productivity we want until we have the right kind relationships.
Finally, I come to my wish: for goodness’ sake, where is the evidence that grammar schools and free schools do anything to find the spark in children that we want to release? There is no evidence and no research. Not one reputable research institute or organisation in this country believes that a return to selective education will help anyone—quite the reverse. Look at all the research and the experience in other countries. Just look at Kent, for God’s sake! It is the most selective place in the country and it has the worst performance across all schools in the country. That is selective education. It has no research base and no experience base, and there is no global comparison of which we can say, “Isn’t it wonderful?” They do not have it in Denmark, Sweden or Finland. I doubt it is even the latest fashion in Shanghai.
I like policy that is based on good research and good evaluation, and yes, sometimes we should work across the party divide—that is the way to make policy. This Budget has not delivered it. We want that spark to be found and promoted—we want the country to be rich and successful in the challenging disaster of Brexit—but it is not in this Budget.
Chris White (Warwick and Leamington) (Con)
I am delighted to follow the hon. Member for Huddersfield (Mr Sheerman). We work together in many areas, including as co-chairs of the all-party group on manufacturing. He displayed his typical passion in his speech this afternoon. My view is that we must be forward looking in our approach and embrace an increasingly dynamic economy. If we tie that in with our industrial strategy, we have much to be optimistic about.
I start by acknowledging the positive news on employment. A record 31.8 million people are in work, which is reflected in the figures in my constituency. Businesses can be particularly proud of the fact that there has been a 74% fall in unemployment since 2010. Naturally, as the unemployment figure falls, it becomes increasingly difficult to reduce that figure further. For that reason, we must think differently about developing a skills base and investing in research and development. Industry 4.0 is a prime example of an idea that must be integrated into Government policy and that must span a range of Departments.
I also welcome the introduction of T-levels. Technical education has the potential to boost productivity. The new system, which will be introduced in 2019, increases the number of hours on such courses and includes good, strong work placements. I spoke in a recent debate on the productivity plan. If we are to improve productivity in the UK, we must first improve our domestic skills base. The £500 million per year in extra funding for technical education is a boost. Warwickshire college, which is in my constituency, is an example of what can be achieved.
Giving parity of respect to technical education in relation to A-levels has been something in which I have long believed. I am pleased that the Government have recognised the significance of this standard. More generally, strengthening ties between our education system and business should be a priority, particularly as the demands on businesses will continue to shift with the changing landscape of the economy.
I welcome the national productivity investment fund, which was announced in the autumn statement, and the funding that will be provided through the spring Budget to upgrade transport infrastructure. In the midlands, some £23 million will be directed towards improving the transport network. Wider spending on infrastructure with a focus on providing the very best framework for business is vital. The launch of the industrial strategy challenge fund is also very welcome, particularly with its focus on investing in innovation. It is absolutely the right approach to take and I hope that it can be built on as the strategy develops.
During the Queen’s speech debate last year, I spoke about the importance of shaping an industrial strategy to give certainty and confidence to British business. Despite being a little alone with that opinion on the Government Benches, I welcomed the industrial strategy Green Paper and the development of the Department. With this new funding, projects that further the capabilities of the automotive sector and that increase the longevity of batteries in electric vehicles can go a long way in securing a prosperous and sustainable future. Investment in infrastructure in tandem with investment in R and D is vital if our potential is to be realised.
The midlands is well placed to be at the forefront of such technologies, and it is in that context that I welcome the launch on Thursday of the midlands engine strategy, which specifically mentions the automotive industry and the fact that 39% of UK employment in the sector is in our region. With a strong science and research base, providing additional support to the midlands is the most effective way of enabling the UK to take a greater share of the international market. Regional empowerment should be a key consideration of Government policy. Sustained support for the midlands engine is, therefore, vital.
My final point is about the concern of a number of businesses in my constituency about business rates. In recent weeks, I have canvassed opinion locally on the upcoming changes to rateable values. By way of an example, a pub in my constituency is seeing a rise from £18,000 to £68,000. Another is seeing an increase from £33,000 to £94,000. Elsewhere, a business is seeing its rateable value rise to £12,500; being £500 above the rates relief threshold will mean a further tax bill of £6,000. Even for successful enterprises, these significant hikes in business rates risk jobs losses and closures of businesses altogether. The £1,000 business rates discount for one year for pubs with a rateable value of up to £100,000 is put into context with the rises I have just mentioned. Allocating £435 million towards supporting those that will be particularly impacted is welcome, but I urge the Chancellor to review the issue urgently.
Mr Speaker
I call Gareth Snell for his maiden speech. [Hon. Members: “Hear, hear.”]
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
Thank you very much, Mr Speaker, for the opportunity to make my maiden speech during an important debate on education and skills. Both are vital to the future success of my constituency, albeit a greater challenge following the sustained underfunding of Stoke schools.
It is a privilege to have been elected as the Labour and Co-operative Member of Parliament for Stoke-on-Trent Central in an election that was not planned and following a campaign that, all too often, did not do justice to the wonderful city that I now represent. Many of my colleagues on these Benches—and, I would wager, on the Government Benches—who came to Stoke-on-Trent during the by- election would struggle to reconcile the vibrant, welcoming and proud city they visited with the portrait painted by the national media. All too often, cameras lingered over disused bottle kilns, while our resurgence in hi-tech ceramics went unmentioned. Journalists posed by abandoned shop fronts, just yards away from the city’s thriving cultural quarter, and rarely did our world-class university feature in reports. Commentators talked down my city in order to play up their narrative. They dismissed a capital of culture as little more than the capital of Brexit, pigeonholing my constituents into a box that does not reflect their true character.
While that narrative suited those seeking to win the election on a platform of hatred, division and nationalism dressed up as patriotism, it did a grave disservice to my city, whose motto is “United strength is stronger.” My city demonstrated that nationalism of any sort has no place in our politics. My challenge, for however long I am blessed to represent Stoke-on-Trent in this place, is to champion everything that is great and good about our city; to recognise our problems, but to highlight our many achievements; and to shout loud and often about why the Potteries, above all else, is the best place in the UK, if not the world.
In the Potteries, we are innovators and educators, artists and entrepreneurs. We pioneered the first industrial revolution—something that has been discussed quite a lot this afternoon—and we have the potential to lead the next. We are the home of Reginald Mitchell, Josiah Wedgwood, Clarice Cliff and, more recently, Robbie Williams. But, most importantly, we are home to the Staffordshire oatcake—a delicacy seldom found outside of the ST postcode but which, once savoured, is never forgotten.
Gareth Snell
Yes; I’ll bring some.
We were the beating heart of a ceramic empire that stretched to the four corners of the world and, today, proud members of the “turnover club” can be seen inspecting their tableware for that all important back stamp, hoping to find neatly inscribed on the back of their plate or cup the five greatest words in the English language: “Made in Stoke-on-Trent.” It is a ceremony my own daughter Hannah has taken up with vigour. Indeed, so enthusiastically does she wish to discover the origins of a dinner plate, she has on occasion forgotten to finish its contents before turning it over and depositing her lunch in her lap.
It was with utter joy, when I arrived in this place, that I discovered that my first cup of tea was from a wonderfully crafted cup produced, upon further inspection, by Dudson, from my city, which, although technically in Stoke-on-Trent North, I am sure my hon. Friend the Member for Stoke-on-Trent North (Ruth Smeeth) will not mind sharing for the purposes of this speech—I hope, anyway. But ceramics is not just our history and our heritage; it is our present, and with the right help from this Government, it can be our future, too.
Mr Speaker, in the middle of my constituency, on an otherwise unassuming window in the city centre, you will see a life-sized picture of TV’s Eric Knowles, best known as the ceramics expert on the “Antiques Roadshow”. He proudly proclaims that the Potteries Museum and Art Gallery boasts a greater collection of ceramics than even the Victoria and Albert Museum—a discussion I shall no doubt have with the V&A’s new director.
That allows me to segue neatly to pay tribute to my predecessor, Tristram Hunt. Although he was, like me, not a native son of Stoke-on-Trent, anyone who met Tristram knew that the Potteries had found its way into his heart. He was a fervent champion for Stoke-on-Trent, and never was an opportunity missed to extol the virtues of our six towns. His ability to bring people together and ignite in them a passion for the Potteries will be sorely missed.
But it was our city’s children who most preoccupied Tristram’s efforts. He knew that the best hope for our city’s continuing resurgence was to ensure that every young person had a good education and the best possible start to life. He was a champion of Sure Start—one of Labour’s greatest achievements and, for the doubters on the Conservative Benches, something we will rescue in the next Labour Government. He was a frequent visitor to the many wonderful schools across the constituency. He delivered the maths excellence partnership to improve standards in our local schools and give young people the skills they need to prosper.
Tristram used his talents to promote literacy, because he knew the value of inspiring children to read and to foster a love of books. His enduring legacy in Stoke-on-Trent Central will be a generation of children who, through his work on the now acclaimed Hot Air literary festival, have been able to expand their reading, take up creative writing and explore a world of literature that otherwise would have passed them by. As we speak today of the importance of education and training for post-Brexit Britain, these achievements, and the ongoing challenges, are as important as ever.
Tristram was a thoughtful and forceful voice in this House and beyond, and I know that his contributions will be missed, but he is one of a long line of distinguished parliamentarians to have represented Stoke-on-Trent Central. Whether it was Mark Fisher and his campaigns on local health services and to ensure the sovereignty of Parliament, or Bob Cant as a keen advocate for local government, my constituency has been ably served by dedicated public servants, and I will do my utmost to continue in that tradition. [Hon. Members: “Hear, hear!”]
My predecessor was a man who loved our movement’s history, but I am a man who has lived it. Growing up with my grandfather, a union rep for the old Transport and General Workers Union, I was taught from a young age that the greatest strength that working people have is our solidarity. It was a lesson that he embodied in his own life, representing his colleagues at the chicken factory where he worked, and representing his friends and neighbours as a Labour councillor.
My childhood taught me always to stand up for what I believe and always to speak my mind. The latter, it must be said, has sometimes brought mixed results. [Interruption.] Yes, 140 characters are coming out later. Nevertheless, that advice has served me well, and my wife Sophia and I will be proud to pass it on to our daughter, Hannah.
I would also like to put on record my thanks to the Labour movement, including friends in the Labour party, the Co-operative party and the trade unions, for their assistance in my election. Particular thanks must go to my hon. Friend the Member for Birmingham, Erdington (Jack Dromey) and to my new neighbours, my hon. Friends the Members for Stoke-on-Trent North and for Stoke-on-Trent South (Robert Flello).
Ours is a politics based on comradeship in which the strength of our common endeavour means that we really do achieve more together than we achieve alone. Those same values of fairness, co-operation and social justice run through the history of Stoke-on-Trent and its people. They were on display in 1942 when the north Staffordshire mining community helped rebuild the village of Lidice in the Czech Republic after it was razed by the Nazis. The driving force behind that crusade was another of my predecessors, Sir Barnett Stross, who said at the time:
“The miner’s lamp dispels the shadows on the coal face. It can also send a ray of light across the sea to those who struggle in darkness.”
At its best, that is what the Labour movement has always been—a ray of light for those who struggle in darkness. It is my immense privilege to be part of that movement here in Parliament, and to try in my own small way to help to hold that lamp aloft. It is a responsibility that I will do my best to meet as I strive to give a voice to the people I represent and showcase all that is great about Stoke-on-Trent.
Richard Drax (South Dorset) (Con)
It is a great pleasure to follow the maiden speech given by the hon. Member for Stoke-on-Trent Central (Gareth Snell). We all remember our maiden speeches. I personally thought the hon. Gentleman made an excellent speech full of passion and conviction. Perhaps a little shiver went through those on these Benches at hearing a man of conviction, which is what this House needs, in my humble opinion, on many occasions. From Staffordshire oatcakes to the ceramic empire, we heard it all. The hon. Gentleman represents an honourable seat and I am sure he will do an honourable job.
I congratulate the Government on doing an excellent job so far, bearing in mind the appalling inheritance that we had back in 2010, along with the banking crisis and many other factors that led to the massive cash crisis that we face. The UK economy is forecast to grow by 2%, real wages are forecast to rise every year to 2021, the deficit is due to fall, and the debt in proportion to national income is also due to fall. All this, and more, is most welcome, and I congratulate the Government of whom I am proud to be a member.
I am also glad that the Government are not ashamed, as they should not be, to mention the dire financial circumstances that our country still faces. Wherever I go in my constituency—I am sure that most Members are the same—we cannot brush over the fact that we are still on a knife edge. We are told—the figures are there—that there is debt of £1.7 trillion, or £62,000 per household; that private debt, which is not often mentioned, is a similar figure; and that there is £50 billion a year of debt interest, which is more than we spend on defence and policing put together. These are horrifying figures that Government Front Benchers are desperately trying to deal with.
I would not be doing my duty as a Member of Parliament if I did not raise a few of my concerns about the Budget, although overall I support it. The word “fairness” is used a lot by the Chancellor of the Exchequer, for reasons I quite understand, but I am not sure that it entirely resounds with those who are going to be affected by one or two tax rises. As a Conservative, I long to hear from a Conservative Chancellor a vision for this country that involves a massive reform of our tax system, which today is one of the most complicated in the world. For example, why cannot we have a flat-rate income tax of, say, 30%? KISS—keep it simple, stupid—is what we were told in the Army, and I think that there is a lot of room for that in the tax system of this country.
Sir Edward Leigh
My hon. Friend is making an interesting speech. The reason why we cannot have a flat-rate tax—this is not often mentioned by Labour Members—is that the top 2% pay a quarter of all income tax. It would therefore be impossible to move to a true flat-rate tax, but we could completely simplify the tax system, perhaps by having two rates. We could also try to merge capital taxes, and their terms and rates, much more into income tax. We could therefore start to get rid of the poverty and unemployment trap.
Richard Drax
I entirely concur with my hon. Friend. As always, his intervention was absolutely spot on.
Another point I have noticed during the six or seven years I have been in the House is that everything is ring-fenced—every Department is ring-fenced. The Chancellor says, as we have heard previous Chancellors say, that there is so little room for manoeuvre. May I suggest that we take away the ring fence, think radically about areas such as the national health service—my hon. Friend mentioned it—and try to look at things far more in the round for the future of our country? I would have liked to have heard a lot more about Brexit, and the future—where we are going—in the vision from the Chancellor, as I do not believe that we heard about that.
I want to touch on one or two other issues, the first of which is the national insurance hike. I must say that I am concerned about that because many people who will be affected work and live in my constituency of South Dorset. The money raised will be relatively pitiful, but 2.5 million people are facing an average rise of £240. We have heard about a manifesto pledge being broken, and I believe it has been broken. I am not saying that manifesto pledges cannot be broken, because circumstances may change, meaning that they have to be broken.
I have consistently argued that if we are to look for more money, the overseas aid budget is the area that we should consider. Many of my constituents certainly believe that we should help the less well-off—of course we should. However, setting an arbitrary figure for such aid of 0.7% of GDP—interestingly, the average figure for the EU is 0.4%—is a pledge too far. It is also a pledge that this country clearly cannot afford, because many areas of our national life are now calling for more money.
Self-employed people take risks that the employed do not, as we all know. They risks their homes, livelihoods and families. That is one reason why they have, or did have, such a tax advantage. I know that there has been equality as far as pensions are concerned, but I still believe that the risk takers, the entrepreneurs and the aspirational —the people we need to create wealth, prosperity and jobs for our future, especially as we move to leaving the EU—should not be penalised.
I am not happy about quarterly reporting. The self-employed and small businesses will be required to fill in four income tax returns a year instead of one. They will need to do so digitally, but if hon. Members speak to farmers about applying for grants digitally, they will find that that is not always easy. Such people will require an accountant and there will be extra costs. Income tax will have to be paid at the end of each quarter, rather than in one or two instalments each year, and that will inevitably affect cash flow. It is important—in the good times or the bad times that we know businesses experience—to have an annual look at a business, rather than for it to be affected during a poor period by a cash payment that has an impact on its cash flow.
Another area that I am concerned about is probate fees. At the moment, probate costs are capped at £215. It is worth noting that the costs on estates of over £50,000 could now range from £300 to £20,000. The press have dubbed this a “death tax”, and I think that that is a fair comment.
On death taxes, I want to mention inheritance tax—I declare an interest. I think that inheritance tax is completely immoral. We pay a lot of tax all our lives, and when we die, as we cannot avoid doing, 40% is charged by the state. In my view, that is completely immoral. Let me quote the previous Prime Minister, David Cameron, who said at the last election:
“We will take the family home out of inheritance tax. That home that you have worked and saved for belongs to you and your family—you should be able to pass it onto your children”.
I entirely concur.
In my remaining minute, let me say that I want the abolition of inheritance tax, a review of capital gains tax and the simplification of the whole tax system. I also want much more investment in technology colleges— I entirely agree with the hon. Member for East Lothian (George Kerevan)—where I think the future lies for all the jobs that we will need to fill. If money is needed, I want the overseas aid budget to be targeted, rather than any other ring-fenced area.
The situation regarding business rates concerns me. In the view of Tim Martin, the very able founding chairman of Wetherspoons, who came to address my apprenticeship fair last week, supermarkets will get away with it and his pubs will get hammered. Finally, may I gently ask Ministers that we stop using the terms “tax avoidance” and “tax evasion” in the same sentence? Tax evasion is illegal; tax avoidance is something we all do for our families’ sake. I would be grateful if we could stop using the two terms together.
Mr Jim Cunningham (Coventry South) (Lab)
I start by congratulating my new hon. Friend the Member for Stoke-on-Trent Central (Gareth Snell). His speech was interesting and very hopeful, given the economic situation that the people of Stoke-on-Trent, like the rest of the country, are suffering from. I am sure their new Member will do his adopted city proud, as I try to do for Coventry.
Let us look at the Budget in the context of the austerity measures that the Government have pursued. They will have lasted far longer than the time from the start of the second world war to the end of rationing, and we wonder why people like Donald Trump get elected—it is because austerity has gone on far too long in America, like in this country and in Europe. I would have expected the Budget to have offered at least some sort of hope to the British people, but all we had was a further dose of austerity.
The Government told us that the deficit would be eliminated by the end of the last Parliament—another promise that they have broken. In fact, the Chancellor is now extending the deficit. Taxes are increasing while real wages are falling. The TUC’s analysis has found that the UK ranks 103rd out of 112 countries for pay growth. Some 6 million people earn less than the living wage and 4 million children are in poverty. The Government have not really addressed those issues.
When Labour left office, Britain retained its triple A rating, we had low interest rates to help poorer families, and 85,000 more nurses and 32,000 more doctors had been trained. The current Government, and the coalition before them, have been living off the benefits of that.
Another broken manifesto promise by the Government is on national insurance contributions. That was touched on earlier, so I will not elaborate too much on it, but it will affect self-employed people, particularly those in lower pay brackets such as taxi drivers and people working in pubs. The rich will not necessarily be better off as a result, but the change will hit hard-working people.
In the case of welfare, there has been no reversal of the personal independence payment cuts and the changes to employment and support allowance, which will hit disabled people hard. There have been demonstrations about that, and I am sure that my colleagues will have been lobbied about it at their surgeries. Yet the Government have started a process that will allow some people to pass on property free from inheritance tax.
Stephen Pound (Ealing North) (Lab)
Not only do we get lobbied in our surgeries but we get lobbied at home—my son, a self-employed electrician, was speaking to me about this the other day. Not only is he being hammered for NICs, but he is having to do quarterly tax returns—he is tempted to vote Labour! That is the unfortunate side effect, from the Government’s point of view. Does my hon. Friend accept that the Conservatives are no longer the party of the self-employed—the party of white van man and woman? They are the party of themselves, and of the wealthy, the rich and those who are not bothered by what have been described as “pitiful” sums of money.
Mr Cunningham
Simply put, the Conservative party was never on the side of the working man, so nothing has changed there. I am quite surprised at times that some people vote for the Conservatives.
Healthcare has been touched on in today’s debate. The funding for social care is welcome, but it is too little, too late. It is putting a plaster over a big wound, and it will not solve the long-term issues. Funding for the national health service is needed, but the funding that has been announced will not help in the longer term; more investment is needed. Council tax increases will raise money in the short term, but they will not solve the problem in the longer term. In Coventry, the increase in council tax will generate about £443 million, but the national living wage increases will cost about £600 million. The Government have abdicated their responsibility for social care and they are shifting the burden on to local authorities and local people, rather than paying for it from general taxation.
Turning to pensions, we were lobbied last week by what we call the WASPI women, but there is nothing in the Budget to address the problems that they face. Women’s issues have certainly been mentioned in this debate, and in many debates in this House over a long period of time. Yet again, however, the Government have done nothing to address the issues that really affect the WASPI women. I will not go into the detail of the hardship that they experience, because it is well known to the House, but the Government have done nothing to address it. The Government boast that there are more women in work. That might be true, but they forget to mention that a lot of women—many of them in lower-paid, manual jobs—will have to work for longer.
The business rate changes will hit small businesses on the high street the hardest. The £1,000 relief for pubs is not a lot in the great scheme of things. It is only a gesture, and it will not help in a meaningful way.
Let us look at education. Instead of funding free schools, money should be invested in our existing schools. Schools are being asked to find £3 billion of cuts, and resources are already stretched to breaking point. Local authorities in Coventry have always taken the decision to fund schools well, but the national funding formula will leave pupils with less funding, even though the Government say that no pupil will be worse off. Will they guarantee money to ensure that the national funding formula does not leave Coventry schools with a shortfall?
The Institute for Fiscal Studies warns that, by 2020, school funding per pupil will have been cut, in real terms, by 6.5%. Funding for 16-to-18 education will be on a level similar, in real terms, to that of 30 years ago. The Chancellor has ignored the funding crisis in the Budget. The cost of employing staff is growing because of increases in employers’ contributions to national insurance and pensions, plus pay increases, but there has been no additional funding for that from the Government.
Women will still have to prove that their third or subsequent child was the product of rape to get child benefit. Once again, we see women being discriminated against by the Government. Women are still disproportionally affected by austerity, and the £20 million fund for violence against women is not enough to offset the cuts that they have faced since 2010. That fund is likely to be a repeat of the £20 million announced last November; it may well not be new money.
In the midlands, although the £392 million of funding through the local growth fund is welcome, it is not sufficient if we have any real intention of developing the west midlands economy. Listen to this: Coventry and Warwickshire will get only £42.4 million, which is not a lot when we consider the area. There will be £20 million for the midlands skills challenge to improve employment prospects for people in the area, £4 million to support the midlands engine partnership, £12 million for commercial and housing developments and broadband infrastructure, and £11 million to support skills and apprenticeships in Coventry and Warwickshire. That will not solve the problems that the country faces.
Although investment is welcome, there is also a housing crisis that needs tackling. London has been awarded nearly 10 times as much for housing. Since 2010, there has been a 40% cut in Government funding to local councils, and small businesses and high streets will be hit hard by business rates rises, but that has not been addressed in the midlands engine strategy. By 2020, the Conservative Government will have cut £655 million from Coventry City Council’s budget, and the midlands engine strategy will not cover that shortfall. Social care and our NHS desperately need funding, and Coventry and Warwickshire local authorities expect a deficit of £33 million by 2020-21 in social care. The midlands engine proposal is superficially attractive, but it will not address the long-term issues in the west midlands.
Shabana Mahmood (Birmingham, Ladywood) (Lab)
I congratulate my hon. Friend the Member for Stoke-on-Trent Central (Gareth Snell) on his excellent maiden speech, which I enjoyed very much. It moved many of us to laughter and tears. I gently correct him on one point: Stoke is not the centre of the known universe. That would be another place in the west midlands called Birmingham, but I will let him off on this occasion because that was a first-rate start to his parliamentary career and I wish him all the very best.
I want to focus my remarks on the Government’s record and their failure on their own terms. I note with interest that the Government Benches are all but empty. That may be because Government Back Benchers are not exactly lining up to defend the increase in national insurance, given the row that has erupted between No. 10 and No. 11 Downing Street, but the reason may go back further than that. Long before the Government’s broken manifesto commitment on national insurance, the Government failed the test they set for themselves: their central mission when they came into government in 2010, and the one promise they made to this country, was that they would eliminate the deficit in five years and that the age of austerity was the only way to achieve it.
The Budget documents are clear. In 2016-17—I am glad more Government Members are coming into the Chamber, so they can hear about their Government’s failure on the deficit in person—the deficit will be £51.7 billion. In 2017-18, it will be £58.3 billion. Even in 2021-22, it will still be £16.8 billion. On this trajectory, the deficit will not be eliminated until 2025-26: a full 15 years after their famous promise, made in 2010, to eliminate the deficit in five years.
That is the true shameful record of this Government, but it sits alongside a much starker and more catastrophic reality on living standards for ordinary working people. [Interruption.] Government Members should stop chuntering and listen to what they have done to ordinary working people. On current forecasts, average earnings will be no higher in 2022 than they were in 2007. That amounts to 15 years without a pay rise for ordinary working people. According to the Resolution Foundation, by 2020 families will have missed out on pay growth of £12,000: the worst decade in 210 years. That is what the Government have delivered for ordinary working people country. They used to taunt Labour Members with a slogan about us not fixing the roof while the sun was shining. For people going 15 years without a pay rise, it is as if the sun never shone at all.
On pay, wages, jobs and growth, I was particularly disappointed that the Government failed to take action to offset the planned cuts to universal credit later in this Parliament. I say to Conservative Members, who rightly kicked up such a fuss on the changes to tax credits planned by the former Chancellor of the Exchequer, that the U-turn was not truly a U-turn. The cuts are still coming down the tracks. Many of the same people will be affected when those currently on tax credits are moved on to universal credit towards the end of this Parliament. At the moment, only 170,000 or so people are in receipt of universal credit, but, by the end of this Parliament, millions of families will be on universal credit.
The Secretary of State’s warm words on opportunity mean nothing given what the Government are doing to the working poor. The cuts to work allowances will total £6.4 billion by the end of this Parliament. Only a tiny concession was given at the autumn statement by the Chancellor when he reduced the taper rate from 65% to 63%. It remains the case that lone parents on the national living wage with one child in 2021 earning £16,000 will lose £2,800. The measures in the autumn statement will give them back only £200 of that money, so they will be £2,600 a year worse off. Those are not small sums. They are the difference between keeping a roof over your head and being homeless. They are the difference between putting food on the table or watching the children go hungry. That record of delivery that the Government are putting on the people of our country in the 21st century is unacceptable.
In the end, politics is always about choices and priorities. This Government have made the choice to cut corporation taxes, totalling £11.2 billion by 2021-22. They could make a different choice. They could choose to spend that money elsewhere, perhaps on universal credit or social care or to alleviate the crisis in the national health service. This is a choice that they are making. Cuts to corporation tax are not necessary to ensure that we have job growth in our country. We have seen what has happened to wages, and we know that business investment is nowhere near where it should be. The cuts to corporation tax are therefore being pocketed as profit more than they are delivering for the rest of the economy. They should be reconsidered. The Government’s choices thus far have made ordinary people pay the price, which is unacceptable.
Several hon. Members rose—
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. As the hon. Member for Birmingham, Ladywood (Shabana Mahmood) cleverly and rightly anticipated, I am afraid that the time limit for speeches has to be reduced to six minutes.
Ruth Smeeth (Stoke-on-Trent North) (Lab)
Before I start, may I say how proud and delighted I am to be joined on these green Benches by my new hon. Friend the Member for Stoke-on-Trent Central (Gareth Snell) who made a wonderful maiden speech? I am now grateful for every door I knocked on in the rain. [Interruption.] We can send him back now.
What we heard last week was a Budget bereft of ideas from a Government in want of a plan. It offered no solution to the crisis in our NHS, no vision for our country’s future outside the EU and no offer of hope for the Potteries, which I am so proud to represent. Its alleged support for health and social care amounted to little more than an empty gesture in the face of crippling financial crisis within our NHS.
The Budget prioritised the vanity projects of an out-of-touch Prime Minister over fixing our struggling education system. It is timid in the face of unprecedented challenges; indeed, it is bold in only one respect—in its choice of victims. The Chancellor will no doubt have been counting his blessings that he had a ministerial car in which to flee the scene last week, because I am sure that the cabbies of central London would have painted him a clear and somewhat colourful picture of what his announcement on national insurance is set to do to their take-home pay.
Wes Streeting (Ilford North) (Lab)
As chair of the all-party parliamentary group on taxis, I can tell my hon. Friend that taxi drivers as well as other self-employed workers cannot understand why their burden as relatively low-paid workers should increase while there are tax cuts for the very richest. Is this not one of the many reasons why there are so few Conservative Members on the Government Benches to defend this terrible Budget?
Ruth Smeeth
I could not agree more with my hon. Friend. As the niece of a black cab driver, I should really declare an interest.
It seems that, as far as the Chancellor is concerned, the “strivers” that his party claims to stand up for are not striving quite hard enough. It is beyond belief that at a time when Britain needs to rebuild and rejuvenate its economy, this Government have chosen to impose a tax on hard work and entrepreneurship. It is also a tax on aspiration, something that we should promote, not attack. I remind hon. Members that this was billed by many as the last pre-Brexit Budget, yet the glaring omission in the Chancellor’s plans was any clear vision of what Britain might look like after Brexit and what sort of investment and Government support might be needed to get us there.
As for constituencies such mine, which voted overwhelmingly to leave, there seemed to be no consideration of the investment and support needed to make sure that places like Stoke-on-Trent can benefit and thrive from our new relationship with the world. There is no clearer example of this than the Government’s approach to education and skills, which is the single biggest issue raised by all the employers and educators in my constituency when we discuss industrial strategy—another phrase sorely missed from the Budget.
Schools in my constituency are losing an average of £400 per pupil, and our city is crying out for proper investment in skills and education. Instead, the Chancellor is choking the life out of our public education system, while pouring millions into a doomed experiment in selective education. That lack of commitment to our wider education system is deeply concerning, because the single most important thing that we can do to improve the economy of my great city and others is to improve the skills of the people who live and work there.
It is not a lack of will that is holding my young people back: they are enthusiastic and keen to work. What is missing is the support and investment to ensure that they are fulfilling their potential, learning the skills that they need in order to succeed and gaining the qualifications to prove it. Last week I visited a wonderful primary school in my constituency—the best primary school in the city, even—which is already having to choose between teachers and computers. It is not two to one for books; it is two to one for computers. That is why it is so wrong —at a time when we should be upskilling our communities for the challenges of the future so that they can embrace the fourth industrial revolution—for the Government to focus on a grammar school system that will benefit only a select few and overwhelmingly favour those from more privileged backgrounds, rather than providing the basics for every child in every school.
We need to ensure that all our schools are properly funded, and that we have a robust system of early intervention to support the most vulnerable families right from the start. That is why our children’s centres, our primary and secondary schools and our further education system need investment, not vanity projects. If we are to make the best out of Brexit, which we now desperately need to do, we must ensure that our communities are ready to seize those opportunities. We need a workforce that is ready for the jobs of the future, we need a universal and properly funded education system, and we need to ensure that all our young people are supported so that they can realise their potential. We need a better deal for the next generation, not this ideologically driven waste of public funds.
Lucy Powell (Manchester Central) (Lab/Co-op)
I echo what has already been said about the fantastic maiden speech of my new hon. Friend the Member for Stoke-on-Trent Central (Gareth Snell). I went with him to visit a maintained nursery school in Stoke, and I know how committed he is to education and skills in the area. That brings me to the main thrust of my own speech.
After nearly seven years, the cumulative effect of Government policy on education and skills is now being felt by pupils, parents and teachers, and has given rise to a number of serious issues, each of which should demand the full attention of Ministers. School budgets are falling for the first time in 20 years. There is a teacher shortage crisis. There has been a huge rise in pupil numbers, requiring about 400,000 new school places. We are seeing the biggest changes in GCSEs and the curriculum for a generation, of which many people are unaware. Primary assessment is in absolute chaos: the pass rate in last year’s standard assessment tests fell from more than 80% to an appalling 53%. We have seen the introduction of more free childcare with insufficient funding, and serious failings in capacity and oversight in the schools system. Many of the Government’s previous “pet projects” have failed and closed. All that has come on top of what the Secretary of State described today as the biggest revolution for a decade in technical education.
Any one of those issues should command the undivided attention of Ministers, but they want to impose two huge further changes on the schools system: a new funding formula which seems to have left all sides unhappy, and the reintroduction of grammar schools without a shred of evidence, which has shone a light on the woeful record of existing grammar schools in supporting children from poorer backgrounds. The Budget had nothing to say about social mobility, closing the productivity gap, or creating the high-wage, high-skills economy that we need. Perhaps the Government would have done better to spend more of their time sorting out the last set of experiments that they said would create “more choice”. What has happened to them? Let us take a look.
Since 2010, when the Government introduced their previous gimmicks—university technical colleges, studio schools and free schools—there have been huge problems and a massive waste of resources. More than 1 in 10 UTCs has closed, and many more are now on the brink. While there are a few excellent UTCs, even the right hon. Member for Surrey Heath (Michael Gove)—who had introduced them—admitted that the experiment had failed, saying:
“the evidence has accumulated and the verdict is clear”.
Three in 10 studio schools have closed or are due to close, as Schools Week analysis has found, and many more are on the brink of closure. Only one has reached the 300-pupil mark that was set. The future is therefore looking bleak for those experimental institutions, yet the Government are hellbent on creating more. One in five free schools are in places where they are not needed. With the starving of capital funds to existing schools, and the failure to meet the places crisis by continuing to throw good money after bad, this Budget does nothing to deal with the real issues facing our schools.
Even though we are awaiting the outcome of the Government’s consultation, we heard this week that the Government are hellbent on going ahead with their grammar schools programme, which they are now calling “selective free schools.” I note that the Secretary of State is so ashamed of that policy that she did not even mention it in her speech today. I reiterate that there are very few Conservative Members in the Chamber to defend that policy.
Maria Eagle
Does my hon. Friend agree that the Secretary of State probably did not mention the policy because she does not agree with it?
Lucy Powell
Yes. We can infer that. The evidence is clear on selective education. Those systems do not boost social mobility. In fact, in many cases they widen the gap. As we all know in the House, the big challenge facing our education system is the long tail of under- achievement. It is not about how we can better support the already high-achieving. The only argument advanced by Conservative Members is that the tiny number of children on free school meals who get into grammar schools, who by definition are already high-achieving, do better than all the other children on free school meals. What a joke of an argument that is to base the entire policy on. There is a huge amount of evidence going the other way.
Perhaps that is why, when the Secretary of State addressed the usually mild-mannered and pragmatic Association of School and College Leaders at the weekend, she got booed, which has never happened at that conference before. It may also be why the Sutton Trust, the Government’s own Social Mobility Commission, the Education Policy Institute, the former chief inspector of schools, all the secondary heads in Surrey and many, many others and many Conservative Members have come out against those proposals.
There are plenty of things that the Government should be doing, and we have mentioned a few of them. Perhaps they should get to those core issues, rather than creating yet more uncertainty and instability in the system. They should get on with doing something about the major funding challenge. This is not about fair funding—it is about funding levels being maintained at the levels they are now. The belts are being tightened even more for some schools, but all schools are losing out from those funding measures.
The Government should do something about teacher shortages. For five years in a row, they have missed their retention and recruitment challenges. They should do something about the school places crisis and work with local authorities, rather than plonking free schools where they are not needed. And get a grip on what is happening with the new GCSEs and curriculum. There is absolute chaos there.
If the Government really want to do something about social mobility, they could do a lot worse than look at investing properly in quality provision in the early years, rather than trying to deliver child care on the cheap. There is plenty of evidence to support it, and I am happy to discuss that with Ministers if they want to have a real agenda for social mobility.
Yasmin Qureshi (Bolton South East) (Lab)
Sometimes we hear Government Members and the Prime Minister herself talk as though when Labour was in power, we did nothing for health, education, children, the homeless, older people and other vulnerable groups, but let me take the six Conservative Members who are sitting in the Chamber on a trip down memory lane. In 1997, when hospital waiting lists were more than three years, people were lying on hospital trolleys, and hospital staff and others were completely demoralised, we spent millions and millions of pounds on repairing hospitals and investing in people—in nurses and in doctors—and in hospital services, so that when we left office in 2010 our NHS was a brilliant service. The Tories inherited that and they are now destroying it.
We had the mantra “education, education, education,” and we followed it with real funding in our education system. I am sure people will remember that there were run-down schools, some with leaking roofs, and demoralised teachers, and all the extra funding that we put in. This Government now take credit for our education doing so well, but that is because of the investment we put in from 1997. We also took half a million children out of poverty and began the Sure Start programme, which helps young people; if we really want to help young people from poorer backgrounds to succeed, we need to ensure that early years education is good, and Sure Start helped many families.
We also introduced the education maintenance allowance for 16 to 18-year-olds, which helped many young people from poorer families to stay on at school or college. That was abolished by the Conservative-Liberal Democrat Government, and now many young people, instead of being able to stay on and study at school or college, are having to go to the jobcentre to sign on, and are not getting any extra training or learning. That is one of this Government’s most counterproductive actions, and it is driven purely by ideological considerations.
Yes, we did create academies, but only when schools were failing, and often in poorer parts of the country, to improve educational levels. Since 2010 this Government have been forcing many outstanding schools to become academies by offering them extra money. Hundreds and hundreds of millions of pounds have been spent on forced academisation and on free schools when many ordinary schools are suffering, and the funding formula has now been changed, affecting many ordinary schools in my constituency. It would have been far better to spend money on most schools than on the ideologically driven academisation of even very, very good schools. I was very disappointed that the Chancellor did not bother to reintroduce something like the education maintenance allowance or redress the funding formula so that all schools can benefit.
Everybody accepts that early years education is very important for children. The Bolton alliance of nursery providers has come to see me on a number of occasions and talked about the fact that although the Government have promised 30 nursery hours, the funding formula that goes with it is just not enough for providers to be able to offer proper provision in nurseries. These providers are not big businesses: for example, one nursery owner says that they will go out of business because they just cannot afford to offer a decent level of nursery provision. I raised this point at last week’s Prime Minister’s questions when I asked, “Can we please reconsider the funding for nursery education?”
I am afraid that, again, this Budget does not address anything. We are told, of course, that a lot of the cuts and the austerity are all to do with balancing the books, but this Conservative Government have borrowed £1 trillion in the last seven years, so our debt is higher than it has ever been. Let us not have lectures from the Government who say that the Conservative party is the party of economic prudence or the party of getting the country going; it is not.
The national debt to GDP ratio is now over 80%, yet when the Labour Government came into office in 1997 it was only about 40%, and after a few years of that Labour Government being in power it was 34% of GDP. Again, no lessons are required from the Conservative party about who is economically prudent and who is not.
We on the Opposition Benches propose a different future, because this Budget has done nothing for jobs, nothing to increase people’s pay, nothing for people on lower incomes, and nothing for many, many people who are worse off and have been the subject of the austerity cuts. We need a Government who will not abdicate their responsibility, nor sit on the sidelines. We need a serious approach to the economy. We do not need a laughing, complacent Chancellor; we need one who protects our living standards and jobs and the environment.
Philip Boswell (Coatbridge, Chryston and Bellshill) (SNP)
I proudly share the mining heritage of the hon. Member for Stoke-on-Trent Central (Gareth Snell), who is no longer in his place. Although I might not agree with quite everything he says, I commend him for his passionate and quite excellent speech, and for his extremely kind and honest words about his predecessor. Stoke-on-Trent certainly has a new champion, and we on these Benches wish him all the very best for his future in this place.
My hon. Friends on these Benches have made numerous salient points about the shortfalls of this Budget, which is noticeably a much thinner document than last year’s pre-EU referendum spring Budget. A thinner document, and yet thinner gruel within. I would like to focus on the glaring issue of the extraordinarily misleading employment statistics used as a foundation for many of the new proposals in this Budget. The Chancellor has claimed that 2.7 million more people are
“enjoying the security and dignity of work than in 2010”.—[Official Report, 8 March 2017; Vol. 622, c. 809.]
I cannot fathom how he can describe as dignified the gig economy that has emerged since 2010, which is filled with zero-hours contracts and insecure temporary work, or the huge growth in the number of individuals who are self-employed through necessity rather than choice. In fact, the working conditions faced by many today are far less dignified than those faced by people a decade ago. Also, many of those workers now face the loss of the minimal remaining employment rights that have been secured by the EU due to the coming hard Tory Brexit.
The Chancellor has stated that he does not want to saddle the next generation with ever increasing debts. I would suggest that he consider addressing that problem by taking a closer look at the funding allocated to the Department for Work and Pensions Work programme. Since 2011, more than £1 billion has been spent on attachment fees, job outcome payments and sustainment payments, all of which are rather nice-sounding euphemisms for what the Government have really been doing: paying off employers—often large chain retailers—to hire Work programme participants to stack shelves or work on shop tills. Not only does this grossly skew the Government’s employment statistics; it also sheds light on the issue of stagnating productivity. It hardly seems a stretch to suggest that if that £1 billion had been used to invest, rather than to aid the UK Government in fudging their employment statistics, productivity might be just a little higher.
I would like briefly to address the Chancellor’s claim that individuals elect to be self-employed, rather than a regular employee of a business, due to the marginally lower rate of national insurance they are required to pay. This point was made very articulately by my hon. Friend the Member for East Lothian (George Kerevan). That might be the case for wealthy consultants in the City of London, but it is certainly not the case for the numerous builders, joiners, electricians and other tradesmen I have spoken to in my constituency, and others all over Scotland.
Martin Docherty-Hughes (West Dunbartonshire) (SNP)
On 27 October 2015, when the right hon. Member for South West Hertfordshire (Mr Gauke)—then Financial Secretary to the Treasury—gave evidence to the Public Bill Committee on the National Insurance Contributions (Rate Ceilings) Bill, he stated:
“I remind the Committee of the purpose here. It is to emphasise and underline our commitment not to increase national insurance contribution rates in the course of this Parliament.”––[Official Report, National Insurance Contributions (Rate Ceilings) Public Bill Committee, 27 October 2015; c. 9.]
What does my hon. Friend think went wrong?
Philip Boswell
Alas and alack, it appears that word is seldom kept in this place.
The people I was describing often do jobs for the same companies for years on end, but the companies will not hire them as regular employees due to the cost of providing them with basic employee benefits. This means that they do not have maternity or paternity leave, sick leave or paid holidays; nor do they have the security of knowing whether they will be employed in a month’s time. The insinuation by the Chancellor that these individuals elect to give up all those benefits for the sake of saving a small percentage of their income on national insurance payments is absurd and hugely offensive. If the Chancellor would like to address the gap in revenue due to the growing trend of self-employment, I suggest that a fairer and more effective way would be to tackle those companies that hire workers only as self-employed contractors, in order to avoid paying employee benefits, rather than blaming those who are subjected to these unfair employment practices.
The Chancellor has presented yet another Tory Budget that blames working people for the economic problems created by the London-centric elite. It offers nothing new to address the existing economic problems faced by so many; nor will it protect working people from the fallout from this hard Tory Brexit. So much for caring Conservatism!
Anna Turley (Redcar) (Lab/Co-op)
After seven years of economic failure, missed deficit reduction targets, deteriorating public services, increasingly insecure employment, and an explosion in the number of food banks supporting working people, my expectations for this Conservative Budget were already low, but have we ever had a Budget so lacking in substance? With breathtaking complacency, it made no mention of the greatest economic challenge facing this country: Brexit. It is clear from the debate this afternoon that the Government have no clue about what they want from Brexit or how much it is going to cost.
Eliminating the UK’s deficit by 2015 used to be the Government’s overriding goal. That target has now been dumped and public debt is climbing to almost £2 trillion. Is this the long-term economic plan so often wildly cheered from the Government Benches? Our public services have paid the price of failure. NHS waiting lists are rising, and our social care system faces a huge funding black hole. In Redcar and Cleveland, the amount spent on social care has gone down in real terms by a fifth under this Government despite rising demand, and there are 400 fewer police officers keeping our streets safe in Cleveland.
Our schools are losing funding, too. In Redcar and Cleveland, schools will lose a whopping £7.8 million by 2020—£422 per pupil in one of the most deprived areas in the country. As my hon. Friend the Member for Huddersfield (Mr Sheerman) said, while our primary schools are in the top 10 in the country, our secondary schools desperately need more support, and the newly departed Lord Heseltine highlighted our poor secondary education in his report on the Tees valley. When the Government close our steelworks and batter our local economy, leading to the loss of over 3,000 jobs and a youth unemployment rate two and a half times the national average, the Secretary of State for Education owes it to our region to invest in the future of our young people, not to snuff out their potential before they have begun.
Teesside has suffered from the loss of well-paid industrial jobs and from falling living standards. Unemployment in the Tees valley has been above 10% for most of the time that the Conservatives have been in office. Austerity has hit many families in my constituency. Over 2,000 people were affected by the bedroom tax and others by unfair benefit sanctions and cuts to tax credits. Living standards are falling, with average annual wages forecast to rise much more slowly than expected over the next four years. At the same time, families are turning to credit to make ends meet. The household debt forecast has been revised up to £189 billion by 2021.
What Teessiders really needed from this Budget was support on the big challenges we face: infrastructure, industry, and skills to give our local economy the boost it needs. Despite the difficulties of the past few years, I strongly believe that our region is on the cusp of a new industrial renaissance. A high degree of investment and development is coming to the region, including the petrochemicals site at Wilton and the former SSI site. Sirius Minerals and MGT Power are both investing in Redcar and Cleveland. However, that investment, and the opportunities that come with it, will not benefit local people unless there is a skills revolution and we get the necessary technical education to capitalise on future industrial opportunities.
The Chancellor did not face up to the challenges facing our country or our workforce. He did not take action to address the unfairness that is holding back areas such as mine. The north-east continues to lose out on regional investment, funding for infrastructure, and investment in education and skills to develop the industries of the future. The Budget made no mention of the north of England, of the so-called northern powerhouse or, indeed, of the industrial strategy, as pointed out by my hon. Friend and neighbour the Member for Hartlepool (Mr Wright).
What is more, the future of Teesside’s economic resilience will depend upon the success of our small and medium-sized businesses. Many small local businesses have been in touch with me about the huge impact of the Government’s business rates revaluation. The Chancellor’s measures to soften the burden are welcome, but there will still be a rise for most. Moreover, the area’s self-employed workers will not have been happy to learn that their national insurance contributions will rise, despite a manifesto promise by the Tories not to increase them. Many ex-steelworkers went self-employed after the closures, with Government funding actively encouraging them, and now many will be hit by the rise. The wrong priorities were at the heart of this Budget. It was a paper-thin, miserable, brittle Budget that came after seven years of crippling economic failure and austerity. I heard no vision in it for a post-Brexit Britain or for the Tees valley.
Susan Elan Jones (Clwyd South) (Lab)
It is a privilege to follow my hon. Friend the Member for Redcar (Anna Turley) and to hear a terrific maiden speech from our new colleague, my hon. Friend the Member for Stoke-on-Trent Central (Gareth Snell), who will be a great asset to the Labour movement, the Opposition and this House.
It was interesting to hear the Secretary of State for Education begin her speech by saying that the Budget was delivered on International Women’s Day, as indeed it was. That makes the insult all the greater that the Government chose not to mention the WASPI women who have been campaigning for fairness. Those women were born in the 1950s and often left school at 15. They are women who have dedicated their life to their job and their family, yet they got not one word from the Chancellor.
Like many Members, last week in Parliament I met a delegation of local women who have been affected by the changes to the state pension law. Women came down from Chirk, Rhostyllen and Llangollen in my constituency. Those women, of whom there are more than 3 million across our country, are not political militants. They do not oppose the equalisation of the pension age, and they certainly do not want the state pension age to go down to 60. All they are asking for is a bit of fairness—a bridging pension to provide for them. It is downright shameful that the Government chose not to listen to them.
Budgets are about choices, and I cannot accept that the Government have put agreeing to £17 billion-worth of corporation tax cuts, £2.8 billion-worth of inheritance tax cuts and many other items above modest bridging support for these women. I am interested in the figures on inheritance tax—my hon. Friend the Member for Leeds West (Rachel Reeves) recently wrote an excellent article on the subject—because I have read that only 15 houses sold for £650,000 or more in my constituency in 2015-16, which is 0.9% of the 1,700 houses sold during that period. The average sale price in June 2016 was £140,000. I wish those 15 people well, but they do not deserve a special tax cut to enjoy their new property.
Rather than that extravagant change to inheritance tax and the cuts to corporation tax, the Government should have been on the side of the small businessperson and the self-employed. How extraordinary it is that the Conservative party has broken its promise to the plumber in Penley, the cabbie in Cardiff and the grocer from Grantham. Could one believe that a Conservative Government are charging grocers from Grantham more? How extraordinary! We all know it is a trade-off. Being self-employed means no parental leave, no sick pay, no holiday pay and difficulty getting a mortgage, among other things. The hike in class 4 national insurance contributions has broken the consensus that we in this country have believed in for years. It is a £2 billion tax rise.
I also hope that the Government will consider what the Farmers Union of Wales has to say, because the Budget has a particular consequence for our rural communities. The union’s managing director, Alan Davies, rightly asked this question last week:
“Why is it that tax is being increased for those hard working individuals, some of whom only make a profit just over £8,000, whilst at the same time corporation tax is falling?”
The Under-Secretary of State for Wales, the hon. Member for Aberconwy (Guto Bebb), has already said that he thinks the Government should apologise to everyone in Wales who read the 2015 Conservative party manifesto, and I thank him for his apology to me and others. However, I would rather that the Government reversed their tax hike and scrapped the tax.
We all remember the Tories’ 2012 “omnishambles” Budget—remember the one?—when the Government decided to declare war on caravanners, churches, stately homes and even the humble Cornish pasty. Well, that will seem like a picnic compared with the consequences for the country now. It is high time that the Government listened to the voice of the ordinary self-employed workers, strivers and entrepreneurs in our community. It is high time that the Government listened to those women who have worked so hard right through their life and have contributed so much to society. And it is time that this Government acted in the interest of fairness, listened to our communities—rural, suburban and urban—and recognised that they must now restore fairness by doing a U-turn on this ridiculous tax hike for self-employed people and by giving some decency to the people in this country.
Graham Evans (Weaver Vale) (Con)
It is a pleasure to speak in this important debate and to follow the hon. Member for Clwyd South (Susan Elan Jones). Hers is a fine constituency in north Wales, an area I know particularly well because it abuts my own county of Cheshire. She will know how closely Cheshire MPs work with her and her colleagues in north Wales to benefit the wider economic zone. MPs in Cheshire and north Wales should work together for the betterment of all our constituents. I would like to think that the Budget goes some way towards enabling us to raise tax to invest in infrastructure that benefits our cross-border constituents.
Against a backdrop of global uncertainty, and as we start our negotiations to exit the European Union, the Budget takes forward our plan to prepare Britain for a brighter future. Nine years ago, the UK was one of the economies worst prepared to face the financial crisis; today, it is one of the best prepared. The OBR forecasts that the UK economy will grow by 2% in 2017. That figure has been revised up from the 1.4% forecast in November. The economy will be growing faster than every major economy in Europe, except Germany’s.
Any family could sit around the kitchen table and tell us that we cannot keep on spending more than we bring in; the same holds true for the Government. There is no magic money tree. Britain has debt of nearly £1.7 trillion —almost £62,000 for every household in the country—and we must never forget that, under Labour, £1 in every £4 that was spent by the Government was borrowed.
Mr Stewart Jackson (Peterborough) (Con)
Does my hon. Friend agree that it ill behoves the Opposition to oppose every spending reduction over the past 10 years, including every reduction in welfare spending, yet also to make completely uncosted promises that amount to £63 billion?
Graham Evans
My hon. Friend is absolutely right. In the previous Parliament, the Opposition opposed every single reform made by the then Government, and they have also opposed all the reforms of the current Government. They call our approach austerity; I call it living within one’s means. We have to take the difficult decisions. Judging by the £30 billion black hole in the Opposition’s counter-proposals, however, they have forgotten the mistakes of the past.
Callum McCaig (Aberdeen South) (SNP)
While talking about the need to balance the books, the hon. Gentleman made a bizarre analogy comparing the country with a family. When he is sitting at the dinner table, can he raise interest rates, print money and quantitatively ease? His analogy is completely and utterly defunct.
Graham Evans
I did not catch the hon. Gentleman’s final word, but I use that analogy because when I was at school we used to have home economics, and we have to make difficult decisions at home. I was merely making the point that we all have difficult decisions to make. That analogy applies not only to families throughout the country, but to the Government. I am sorry that the hon. Gentleman does not feel it is a good analogy. Perhaps I shall wait to hear his speech and comment on it.
I welcome the Chancellor’s steps to return balance to the country’s finances and to continue the Government’s commitment to take the lowest earners out of tax altogether by raising the personal allowance to £11,500. I sat on the Work and Pensions Committee in the previous Parliament, when the Government’s mantra was helping to make work pay. That is the right course of action to take.
I come to a subject that is very close to my heart, and I declare an interest as the chairman of the all-party group on beer. I welcome the relief of £1,000 for pubs with a rateable value of less than £100,000, which will benefit 90% of pubs. I also welcome the discretionary fund, which enables local authorities to make awards to businesses in their areas on a case-by-case basis. However, I am somewhat disappointed about the inflationary rise in beer duty, which is now 43% higher than it was a decade ago, 13 times higher than the rate in Germany, and significantly higher than those of our major brewing neighbours in Europe. None the less, the Government do have a proud track record of three reductions in beer duty, a beer duty freeze and the removal of the hated beer duty escalator. Although I welcome the introduction of duty bands to target high alcohol-by-volume white ciders to encourage responsible drinking, it is important to remember that 70% of the drinks bought in pubs are beer.
The current bracket for reduced-rate beer sits at 1.2% to 2.8% ABV. However, current HMRC duty receipts demonstrate that, in the six years since the policy was introduced, such beer represents just 0.15% of the market. I know that the Minister will be aware of the cross-industry campaign to split general beer duty rate into two tiers— 2.8% to 3.5%, and 3.5% to 7.5%—and to reduce the duty rate for 3.5% ABV beers, which have much less alcohol in them than the UK average and are highly drinkable for UK consumers. I hope that we can work together on this matter over the coming month to encourage a broader selection of lower strength beers to become part of the norm in UK drinking culture. I will be encouraging the industry to step up to the plate with lower strength beers that can be drunk and enjoyed in the great British pub.
This Government have a plan to build an economy that works for everyone, and the Budget continues with that plan by building on the foundation of our fundamental economic strength. It makes sure that our economy remains strong so that we can properly fund our public services, it helps ordinary working families to make ends meet, and it makes it clear that Britain is open for business.
Nick Thomas-Symonds (Torfaen) (Lab)
It is a pleasure to follow the hon. Member for Weaver Vale (Graham Evans), who highlighted the importance of our community pubs very well. It is also a pleasure to speak in the debate in which my hon. Friend the Member for Stoke-on-Trent Central (Gareth Snell) has made his quite superb maiden speech.
Aneurin Bevan once said of the then Prime Minister, Harold Macmillan—the late Lord Stockton—that he had an
“absolute genius for putting flamboyant labels on empty luggage.”
I am afraid that, with this Budget, we have plenty of empty luggage and no flamboyant labels—even those have now gone.
There was certainly no vision in the Budget for what post-Brexit Britain should look like, and neither was there anything about tackling some of the very fundamental problems that our economy will face over the next few years. Nowhere is that better illustrated than in the approach that was taken to the self-employed in this country. There are 4.6 million self-employed people in the UK today. Of course I am completely opposed to those unscrupulous employers who push people into self-employed status to avoid the duties involved in employing them. However, the reality is that there are millions of people who are self-employed by choice. They have the flexibility that self-employment brings, but there has always been a trade-off. Self-employed people do not have the same access as employed people to pensions and our social security system. Having been self-employed for many years, I also know that they do not have absolute certainty over their income—they do not know how much money will come in from week to week.
The Tory answer to that, it appears, is to hammer the self-employed through national insurance contributions—I am talking about the rise in class 4 contributions. That is a breach of a manifesto pledge. I am not a regular visitor to conservatives.com, but I can tell Members that if they get the pdf version of the 2015 manifesto from that website, they will find on page 3, under the headline “While you grow older”, a promise that the Conservatives
“will not raise VAT, National Insurance contributions or Income Tax”.
This policy is a flagrant breach of that manifesto promise. It is also incredibly short-sighted, because we should be looking at long-term policy solutions to ensure that we can help these 4.6 million people, who take great risks and are great entrepreneurs, to access our social security system and appropriate pensions. How must the self-employed feel about their treatment under this Tory Government? We all know that the Prime Minister likes to read the brief first. She likes to consider her position and then come out with her opinion, as she duly did on the self-employed. And what did she say? That they are “eroding” our tax base. What kind of comment is that towards the millions of self-employed people in this country?
I certainly agreed with the Chancellor’s words about parity of esteem between vocational and academic qualifications, and with the idea of T-levels. The problem was that as I listened to him speaking, I was reminded of somebody else—someone who promised new university technical colleges and vocational training right across the board. I was struck to go and look up who that person was. What did I discover? It was actually the former Chancellor, the right hon. Member for Tatton (Mr Osborne), speaking on “The Andrew Marr Show” in March 2011. I think we can be sceptical about the ability of Tory Chancellors to deliver on vocational training, given that almost the same thing was said six years ago.
We have to look at the overall impact of the Budget. I commend to Ministers a document produced by the Resolution Foundation, appropriately called “Back to the ’80s”. It is a study of what will happen to working age incomes over the next four years as a consequence of Conservative policies. It tells us that those whose incomes are in the lowest quartile will be 5% to 15% worse off in the next four years. But what happens to people in the top quartile? They will be 4% to 5% better off over the next four years.
Although we live in an age of great political uncertainty, some things are still absolutely certain: water still flows downhill by the easiest route; the sun will rise tomorrow; and Tory Governments always make the rich richer and the poor poorer. That is precisely what this Budget does.
Maria Eagle (Garston and Halewood) (Lab)
The Budget was more about what the Chancellor did not say than what he did. It is incredible that the consequences of us leaving the EU—the biggest cause of uncertainty and the biggest threat to our economic wellbeing in a generation—got no significant mention at all in the Budget. That fact alone is enough to render the Budget a failure, but it was not the only failure. Most Chancellors at least get to see good headlines the next morning, but not so “Spreadsheet Phil”, as the right hon. Gentleman likes to be known. However, the way in which the Prime Minister, her Chancellor, their close allies, ministerial aides and senior sources have been denouncing each other over the weekend—in the most vituperative terms—show just what his own colleagues think of him breaching a manifesto promise in his Budget.
Apart from the considerable entertainment value of all this briefing and counter-briefing, which shows the dysfunction at the heart of this blundering, fractious and divided Government, I find it astonishing that no one in the entire Cabinet spotted the howling, broken election promise at the heart of the Budget when the Chancellor briefed them on his plans. They have all been whinging to the newspapers that the Chancellor did not flag it up, but they all stood on a manifesto that promised no increase in income tax, national insurance contributions or VAT for the entire five years of this Parliament. They all repeated that ad nauseam during the election campaign, yet none of them noticed. I would not have expected that they had all forgotten about it, but apparently they all managed to put it right out of their minds. It shows just how cynical this Tory Government really are that the entire Cabinet failed to remember their main election tax promise within two years of winning that election. Some 5,400 people in my constituency, some of whom earn less than £17,000, will now have to pay more, and not all of them are self-employed by choice.
I will say a little bit about education because there are real challenges in my constituency. Schools are facing a real squeeze. There are some figures that the Secretary of State did not give us in her opening remarks. According to the Institute for Fiscal Studies, thanks to the Lib Dem-Tory coalition Government and the current Tory Government, spending per pupil fell by 14% in real terms between 2010-11 and 2015-16, and is due to fall by a further 6.5% between 2015-16 and 2019-20. That is before the new schools funding formula hits many schools with more cuts. In the Liverpool part of my constituency, another £3.6 million will be lost as a result. According to the National Union of Teachers, there will, on average, be a further 10% funding cut by 2020 for schools in my constituency. That is threatening the future of many schools.
A letter I have received from the head and governing body of St Francis Xavier’s College in my constituency spells out the reality of the financial pressures it is under. It cites increases in the salary bill because of unfunded public sector pay awards; higher pensions and higher national insurance contributions; the removal of the education support grant in September this year; the apprenticeship levy, which is payable from April; and losses in per capita sixth-form funding. As a consequence, the college has reduced its leadership team and their salaries and lost 13 staff to voluntary severance, and it has six teaching posts unfilled. It says:
“We are extremely concerned about the potential impact of the forthcoming national funding formula. The impact of this is likely to make it impossible that the college can remain financially stable and this will have a detrimental effect upon the educational provision for pupils in a city which has amongst the highest levels of deprivation in the UK”.
This is a popular, over-subscribed school. I have written to the Secretary of State about the issue, but I have yet to receive a reply. I can assure her that SFX is not the only school in my constituency with these problems.
This situation is a disaster for our schools, but the Budget has made it worse, when it could have made it better. In divisive and unfair measures, the Government have set aside £1 billion to fund new free schools and the Prime Minister’s back-to-the-1950s grammar schools vanity project. They have also agreed to pay school transport costs for poorer pupils, but only those who attend selective schools. Young people who live in Halewood, in my constituency, who can no longer study for academic A-levels without leaving the borough are to get no such help, even though they are from some of the most deprived families in the country, and even though education could help to give them better life chances.
When I asked the Minister responsible for the school system, Lord Nash, what assistance the Government could offer to ensure that Halewood kids can get transport to study A-levels, he said in a recent letter:
“It would be unfair to offer free transport to young people in one area of the Country and not to others.”
Quite, but that is precisely what the Chancellor has just done in his Budget—although only if pupils are attending a divisive selective grammar school. How typically Tory. The Chancellor has offered Halewood kids who want to study A-levels precisely nothing, because he is spending all the money on recreating the Prime Minister’s 1950s grammar school myth.
That is why Labour, in office, banned grammars, put money into rebuilding all our schools, doubled funding per pupil, and employed 36,000 more teachers and 250,000 teaching assistants. After seven years of the Lib Dem-Tories and the Tories, our schools are in crisis again, with class sizes going up, GCSE pass rates going down and teachers fleeing the profession. This Budget has done nothing to stop the rot; instead, it has set about doing even more damage and causing even more division.
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)
I want to focus on the need to boost skills and jobs in our country, especially in manufacturing, following last week’s Budget. That is especially pertinent as we begin the process of leaving the EU.
It is unsurprising that, in a constituency-wide Brexit listening exercise I conducted, Nissan, which is based in my constituency, dominated, especially in terms of trade, investment, jobs and skills. Last week’s Budget was the perfect opportunity for the Chancellor to lay the foundations for strong economic growth that is resilient to any storms we may weather during the EU negotiations, but, sadly, we were left wanting. The announcements we did get on skills did not go far enough, and they must be placed in the context of the Government’s wider approach to education and skills.
Since 2010, we have seen the further education budget cut by 14% in real terms. That is a cash reduction from £3.18 billion in 2010-11 to £2.94 billion in 2015-16. That is compounded by the fact that the non-apprenticeship adult skills budget has been depleted by 54%. However, that negligent approach by the Government has not scuppered the innovative work by great employers in my constituency. Only last Friday, I was honoured to open Unipres’s new training academy, which will help to boost the skills of our local workforce by offering much-needed apprenticeship opportunities in engineering and manufacturing. It goes without saying that manufacturing is symbiotic with the north-east. We are the country’s makers and builders—I am pleased that Stoke colleagues are not here to shout me down—due in part to the innate talents of the people in our region and the skills we inherently have within us to manufacture with high quality and high productivity.
I like to call my constituency the manufacturing hub of our region, perhaps the country, with the likes of Nissan, BAE Systems, Rolls-Royce, Unipres, Rayovac and Gestamp, to name but a few, all based there. The manufacturing presence in our region will only be strengthened with the creation of the IAMP—International Advanced Manufacturing Park—which will be based not only in my constituency but that of my neighbour, my hon. Friend the Member for Jarrow (Mr Hepburn). However, the success of the IAMP and manufacturers in my constituency—from the large, some of which I have mentioned, right down to small and medium-sized enterprises such as AdFab Ltd, Washington Components, and PFF Packaging—depend on the Government strengthening their approach to skills and jobs. This is especially important with Brexit on the horizon.
There is one way in which Ministers could easily help to bolster our manufacturing, not only in the north-east, but across the country—through catapults. I am not talking about the ancient war machines but instead
“a network of world-leading centres designed to transform the UK’s capability for innovation in specific areas and help drive future economic growth.”
A number of catapults have been started across the country, yet there seem to be none for materials. This means there is no support for the innovation and development of materials such as steel, ceramics, glass and plastics, all of which are crucial to the dominant industry in Sunderland—the automotive sector. If we were to see a catapult for materials like the industry-supported proposal by the Materials Processing Institute in Redcar that received cross-party endorsement in January from the all-party parliamentary group on steel, this could have a positive impact on the whole of the manufacturing industry. However, it would especially help the Nissan supply chain, which Nissan has said needs re-powering.
Anna Turley
I appreciate my hon. Friend mentioning the fantastic institute in my constituency. Does she share my concern at a story on WalesOnline last week saying that Swansea is predicted to receive £80 million for a steel science centre that would almost directly duplicate the work that is happening at the MPI in Redcar and could then impact on the Nissan supply chain that she mentions?
Mrs Hodgson
I do not want to take anything away from Wales, especially with colleagues from Wales in the Chamber, but duplication does not make any sense, especially when there is so little funding around, and we definitely do not want to take any support away from Nissan. I am pleased that my hon. Friend made that point.
Currently, only a minority of parts used to build a Nissan car are made here in the UK, through a 38,000-strong supply chain workforce across the UK, with 27,000 of those jobs based in the north-east.
Graham Evans
What an exciting constituency the hon. Lady represents! My understanding is that one of the reasons Nissan decided to stay in her constituency is the cluster of battery technology companies. Is that true?
Mrs Hodgson
Yes—I am pleased that the hon. Gentleman makes that point. Electric battery technology is going from strength to strength. I was very pleased to see that there was an announcement on electric vehicles and battery technology in the Budget.
However, we see a predicament looming on the horizon as we begin to leave the EU—WTO tariffs. Ministers have given countless reassurances that we will strike a deal with the EU that does not mean we have to fall back on the 10% WTO tariffs. Yet only this weekend this was blown out of the water when a leaked document showed the Prime Minister’s willingness to fall back on those terms, regardless of the economic impact they may have. That was then reiterated by the Foreign Secretary on TV, also over the weekend. This would be catastrophic not only for the country but for my constituency and the businesses there. In the case of Nissan, falling back on to WTO tariffs and crashing out of the customs union would cause significant delays on products coming into the country that they rely on.
Another issue is that overseas parts currently used to build Nissan cars would have to be reduced significantly to meet the WTO rules of origin. The Society of Motor Manufacturers and Traders has said that cars need to have 50% local content to meet the rules of origin and be classed as British-made, and that could prove a major problem for Nissan. This is where the materials catapult comes into play. Not only would it reinvigorate the supply chain with innovation, especially in skills and jobs, but it could act as a way to mitigate the issues arising from the potential impact of WTO tariffs on manufacturing. I cannot make this point strongly enough the House: this catapult could also mean potential jobs growth. If we take the case of reducing overseas content in Nissan cars, it could significantly boost the UK supply chain and create tens of thousands of new UK jobs, which could seriously transform the manufacturing sector in the UK. Catapults could help in part to achieve the resilience I have talked about, and I hope the Government will listen and look again at the potential of a materials catapult.
Julie Cooper (Burnley) (Lab)
I want to put this Budget into context for my constituents. We have a Government who have borrowed more in seven years than the last Labour Government did in 13 years. The deficit that we were told would be gone is still there. The country is just about to embark on the most important negotiations since the end of the second world war, but the Chancellor barely mentioned Brexit. The disabled who are desperately trying to gain employment are to have their incomes cut by close to a third next month. Children who are unlucky enough to be the third child in a struggling family will suffer as the withdrawal of child tax credit pushes another 600,000 children into poverty. The truth is that many families are just not managing, and all they have to look forward to is years of austerity stretching far into the 2020s.
But it is all okay: we do not need to worry—because inheritance tax is to be reduced. I wonder whether the Chancellor knows how many people in my constituency are likely to benefit from a cut in inheritance tax. I have checked: last year it would have been six people, while this year it is eight—not even into double figures. It is obscene to take from the disabled and from those struggling to make ends meet to give to the richest households in the land.
I will turn to some of the announcements made on Budget day. The first concerns the increase in national insurance for the self-employed. The changes to national insurance contributions for the self-employed, taken alongside the cut in corporation tax, tell my constituents all they need to know about this Government: increased costs for small business, and reduced costs for big business. There are over 4,000 self-employed people in my constituency, and they will all be worse off despite the fact that the 2015 Conservative manifesto promised that national insurance contributions would not be increased. There can be no justification for any of this. If the Government are serious about tackling the deficit, why are they cutting taxes for the richest? By 2022, cuts to the banking levy, capital gains tax, inheritance tax and corporation tax will have cost the taxpayer another £70 billion. I repeat: it is obscene.
The second point relates to the whole issue of social care. In light of the cost of tax cuts, no wonder there is no money for adequate social care. Depriving old people of the care they need is causing widespread misery and placing additional pressure on an already overstretched NHS. The Chancellor could have announced measures to fully fund social care and help to restore funding for local government; instead, he offered only £2 billion over the next three years. The Government are giving the care sector only half of what it actually needs, and of course we must all remember that the Government have cut £4.2 billion from social care budgets since 2010. My constituents might not have been aware of the figures, but they know what they see with their own eyes. They understand that the Government take with two hands and give back with one, and quite frankly, they are not impressed.
My third and final point is in connection with the Government’s proposal to spend millions of pounds creating new grammar schools to the detriment of the schools that already exist. Under the new school funding formula, funding is set to be cut in Burnley and Padiham by over £400 per pupil. So much for a Government who say they want all children to have a good education. In Burnley, we are already seeing increased class sizes, subjects being dropped from the curriculum, pupils with special educational needs and disabilities losing vital support and teacher and school staff vacancies being left unfilled or the posts cut altogether. The introduction of grammar schools will not help existing schools in Burnley, nor will it do anything for social mobility. In spite of the Prime Minister’s grand promises, this Budget and this Government have once again failed to deliver for my constituents.
Heidi Alexander (Lewisham East) (Lab)
There is much that I could say about last week’s Budget, but given the time constraints I will limit my remarks to the specific topic of today’s debate, education and skills.
In recent weeks there have been protests in my constituency, as there have been across the country, against cuts to school budgets. Parents have taken to the streets, concerned about fewer teachers and support staff, reduced curriculums and fewer opportunities for their children. So what good news did last week’s Budget contain for those concerned mums and dads? The answer is, very little. Ministers ramped up their grammar school rhetoric and made a lot of noise about being on the side of aspiration, and they hoped no one would notice that they have no real solutions for the schools that are struggling most.
The Government’s education policy is nothing more than an aspirational mirage, with £320 million allocated for up to 140 new free schools, 30 of which will be open by September 2020, some of which could be grammars. That sum of £320 million may sound like a lot of money, but in the grand scheme of things it is not. In Lewisham, Building Schools for the Future, under which nine secondary schools and two special schools were rebuilt, was a £285 million programme. That was in just one borough in one city.
Richard Graham (Gloucester) (Con)
Is the hon. Lady aware that there are possibilities for university technical colleges within the budget allocation for free schools? That will enable a constituency such as mine to go ahead with a proposed new health UTC, which will help a huge number of young people to work in the NHS in future. Does she think that is constructive?
Heidi Alexander
I am grateful to the hon. Gentleman, but I am not sure whether he was in the Chamber earlier for the speech by the former shadow Education Secretary, my hon. Friend the Member for Manchester Central (Lucy Powell). She pointed out that some of the evidence on UTCs is dubious at best.
As I pointed out, the Building Schools for the Future budget in Lewisham was £285 million to rebuild 11 schools. The budget for grammar schools for the whole country is £320 million. The revolution in education that the Government speak about is a chimera. They want to build the wrong schools in the wrong places, and they have the wrong priorities.
I do not think a penny of extra money should be spent on new grammar schools. I have read the research showing that there is no aggregate improvement in outcomes in areas that operate selection, and I have seen the impact of selection in my own family. My own mum, as bright and capable as anyone in this Chamber, was told when she was 11 that she was not good enough, that she was a slow learner and that she was not academic. She believes that to this day.
I strongly and fundamentally believe in our comprehensive system. We should teach children of different backgrounds and different faiths, with different abilities, in the same schools—we can stream in secondaries, yes, but we must ensure that young people get to mix with others who are not exactly the same as them. The truth is that the Government are not interested in that. They want to play politics instead of addressing real problems. It does not matter what they say about paying for transport to grammars or fiddling with entrance exams, their proposals will cream off the lucky few at the expense of the majority.
To rub salt into the wound, the Government are simply failing to address the problems in some of the country’s worst schools, and they will exacerbate them with their new funding formula. They are still pursuing an academy strategy that is slowly falling apart. Lewisham has the worst-performing secondary schools of any borough in London, and the academies in my constituency are struggling. They have not delivered the soaring GCSE results that were promised, and they have a mixed record on discipline. That is not the worst of it, though. At Sedgehill school, staff and pupils have been left in a permanent state of limbo. An academy order has been issued following the imposition of an interim executive board, but no academy sponsor seems interested in taking the school on. This has been dragging on for more than two years.
What is the Government’s answer for schools like Sedgehill? What is their answer to the parents who ask me whether their school is one of the many so-called orphaned or untouchable schools they read about in the papers, for which academy sponsors cannot be found? It is an absolute disgrace. If an academy sponsor cannot be identified, revoke the academy order and put in place a tailored package of support for the school. Focus on what is going on inside the classroom, not on the sign outside the school gate. Do not blame the local authorities, either. Councils have been emasculated by central Government in recent years and stripped of resources, leading to the loss of school improvement services. They have been stripped of the ability to open new schools of their choosing and stripped of any real power to sort things out when they go wrong.
I am fed up with listening to Ministers talk about grammar schools when they have no answer for schools like Sedgehill. I do not want teachers to be asking me why the parent teacher association is raising money for photocopier paper rather than for the luxuries it used to raise money for. I do not see how anything in the Budget, or anything that the Government are doing in education, will equip all children with the skills, knowledge and confidence that they need to succeed in the increasingly competitive, complex and fast-moving world we now live in.
Martin Docherty-Hughes (West Dunbartonshire) (SNP)
First, Mr Speaker, let me give you an apology for missing Business, Energy and Industrial Strategy questions earlier today. I was suitably admonished by you and by people at home.
I want to focus on a couple of issues: the Chancellor’s assault on the Scottish whisky industry and the ill thought out increases in national insurance contributions for the self-employed. Let me declare an interest as the treasurer for the all-party group on Scotch whisky—a position that has offered me the opportunity to establish a close working relationship with this vital industry, which is very local to West Dunbartonshire.
As I am the Member for West Dunbartonshire—a constituency that is home to two well-known distilleries, Auchentoshan and Loch Lomond, and that has seen massive investment over recent months in a new bottling plant by Chivas Regal—the House will understand why I have strong reservations about the impact of the Government’s decision to increase excise duty on spirits by 3.9%. That money grab has been described by Loch Lomond distillery as a
“spectacularly poor decision by the chancellor”
and by the Scotch Whisky Association as a “major blow” to the industry which will undermine the progress that the industry has made in recent years. I therefore urge the Chancellor to use the opportunity to carry out an urgent review of the UK’s alcohol taxation system to give the industry—described by the Prime Minister only a week and a half ago as
“a truly great Scottish and British industry”
producing “the world’s pre-eminent spirit”—the support it requires to remain competitive in this vital global market.
I turn from the ill thought out increase in excise duty to the potentially disastrous impact on the self-employed of the increase in class 4 national insurance contributions by nearly 11% over the next two years. In my constituency, the local community and economy are built on a strong foundation of small businesses, and I have serious concerns—similar concerns have been expressed by many Members in the House—about the long-term impact and pressure of these increases on small businesses.
In a briefing that it sent to my office, the Federation of Small Businesses Scotland voiced its concerns about the proposed policy and stated:
“The risk that the self-employed face makes them fundamentally different to employees. This is why the proposed National Insurance tax grab on this group is an absolute kick in the teeth, just at a time when we need to create more entrepreneurs, not fewer.”
The fact that Members on the Chancellor of the Exchequer’s own Benches do not support this policy—we hear them in the Lobby all the time—sends a strong message to the Chancellor and the Treasury that the business community must be understood and consulted before any drastic changes are made. There is still time for the Chancellor to see sense and give small businesses the respect and support they deserve. To fail to do so would be a dereliction of duty and a show of no confidence in those who ensure that the economy is built on a strong base.
Finally, the utter failure in the Budget to even mention the WASPI women shows that the Treasury has failed to grasp the reality facing women born in the 1950s: poverty, destitution and a political state unwilling—not unable, but unwilling—to offer them equality in the 21st century.
Callum McCaig (Aberdeen South) (SNP)
As the Scottish National party’s spokesperson on business, energy and industrial strategy, may I too admonish my hon. Friend the Member for West Dunbartonshire (Martin Docherty-Hughes) for missing Business questions this morning? Nevertheless, I agree wholeheartedly with what he says on whisky duty, national insurance and WASPI women. I will come on to talk about national insurance contributions in a moment.
The Budget was dressed up as something a little bit different and a little bit bland. It really was bland, but parts of it did not ring true. The Chancellor seemed to think he could demonstrate that Tory austerity has not been felt most keenly by those who do not have the means to bear it. That may be true if we look at it in a very narrow sense—the top 10% of earners, when all things are taken into consideration, have borne a slightly greater share—but the lowest three deciles have borne a similar percentage decline in their income as a result of the Government’s policies. It may be easy to say that those in the top decile have taken the greatest hit, but the reality is that a 1% or 2% fall in income will mean considerably more to those in the bottom three deciles than it will for those in the top 10%.
The Chancellor said in his Budget speech:
“As a result of the changes we have made since 2010, the top 1% of income tax payers now pay 27% of all income tax”.—[Official Report, 8 March 2017; Vol. 622, c. 813.]
He wears that as a badge of pride, but that is not an indication of a fair society. It is the very opposite and it demonstrates that we live in an incredibly unfair society where 27% of income tax is being paid by 1% of the population. That is because they earn, unjustifiably, more than the rest of the population. That is not a badge of honour; that should be a badge of shame for this Government.
We have heard talk about how the Government want to use technical education and reforms in the Budget to put entrepreneurship and technical skills at the heart of the British economy, yet the single key announcement in the Budget was the change to national insurance contributions for the self-employed. They are the entrepreneurs. They are the folks with the technical skills we need in our economy. As we have heard from Member after Member today, those people do not enjoy the same benefits and protections enjoyed by those of us who are employed. That is why they deserve a differential in terms of their national insurance contributions. To dress this up as anything other than a naked tax grab is entirely disingenuous. This will not help our economy and it is coming at precisely the worst time. It must not just be stopped, but cancelled entirely.
The most disappointing aspect of the Budget for me was the utter silence on the energy challenges we as a country face. Next to nothing was said on renewables. There was nothing on how we decarbonise our economy. There was nothing on how we tap the massive potential in Scotland, particularly in our rural communities. There was nothing on how we can get contracts for difference for our island communities or how we tap the massive potential of our tidal streams. We heard nothing on the implementation of carbon capture and storage, which we will need if we are going to be able to afford, in both a financial and technical sense, to meet the carbon budgets we as a Parliament agreed.
Callum McCaig
I will not give way, as others still wish to speak.
The privatisation of the Green Investment Bank is pushing ahead at precisely the wrong time. As part of this, I hope that the Government will reflect on the challenges they face and cancel that sale.
Oil and gas has raised its head as an issue, given the changing dynamic in Scottish political debate. In 2014, the then Prime Minister promised Scotland a £200 billion oil bonanza if we voted no. He told us that the industry relied on the broad shoulders of this United Kingdom. Well, those shoulders have barely shrugged in defence of the 65,000 people, many of them in my constituency, who have lost their jobs while the Government have been asleep at the wheel.
I and my party will take no lectures from folks over there on the oil and gas industry. We have seen an absolute dereliction of duty; the Government have been asleep at the wheel. This Budget provided an opportunity to right that wrong, but what did the Government do? Did they come forward with the exploration incentives that the industry needs? No, they did not. They simply reheated a previous commitment from the last Budget and said that they would set up a discussion group. Frankly, that is not good enough. When people are losing their jobs, it is not enough to sit down and have a chat over a cup of tea. An independent Scotland would undoubtedly have acted; it would have acted swiftly and decisively to save these people’s jobs.
Vernon Coaker (Gedling) (Lab)
At the heart of all the great Budgets and all the great policy statements is a vision backed by policy. The theme of today’s Budget debate is education. We heard the Secretary of State speak at great length about one of the main problems that has beset every education system in our country for decades: the link between social background and educational attainment. It is one thing to talk about it, but another to address it with policies that will work. For most of us, seeing the Government return to the failed policies of the past to try to address that is a great mistake.
The idea that the issue of social background and educational attainment can be solved by the return of grammar schools—they might have benefited a few, but did so at the vast expense of the majority of young people in an area—is totally and utterly unacceptable. Indeed, the Government have had problems with their own Back Benchers in putting forward that policy. I say to the Government that, yes, we all agree with tackling the link between educational attainment and social background, but not by returning to selective education—essentially to the 11-plus.
It is clear that Education Ministers went to the Treasury —I see on the Government Front Bench the Chief Secretary to the Treasury—and said that the National Audit Office was predicting a £3 billion or 8% real-terms cut in the Department’s budget by 2020. That is not defensible. Conservative Members will not have on their leaflets all the cuts that will be made to the schools in their constituencies; they will say, “Don’t worry, I will write to the Minister about this”, as though it somehow happens without the Government’s decision. The Department for Education has failed in its attempt to get the Treasury to stump up more money to pay for our schools. As a consequence, there will be a reduction in funding for virtually every school in the country, and large numbers of teachers will be made redundant or not employed in future. That is the reality of the Government’s policy on education.
My own Gedling constituency will see cuts of £5.6 million in real terms by 2020—the equivalent of 139 teachers. In Nottinghamshire, it amounts to nearly £40 million-worth of cuts. Local Conservative candidates at elections somehow pretend that it has nothing to do with them and object when we point out that it is their own Government who are doing it.
We face a crisis in teacher recruitment and retention, too. At the heart of any policy whose aim is to raise attainment in some of our most difficult schools are good teaching and good head teachers: they are absolutely fundamental. Over the last few years, until fairly recently, every policy has recognised the need for such provision and has tried to ensure that it happens. However, teacher recruitment and retention are now under threat. Some schools are unable to recruit staff to teach certain specialist subjects, and some are even reflecting on whether they have enough staff to enable them to deliver a full curriculum over a full number of school days.
Let me say something to the Minister about T-levels. Every Government for decades have called for parity of esteem between academic and vocational education. The question that the present Government need to answer is this: how will the T-level policy initiative differ from all the other policy initiatives that have gone before? There has been talk about quality work experience and parity of esteem, but there is a problem that the Government have not addressed and we all need to address. It is a cultural problem: vocational education is not seen as having parity with academic education. When the Government decide what constitutes a good school, they do not say, “This is a good school because of the number of people it gets into high-quality vocational education post-16.” They judge that school on the basis of academic results. If we are judging our schools purely on the basis of academic achievement, is it any wonder that vocational education is sometimes regarded as second rate when it should not be?
I believe that there should be a national crusade. We need to make clear that there is a cultural problem with vocational education, and that we must change attitudes to it if we are ever to deliver the high quality that we need. There are skills shortages in various industries throughout the country—in Scotland, in Northern Ireland, in Wales and in England. The Government must explain how what they are proposing will differ from many of the sound and well-meaning policy objectives that we have seen before.
Helen Whately (Faversham and Mid Kent) (Con)
A few weeks ago I joined a Faversham care worker, Kim, on her rounds. When I joined her at 7.30 in the morning, she had already started washing her first client. That lovely lady needed Kim’s help to get up, get washed and dressed, and have breakfast. So many of us take such things for granted, but there is a time in life when people need help, especially if they suffer from disabilities, as she did.
I spent that morning with Kim because I wanted to see for myself the challenges presented by social care. In my constituency, we have an acute shortage of domiciliary care. Care agencies tell me that they simply cannot recruit enough staff to meet the demand—at least, not at the rates that they can pay. Age UK Faversham tells me that people are going without care who desperately need it, and the local hospitals tell me that at any time about a third of their patients would be better cared for somewhere else.
Kent County Council has made huge efforts to protect frontline care while efficiencies have been achieved, but in my part of Kent it seems that the care system is only just managing, and there are similar stories across the country. That is why, before the Budget, I asked the Chancellor if he could find extra money for social care. I know that I was one of many, and I am grateful that we have been heard. The Budget will give social care £2 billion more over the next three years, of which £l billion will be available in 2017-18. For Kent that means an extra £26 million this year, more than double what it is expecting to raise through the social care precept. That will make a real difference. Also welcome are the £100 million to fund more GPs at A&E departments—which, as we know, are a hospital pressure point—and the £300 million of extra capital funding for sustainability and transformation plans.
There is no escaping the fact—about which the OBR is very clear—that the need for health and social care will rise, and costs will rise with it. The number of over-85s is set to double in the next 15 years, and there are some worrying trends among much younger people—for instance, people in their 60s—who are living with complex life- limiting conditions. The money to care for those people has to come from somewhere, but it should not come from adding to the debt to be paid off by future generations, or from the tax changes that have been proposed by some Opposition Members, which have not been thought through and could result in reduced tax revenue to pay for the costs of care.
The best way to pay for the increasing costs of care is to have a strong and growing economy. I welcome the fact that, with its proposals for investment in infrastructure, skills and education, the Budget has boosting productivity at its core. However, we also need to adapt to changes in the nature of work that are already happening. As the Secretary of State said earlier, jobs are changing fast. About 60% of the jobs that today’s schoolchildren will do have not even been invented yet. More people are choosing to be self-employed or finding work in the gig economy. More businesses are moving online. The tax system needs to respond.
I fully recognise the extra risks and insecurities for the self-employed and entrepreneurs—I am married to one—and I hope that the Taylor report that is due in the autumn will address some of the insecurities of modern work, but there is an enormous imbalance between the contributions made by people in employment and those made by the self-employed, particularly when one adds in national insurance contributions paid by employers. Many business models have developed simply to take advantage of that tax differential and, in the process, the rapid rise in self-employment is eroding the tax base. That simply has to be addressed. We will all get old and may need care one day, so we all need to contribute to paying for that.
I look forward to the planned Green Paper on future social care funding. We need a funding system that means providers of care will invest in facilities and especially in the workforce, because the people who provide care are at the heart of this. It was such a privilege to spend time with Kim in Faversham and to see what she did for the people she cares for. We must ensure that no one has to worry whether they will get the care that they need, when they need it.
Hannah Bardell (Livingston) (SNP)
Last week, the Chancellor delivered his Budget on International Women’s Day, a day when women, and men, across the world celebrated women and their contribution to society, and highlighted how important it is to have an inclusive, gender-balanced workplace. I cannot think of a better day for the Chancellor to show how much we value the contribution that women make to the economy. Instead, he used his Budget to continue the hard Tory austerity policies that disproportionately affect women, men and their families across the country.
We know that women are affected twice as hard by this Government’s dangerous obsession with austerity. It is clear that Tory austerity is gendered because cuts to public sector jobs and an increase in temporary and zero-hours contracts affect women the most. Women make up the majority of workers living in poverty, with many juggling two or three low-paid, part-time jobs as they try to make ends meet. Where is the help that they so desperately need to scramble from just about managing to being able to provide for their families without the fear and stress of ever-shrinking household budgets?
The Chancellor started his speech by talking about preparing for a “brighter future”, but I have to ask him and his colleagues: in what parallel universe is the future bright for the 300,000 children who will be forced into poverty as a result of his refusal and that of his colleagues to stop the cuts to the work allowance? That is despite a report from the Resolution Foundation only this month warning that the Tory Government’s tax and social security policies would
“drive the biggest rise in inequality”
since Thatcher. I grew up in a single-mother family under Thatcher and it strikes me that, sadly, not much has changed.
It is both sad and ironic that, on the same page of the Budget document, the Government give money to tackle domestic abuse—a welcome move—yet refuse to take action on the punitive two-child limit and to scrap the repugnant rape clause. As the Chancellor spoke about this “brighter future”, hundreds of WASPI campaigners, including women from my Livingston constituency, protested outside Parliament—and still he failed resolutely to outline a single measure to tackle state pension inequality. Those women worked hard for their bright future, and this Tory Government are extinguishing it.
The cuts that have been announced will mean that Scotland’s day-to-day budget will be a massive £1 billion worse off. By 2020, Scotland will be £2.5 billion worse off in real terms. The IFS forecasts that austerity could last until the middle of the next decade, meaning that Scottish households and public services could ultimately face 15 years of UK Government austerity.
A separate report from the IFS this month projected that child poverty would increase to 30% by 2021-22, and said that this is
“entirely explained by the direct impact of tax and benefit reforms”.
Let us not forget that only a few months after the Tory Government came to power, they scrapped child poverty targets, and that came just before child tax credit cuts. What a shameful way to start their time in government. This Government and this Chancellor had a chance to reverse that, and he did nothing.
I ask the Government to tell us why they brought forward nothing to reverse the punitive cuts that will hit mid-low income families? Why has the Chancellor done literally nothing to protect millions of children from the prospect of poverty? The Resolution Foundation found that the poorest quarter of working-age households will be between about 5% and 15% worse off, and says that this
“is the worst period of household income growth for the poorest half of households since records began in the mid-1960s”—
and that is before the swingeing cuts that are due to hit, and before Brexit.
The Chancellor told us that his Budget
“continues the task of getting Britain back to living within its means.”—[Official Report, 8 March 2017; Vol. 622, c. 809.]
I am sure that there are thousands of families across the country who would love to have the means within which to live, but they do not, and they are simply struggling, every day, because of the punitive measures of this Government.
What would the Chancellor tell lone parents on universal credit, who will on average lose £2,380 a year? The End Child Poverty coalition has said:
“The impact of the benefit freeze, in the context of rapid price rises, has a dramatic effect on family incomes. Families on a low income simply cannot afford to pay the increased prices”
that will result from this Government’s policies.
A hard Tory Brexit remains the major threat to Scotland and our economy. Brexiteers will claim that revised figures on debt, GDP and borrowing show that the negative effect of Brexit has been exaggerated, but it has not happened yet. The Office for Budget Responsibility has said that there has been no structural improvement in the public finances and forecasts for the next five years remain virtually unchanged. The impact of a hard Brexit is yet to be felt.
Amidst the utter chaos of a hard Tory Brexit, the change for entrepreneurs and the self-employed is going to be devastating. The SNP wholeheartedly believes in flexible labour markets, but that flexibility must be guarded against vulnerability. Some self-employed workers in the UK, particularly those on low incomes, do not enjoy the same guarantees as other people, as we have heard.
This Budget was an opportunity to do the right thing to support women and low- income families, to boost business and to put an end to austerity, yet it is nothing more than an opportunity lost by this Government. This Government might see a “bright future”, but it looks more to me like the dark clouds of a perfect storm for the rest of us. Winter is coming, and Scotland is headed in a different direction—it will, I think, be a new dawn for us.
Margaret Greenwood (Wirral West) (Lab)
Education has a key role to play in breaking cycles of poverty, but we know, too, that poverty has a profound impact on a child’s ability to make the most of any educational opportunity available. Yet this Budget did nothing to tackle child poverty, which stands at about 4 million in this country—that is a shameful figure, and it is set to rise.
According to the Child Poverty Action Group, by the age of three, poorer children are estimated to be on average nine months behind children from wealthier backgrounds. Department for Education statistics show that by the end of primary school, pupils receiving free school meals are almost three terms behind children from more affluent families. By 14, the gap grows to over five terms, and by 16, children receiving free school meals achieve on average 1.7 grades lower at GCSE.
We know, too, that the early years are crucial for child development. Maintained nursery schools do an important job for children in their early years and many are struggling financially, yet the Chancellor chose to find £320 million for 140 new free schools. I strongly question his sense of priorities. Some 65% of maintained nursery schools are in the most deprived areas in the UK, and 97% of them are rated as good or outstanding by Ofsted. No other part of the education sector can match that, so their value cannot be in doubt.
Ganneys Meadow nursery school in my constituency has received outstanding judgments in its last three Ofsted reports, and it provides a vital service to families in the local community. Around 20% of the children there have special educational needs or a disability, including autism, epilepsy or mobility problems. The families of a number of the children are on low incomes, and some of the children might be quite vulnerable. The school gives those children the very best start in life, yet despite that service, based on the specialist expertise of highly qualified, trained teaching staff, it is funded at the same rate as all childcare providers. Local authorities can top up that funding, but we all know that they have had their budgets severely cut by central Government.
The Government have announced extra funding for nursery schools but, in practice, schools such as Ganneys Meadow will see their overall income rise by only a very small amount, and they will remain financially squeezed. If the Government are really serious about improving the life chances of the most disadvantaged children in our society, they should back the maintained nursery schools and ensure that they get the funding that they need to secure their future. At secondary school level, funding per pupil in my constituency is expected to fall by 10% between 2013 and 2019, which will mean a loss of £309 per pupil in cash terms between 2015 and 2019. That will inevitably be to the detriment of pupils’ education and staff morale, and it is wholly unacceptable.
The arts in education are particularly at risk at the moment. Uptake of creative subjects at secondary level fell by 14% overall between 2010 and 2015, and the Government have so far failed to respond to the consultation on the future of the English baccalaureate, which included a consideration of the place of arts subjects in the core curriculum. A survey of teachers by The Guardian in January found that 9% of respondents reported that either art, music or drama was no longer offered at their school. About 20% said that one or more of those subjects had been given reduced timetable space. Yet studies here and in the United States have shown that students from low-income families who have the opportunity to engage in the arts at school are significantly more likely to go on to get a degree and are also more employable overall, so these cuts to school funding really are damaging the prospects of our young people.
There are also real issues around adult literacy and numeracy. The latest Government studies, published in 2011, found that nearly 15% of 16 to 65-year-olds were functionally illiterate and that 23% of the people surveyed lacked basic numeracy skills. This is a real crisis, and the Government should tackle it as a matter of urgency, for the sake of not only the individuals involved but their families. When we educate the mother or the father, we educate the child. We need real investment in adult education and lifelong learning. The Chancellor announced £40 million in funding for 2018-19 to test different approaches to helping people to retrain and upskill throughout their working lives, but there have been cuts of more than £1 billion in the sector since 2010. I also question the need for pilots. As a former teacher in adult education schools and someone who has close knowledge of the work of the British Education Research Association, I can assure the Government that there is plenty of expertise out there that they could tap into to put together a really robust programme of adult education and lifelong learning.
I also urge the Government to think beyond retraining and upskilling. Those are important in providing vital training opportunities to help people to move on in their employment, but it is important to provide education for education’s sake. On TV, we see the huge popularity of programmes such as “The Great British Bake Off”, “The Great Pottery Throw Down” and “The Big Painting Challenge”. It is clear that there is a real interest in discovering arts and skills areas that might have nothing to do with employability, but everything to do with creativity and learning. I join my right hon. Friend the Member for Tottenham (Mr Lammy) in his call for the reintroduction of night schools. They are inexpensive places where people can learn and socialise, and they can help people to grow in confidence and make friends. They also provide an effective way of tackling social isolation. They can be quite transforming for individuals and communities, and I believe that they have a particularly important offer in our ageing society.
In the Prime Minister’s Lancaster House speech, when setting out the Government’s negotiation objectives for exiting the European Union, she said that the Government would aim
“to build a stronger economy and a fairer society”
in which
“every child has the knowledge and the skills they need to thrive”.
If the Government are sincere in that, they should make it a priority to fund early years education. They should also be ambitious in their plans for lifelong learning and make a real priority of tackling child poverty so that children are healthy and able to make the most of the educational opportunities on offer.
Several hon. Members rose—
Mr Speaker
Order. As I call the hon. Member for Sheffield, Brightside and Hillsborough (Gill Furniss), I am sure that Members on both sides of the House will join me in wishing her a happy birthday.
Gill Furniss (Sheffield, Brightside and Hillsborough) (Lab)
Thank you, Mr Speaker. This Budget is, at its heart, deeply unfair. It is full of broken promises and missed opportunities. I am a Sheffield MP. I love Sheffield. I grew up in Sheffield. I am extremely proud to represent its people in this place and that means standing up for them. Sheffield City Council has faced cuts every year for seven years, now totalling £352 million, and it will have to find another £40 million next year to balance its budget. Sheffield is a fantastic city with a strong industrial base. It is where stainless steel was invented, and I must put it on the record that Sheffield definitely drove the industrial revolution, no matter what others have said today. However, wages have fallen dramatically. In fact, shamefully, it was recently found that Sheffield is the low-pay capital of the UK. There is little in this Budget to help that.
The self-employed are the engine drivers of entrepreneurship, with many working at the cutting edge of technology. Self-employment in Sheffield has increased by 10% in recent years, showing our city’s entrepreneurial character. However, real wages among the self-employed have fallen faster than those of employees. For my constituents, the Chancellor’s £2 billion broken promise on NICs will have a serious effect on their livelihood. As I said, unfairness is at the heart of the Budget, which hits low and middle earners hardest, hurting working people in Sheffield, Brightside and Hillsborough. While increasing taxes for the most vulnerable in our society, and simultaneously choosing to do nothing about working standards for the self-employed, the Chancellor decided to cut taxes for the richest. Policy measures introduced by this Government since 2010 will result in over £70 billion in tax giveaways to big businesses and the super-rich over the next five years. Much has already been said about the contentious business rates revaluation, and pubs in my constituency will feel the pain of increased rates despite the headline-grabbing one-year-only discount. The British Beer and Pub Association forecasts that increases on beer duty will result in 4,000 job losses and more pub closures.
We know what to expect from this Government by now—they kick the can down the road—so the Chancellor’s speech naturally contained no mention of the industrial strategy, nothing for the struggling steel sector, and no mention of climate change. Social care is in a state of emergency due to cuts to local council budgets, with over 1 million vulnerable elderly people not receiving the care they need. The extra £2 billion for adult social care does not make up for the £4.6 billion in cuts over the last Parliament and, believe me, councils in the north are not getting the same Surrey sweetheart deal on social care. The Chancellor had the opportunity last Wednesday to properly address the funding crisis, but he did not take it. He announced no money to deal with hospitals despite the £5 billion black hole in NHS maintenance. There are not enough GPs in the NHS, and cuts to nurses’ bursaries have led to a reduction in applications for nursing courses. A&Es are in crisis, and waiting lists are soaring. Mr Speaker, forgive me if I feel that this is all too little, too late.
Ensuring a decent education for our children should be an absolute priority, not an afterthought. This Government promised to protect pupil spending but it has fallen in real terms after inflation—another broken promise. According to the National Union of Teachers, Fox Hill primary school in my constituency will be £1,003 worse off per pupil than in 2013, and Wisewood Community primary school will be £1,586 worse off per pupil over the same period. By 2019, per pupil funding will have fallen by an average of 11% from 2013 levels.
There are 1.5 million fewer adult learners than there were under the previous Labour Government, and adult skills training has been cut by 54% since 2010. Furthermore, the beleaguered further education sector has fared little better. According to the IFS, by 2020 per student spending will be only just above the level seen 30 years ago at the end of the 1980s.
It is ironic that the Budget fell on International Women’s Day. Tory cuts have disproportionately affected women and, sadly, the Budget does nothing to change that. The Budget hurts the self-employed, low earners and those on benefits while letting the richest off the hook. It is a divisive and unfair Budget, and the Conservatives are clearly not the party of the working people of Britain.
This Budget is, at its heart, deeply unfair. It is also a Budget full of broken promises and missed opportunities, and it will hurt my constituents of Sheffield, Brightside and Hillsborough.
Mr Speaker
The hon. Member for Wirral West (Margaret Greenwood) has subsequently advised me that it is her birthday, too. So again, on both sides of the House, we wish her a very happy birthday.
Ian Blackford (Ross, Skye and Lochaber) (SNP)
This Budget was a missed opportunity to help deliver confidence and growth. The OBR has stated that the future is uncertain and that any central forecast is most unlikely to be fulfilled, which is a damning statement as it is ultimately the Government’s responsibility to create certainty.
Brexit approaches us like an enormous black cloud threatening stormy weather, which is perhaps not all the Chancellor’s fault. After all, the Prime Minister sets the direction. As the storm approaches, in the modern parlance of giving names to impending storms, we should call it Storm Theresa. This Budget was another missed opportunity to deal with the unfairness of the steep rise in women’s pensionable age over too short a timeframe. That from a Budget delivered on International Women’s Day. The irony is not lost on the WASPI women.
As thousands of WASPI women demonstrated outside Parliament, making such a tremendous noise that we could hear them clearly in this building, the only man who apparently could not hear was the Chancellor—deaf to the legitimate demands of the WASPI women and desperately hoping that their calls for fairness and equality would go away. Well their calls will not go away. Like the message communicated last week, the volume is going to be turned up. The campaign is gathering momentum and the Government will have to listen.
Some 245 Members of Parliament have lodged petitions asking for action on the WASPI women. There was a debate in Westminster Hall on 9 February, and the Chair accepted the challenge that the House had not considered the effect of state pension changes on working class women after a woeful and disrespectful response from the Under-Secretary of State for Welfare Delivery, the hon. Member for Romsey and Southampton North (Caroline Nokes). The fact that, following the challenge to the determination of the motion, the matter has not come back to the Chamber for determination is disgraceful. We will continue to pursue the matter.
Of course, the debate followed a Division in this Chamber on 1 December 2016 in which the House divided by 106 votes to two against the motion that this House had considered the acceleration of the state pension age for women born in the 1950s. There has been no Government response to that vote. The Government are choosing to ignore the message that this House delivered.
In all our discussions on the Women Against State Pension Inequality Campaign, the focus has been on the 2.6 million women who are supposedly affected—the Government have continually referred to that number—but a freedom of information request that came to light last Friday now alleges that the actual number is not 2.6 million but 3.48 million women. If those reports are accurate, nearly 1 million more women than originally thought are set to miss out on their pension entitlement. It is absolutely outrageous if that is the case, and I ask the Minister to give us clarity on that matter in his summing up.
What is the figure, and why the discrepancy? Why at this stage do the Government not appear to know the exact number of women affected by the changes? We have had the farce of it taking successive Governments 14 years to communicate formally with any of the women affected, and this latest twist adds insult to injury. If the reports are true, how did the Government get the figures wrong? We need answers from them today.
The UK Government must recognise that pensions ought to be a contract, not a benefit. The Budget presented an opportunity for them to live up to that contract. It is clear that delivering fair pensions is not a high priority for the Government. With inflation spikes forecast, the Budget was completely devoid of any mitigating measures to future-proof pensioner incomes. We need a clear commitment that the triple lock will remain in place beyond 2020 and that mitigation will be put in place for the WASPI women. The SNP has already published a paper that explains how the Government can push back the timescales for increasing the pensionable age for women, at a cost of £8 billion in this Parliament. That is affordable, given the £30 billion surplus in the national insurance fund. Why did the Government not take that opportunity in the Budget? What is it going to take for them to act?
There is talk of another referendum on Scottish independence; I wish to make it clear that pensioners in Scotland would get justice and fair pensions from an SNP Government—things that are sadly lacking from the UK Tory Government. The OBR’s economic and fiscal outlook is a damning indictment of Government policy over the past few years and demonstrates the lack of vision from the Government on our economic future.
Sarah Olney (Richmond Park) (LD)
Every school in my constituency is facing cuts to its funding and rising costs. I speak to headteachers, all the time, some of whom have been in teaching for many years, and they tell me that they are extremely concerned about the funding situation. In the past, they have cut non-essential activities and support services, but they now feel they have no choice but to cut classroom teachers and whole subjects out of the curriculum. For the first time, they think that funding cuts will actually affect the quality of the teaching they provide.
Last night, I went to an event in my constituency for the concerned parents of children in local schools, and well over 200 were present. There was real anger among the parents about the prospects of further cuts. They feel a real sense of betrayal that their children are not going to receive the quality of education that their parents feel they deserve. There are excellent, dedicated teachers in our schools who are ready and willing to do the very best they can for our children, but they will not be able to if the resources available to them are not increased.
There are many different causes of the current crisis, and not all are related to the proposed changes to the funding formula. Costs are increasing because of unavoidable increases in pension and national insurance contributions; the Government are stopping the education services grant, which will end in September; and, absurdly, many schools find themselves having to pay the apprenticeship levy. The funding formula will also decrease the money available to many schools in my constituency.
Parents and teachers in my constituency are not uninformed. They know that there is a squeeze on public spending, that belts have to be tightened and that borrowing has to be cut. But they question some of the decisions that are being made. For example, a National Audit Office report in February this year found that the free schools programme, which was originally budgeted to cost £90 million, is now likely to cost in the region of £9 billion. The cost of procuring land for new school buildings is a large component of that cost, at around £2.5 billion, but the NAO estimates that the Education Funding Agency is paying, on average, almost 20% more than market value for land for new schools. The NAO also found that some sites are being purchased for schools in areas where there is no demand for extra school places.
Nobody is arguing that there is not an urgent need for new school places—not least in my constituency, which badly needs a new secondary school—but the free schools programme is not providing a cost-effective or efficient solution to that need. It urgently needs to be reviewed. Tougher negotiations on land purchases and the targeting of resources to areas of greatest need would provide better value for money for new schools and free up resources to direct towards existing schools.
The Budget statement included money put aside for a new generation of grammar schools, to be introduced as part of the free schools programme. I have searched the Conservative party manifesto from 2015 and can find no reference to this spending commitment. If the Prime Minister declines the necessity to seek a mandate of her own, she has a moral obligation to deliver the manifesto on which the Conservative party was elected. She has no mandate to introduce grammar schools; it was not a spending choice on which the public were asked to vote. There is no evidence that grammar schools deliver better educational outcomes for all children, which is surely the only goal of any Government’s educational policy.
I visited a girls’ comprehensive school in my constituency yesterday—a school that is rated outstanding in all areas. I was impressed by the quality of teaching on display as I watched a year 11 history lesson and a year 7 French lesson. The head told me that they had recently introduced a classical civilisation A-level, in response to demand from pupils, and that one of their alumni was now studying classics at Oxford. This headteacher is worried—as are all the headteachers in my constituency—that the cut in funding means that she will not be able to deliver all the subjects at A-level that she used to. There is nothing that the Prime Minister’s beloved grammars can deliver that this excellent comprehensive school cannot already deliver to the children of my constituency, and deliver without divisive selection. I call on the Prime Minister to cancel her plans for these expensive, unnecessary grammars and make the most of the excellent educational provision that is already available and continue to ensure its excellence.
The Chancellor and the Prime Minister have both stated their commitment to increasing choice in education. Choice is no good to parents who already have children in schools that are facing funding cuts. Choice implies that there are places in a range of schools for each child, and that parents merely need to make a decision on which one they want. The reality is that this would be an extraordinarily wasteful way to fund school places and that most parents take the place in the school that they are offered. Rather than choice, all most parents want is to know that the school place they are offered is capable of offering their child the very best education possible.
I call on the Government to look again at their spending plans for education and to take heed of the rising chorus of protest against the cuts in school budgets—in my constituency and elsewhere. Investing in education is essential to securing a prosperous future for this country, and skills training—not grammar schools—should be the priority if we are to thrive outside the European Union. I welcome the announcement of further investment in skills training but ask what analysis has been done of how the proposed new T-levels will align with existing vocational qualifications such as NVQs. How much of the proposed new spending will be taken up with establishing new awarding bodies and structures that could have been spent directly on teaching existing qualifications?
Anna Soubry (Broxtowe) (Con)
Will the hon. Lady agree to work with me and other colleagues in examining whether it is either right or lawful for local authorities to impose the apprenticeship levy on all the schools in our constituencies?
Sarah Olney
I quite agree that including schools in the apprenticeship levy is utterly absurd. The apprenticeship levy is supposed to raise money for training in employment. To levy it on schools, which are already providing excellent learning opportunities, is outrageous. I certainly agree to work with the right hon. Lady to investigate that further.
In conclusion, this Budget does not provide the best possible provision for education in this country and I urge the Prime Minister and the Chancellor to look again at their spending plans.
Peter Dowd (Bootle) (Lab)
I thank colleagues who have spoken in this debate today. They have torn this Budget apart. I am talking about my hon. Friends the Members for Washington and Sunderland West (Mrs Hodgson), for Lewisham East (Heidi Alexander), for Burnley (Julie Cooper), for Garston and Halewood (Maria Eagle), for Cardiff South and Penarth (Stephen Doughty), for Redcar (Anna Turley), for Gedling (Vernon Coaker), for Wirral West (Margaret Greenwood) and for Sheffield, Brightside and Hillsborough (Gill Furniss), my new hon. Friend, the hon. Member for Stoke-on-Trent Central (Gareth Snell) and many other people.
Last week, the Chancellor painted a rosy picture of the nation’s finances. He claimed that the Conservative party’s stewardship had been nothing short of miraculous. He was relaxed and attempted jokes throughout his speech. The Prime Minister’s shoulders shook with amusement, and many Government Members chuckled away. Some of the more experienced Government Members were watching cautiously, as the nosedive gained velocity. The Chancellor had got it wrong—big time. Within hours, he was attacked by many of his own Back Benchers. He was left hung out to dry by the Prime Minister, and, unsurprisingly, he has faced universal criticism over his plans to raise national insurance to 11% for millions of self-employed people. As Sir Michael Caine in the iconic film “The Italian Job” said, “You were only supposed to blow the doors off.” [Interruption.] It would have been unparliamentary to throw in that word. Well, the debris from the explosion is still descending. To put it purely and simply, the manifesto pledge was broken.
Since last Wednesday, Nos. 10 and 11 have been in a briefing war, with each trying to blame the other for the fine mess. Ostensibly, No.10 suggested that the Chancellor sneaked the national insurance rise into the Budget. Apparently, other shocked Cabinet colleagues have indicated that he failed to mention that it would break their manifesto pledge. As my hon. Friend the Member for Garston and Halewood said, it is worrying that Cabinet members do not know their own manifesto commitments. Perhaps they do not care. Then again, the Government have an insouciant attitude towards their manifesto commitment—[Hon. Members: “Give way!”]. I will come back to that in a minute. The insouciant attitude goes on. First the Government committed to getting rid of the deficit by 2015—a broken promise. Secondly, they said that it would be pushed back to 2019-20—another broken promise. Thirdly, they vowed that the debt would start to come down after 2015—another broken promise.
The Government will have virtually doubled the debt and doubled the time they have taken to get it down, and this is what they call success and fiscal credibility. They seem to think that they can simply press the reset button when it comes to meeting their own fiscal rules, and that no one will notice. It is the flipside of John Maynard Keynes’ approach—namely, “When I change my mind, the facts change with it.”
Sir Oliver Letwin (West Dorset) (Con)
Now that the hon. Gentleman has had his bit of fun, would he possibly explain how he proposes that the Labour party would find the money required for social care?
Peter Dowd
By fiscal rectitude. When the Government miss a deadline, their modus operandi is to set a new one and brazenly move on. It is the immutable law of Tory economics—make it up as you go along. What happened to the long-term economic plan? Well, it did not last very long. The Prime Minister and the Chancellor have their fingerprints all over every single financial decision that has been made during the past seven years. It is no surprise that they have come under criticism from many in their own party, including the former Member for Witney, and the former Chancellor Lord Lamont who called the national insurance debacle a “rookie error”—otherwise known, in the real world, as gross incompetence. But, regrettably, other people will pay the price for that incompetence.
Turning to Brexit—I will mention it even if the Chancellor does not want to—it is the 10th anniversary of the production of “Freeing Britain to Compete: Equipping the UK for Globalisation”. The publication was a wide-ranging policy document authored by the right hon. Member for Wokingham (John Redwood) and friends. It was endorsed by the then shadow Cabinet, which included the current incumbents of No. 10 and No. 11 Downing Street. The publication was hard to track down as it has been removed from the Conservative party website for good reason, but I found a copy. Its contents were toxic—all the more so in the wake of the subsequent global financial crisis—and remain so. But in the light of Brexit, and the resurgence of the right hon. Member for Wokingham’s influence, it will soon get a second run out.
It is worth apprising the House of a few nuggets in the document’s pages. It includes policies such as the abolition of inheritance tax; charging foreign lorries to use British roads; the potential abolition of the BBC licence fee, which it refers to as a “poll tax”; the watering down of money laundering regulations; and the deregulation of mortgage finance because
“it is the lending institutions rather than the client taking the risk.”
Try telling that to someone whose home has been repossessed.
The publication goes on to say:
“We need to make it more difficult for ministers to regulate”.
Remember that this document was dated August 2007, and was rubber-stamped by the current Prime Minister and the Chancellor at the time that Northern Rock was about to go under. The document continues—listen to this one—to say that the Labour Government
“claims that this regulation is all necessary. They seem to believe that without it banks could steal our money”.
Well, that might not be the case, but, at the peak of the banking crisis, we had liabilities of £1.2 trillion. Many people did believe that the banks were stealing money and queued up outside banks accordingly. The document refers to wanting
“reliably low inflation, taking no risks by turning fiscal rules into flexible friends”—
not that the Chancellor has many of those nowadays. As for Europe, in search of jobs and prosperity the document says:
“An incoming Conservative government should go to Brussels with proposals to deregulate the whole EU”.
No wonder they wanted to bury the evidence—it is the autobiography of the hard-line Brexiteers, and the Tory blueprint for a post-Brexit, deregulated Britain. It is a race to the bottom.
These policies are a telling narrative of the views of the fundamentalist wing of the Conservative party. The Prime Minister is hostage to that right wing, and she is on the hook. The stage directions are coming from Wokingham, Haltemprice and Howden, North Somerset, and Chingford and Woodford Green, with occasional guest appearances by the Foreign Secretary. The forlorn, melancholic Chancellor is briefed against—he is not laughing now—because he may just have a less hard-line approach to Brexit than his colleagues.
These are the dusted-off policies of hard Brexiteers, who will stop at nothing until Britain becomes a low-wage, low-tax, low-regulation economy. They want to turn our country—not their country—into the bargain basement of the western world, and they have the Prime Minister in tow. Parliamentary scrutiny is a hindrance.
Meanwhile, the Prime Minister has put kamikaze pilots in the cockpit. The Chancellor knows this too well, and that is why there is a reported £60 billion set aside as a trauma fund—a failure fund. It is not Brexit-proofing the economy, but proofing the economy from the toxic ideology of the hard Brexiteers.
The Government’s proposal to increase insurance premium tax from 10% to 12% is a regressive measure and a charge on households, and we will not support it. It was a surprise to see it in the autumn statement, coming as it did from a Government who use the high cost of insurance premiums as an excuse for curbs on victims’ rights to claim compensation, and we will oppose that rise. While the Government drive up the price of insurance for millions of families, through other policies they will forgo £73 billion of revenue.
The Budget claims it is for lower and middle earners, the NHS, social care agencies, the self-employed, schools, businesses, pubs, the strivers and the entrepreneurs. It wants to give them the thumbs-up, but, in practice, it is not doing that; on the contrary, it is putting two fingers up to them, and that is something Labour will never do.
The Chief Secretary to the Treasury (Mr David Gauke)
This is a Budget that demonstrates the Government’s determination to face up to our long-term challenges. This is a Budget that recognises that the only sustainable way to improve living standards is to improve our productivity. This is a Budget that recognises that sustainable public finances are not an impediment to prosperity but a necessary precondition.
I would like to thank my hon. Friends who participated in the debate: my hon. Friends the Members for Croydon South (Chris Philp), for Gainsborough (Sir Edward Leigh), for Telford (Lucy Allan), for Warwick and Leamington (Chris White), for South Dorset (Richard Drax), for Weaver Vale (Graham Evans) and for Faversham and Mid Kent (Helen Whately).
May I say a particular word of congratulation to the hon. Member for Stoke-on-Trent Central (Gareth Snell)? I apologise for having missed his speech, but I have heard from a number of people that it was excellent, and it proves that, in terms of his attributes as a Member of Parliament, it is not only because he is not Paul Nuttall that he will be welcome in this place.
I could probably summarise the other contributions from the Opposition Benches as saying that we are not spending enough, we are taxing too much and we are borrowing too much. Thankfully, it is not my job to reconcile all of that, and I wish the hon. Member for Bootle (Peter Dowd) the best of luck—he can say it is fiscal rectitude if he likes.
An important part of this Budget has been ensuring that this country has the skills we need to grow in the 21st century. We have to face up to the fact that tomorrow’s labour market is going to look very different from today’s. One study, for example, estimates that over a third of all jobs in the UK are at high risk of replacement in the next one to two decades, as technology and society advance. Economic, social and technological change can make certain jobs or institutions obsolete: lamplighters, handloom weavers and the Hansom Cab Company—I suppose we could add the Labour party to that list.
The job of the Government is not to stand in the way of those changes, preserving the old by stifling the new; instead, our role is to prepare the country and its people to adapt to the changes ahead, and that is what this Budget was all about: giving young people the skills they will need to get ahead in tomorrow’s world. That includes expanding the programme of free schools, investing more in schools maintenance, reforming technical education, and increasing teaching hours for further education students.
Alongside that, we also took steps to help people with the opportunities to upskill and reskill throughout their working lives, as well as to help our top researchers to develop so that our brightest can become the world’s best. We are taking forward an ambitious plan to improve education across the board for people of all backgrounds and of all ages, because that, alongside our investment in the country’s underlying infrastructure, is what will count in turning the tide on Britain’s long-standing productivity problem. Only by doing that can we increase living standards and fund world-class public services.
But as we prepare a bright future for the 21st century, we do so responsibly. This was a Budget that protected and improved our health and social services, and a Budget that invested in reform for the benefit of the next generation of workers and businesses alike, but a Budget that did so by funding all the new spending commitments it made, because, unlike Labour, we do not believe in spending and promising what we cannot deliver. That means having a tax base that is capable of funding the public services we provide, and doing so in a way that is fair.
We have heard a lot about the change we made to national insurance for the self-employed, and we are listening to hon. Members’ concerns. I think we all have to recognise that the difference between the benefits received by the employed and the self-employed have narrowed but the gap in contributions has not. This means that the employed pay a lot more for the same benefits. As self-employment grows in our economy—a welcome trend—that should not place a pressure on funding public services and deficit reduction. A Government addressing long-term challenges have to address this point, not ignore it.
This is a Budget that keeps Britain working—one that invests in our people, infrastructure and public services but does so responsibly, continuing to steer the country’s course away from Labour’s “spend what you can borrow” approach to our “spend what you can afford”. In doing so, we are once again demonstrating that we are the party that is delivering for this generation but not at the expense of the next generation. That is why the House should support the Budget in the Lobby tonight.
Question put and agreed to.
Resolved,
(1) That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance.
(2) This Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—
(a) for zero-rating or exempting a supply, acquisition or importation;
(b) for refunding an amount of tax;
(c) for any relief, other than a relief that—
(i) so far as it is applicable to goods, applies to goods of every description, and
(ii) so far as it is applicable to services, applies to services of every description.
Mr Deputy Speaker (Mr Lindsay Hoyle)
I am now required under Standing Order No. 51(3) to put successively, without further debate, the Question on each of the Ways and Means motions numbered 2 to 46, and on the motions on procedure numbered 47 to 51, on all of which a Bill is to be brought in. These motions are set out in a separate paper distributed with today’s Order Paper. Column 1 Column 2 Section Section 81(1) 87(1) 94(1) 102(1A) 120(1) 149(1) 154(1) 160(1) 175(1) 203(1) 81(1A)(b) 87A(1)(a) 94A(1)(a) 102(1B)(b) 120A(1)(a) 149A(2)(a) 154A(1)(a) 160A(2)(a) 175(1A)(b) 203A(1)(a) “amount foregone (in relation to a benefit) (in the benefits code) Section 69B” “optional remuneration arrangements (in the benefits code) Section 69A” “3A Income tax Amount payable under regulations under section 244L(2)(a) of FA 2004 The date falling 30 days after the due date determined by or under the regulations” “Charge under section 244A (overseas transfer charge). 1. The name, date of birth and national insurance number of each individual in whose case a transfer results in the scheme administrator becoming liable to the overseas transfer charge. 2. The date, and transferred value, of each transfer. 3. The reference number of the qualifying recognised overseas pension scheme to which each transfer is made. 4. The amount of tax due in respect of each transfer.”
I must inform the House that for the purposes of Standing Order No. 83U and on the basis of material put before him, Mr Speaker has certified that in his opinion the following founding motions published on 8 March 2017 and to be moved by the Chancellor of the Exchequer relate exclusively to England, Wales and Northern Ireland and are within devolved legislative competence: 3, Income Tax (main rates); and 36, Landfill tax.
The Deputy Speaker put forthwith the Questions necessary to dispose of the motions made in the name of the Chancellor of the Exchequer (Standing Order No. 51(3)).
2. Income tax (charge)
Resolved,
That income tax is charged for the tax year 2017-18.
And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
3. Income tax (main rates)
Resolved,
That for the tax year 2017-18 the main rates of income tax are as follows—
(a) the basic rate is 20%,
(b) the higher rate is 40%, and
(c) the additional rate is 45%.
And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
4. Income tax (default and savings rates)
Resolved,
That—
(1) For the tax year 2017-18 the default rates of income tax are as follows—
(a) the default basic rate is 20%,
(b) the default higher rate is 40%, and
(c) the default additional rate is 45%.
(2) For the tax year 2017-18 the savings rates of income tax are as follows—
(a) the savings basic rate is 20%,
(b) the savings higher rate is 40%, and
(c) the savings additional rate is 45%.
And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
5. Income tax (savings rate limit)
Resolved,
That—
(1) For the amount specified in section 12(3) of the Income Tax Act 2007 (starting rate for savings) substitute “£5000”.
(2) The amendment made by this Resolution has effect for the tax year 2017-18 and subsequent tax years. (3) Section 21 of the Income Tax Act 2007 (indexation), so far as relating to the starting rate limit for savings, does not apply in relation to the tax year 2017-18 (but this Resolution does not override that section for subsequent tax years).
And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968
6. Corporation tax (charge for financial year 2018)
Resolved,
That corporation tax is charged for the financial year 2018.
7. PUBLIC SECTOR OFF-PAYROLL WORKERS
Resolved,
That—
(1) The Income Tax (Earnings and Pensions) Act 2003 is amended as follows.
(2) In section 7(5)(a) (amounts treated as earnings by Chapters 7 to 9 of Part 2 are “employment income” and “general earnings”), for “9” substitute “10”.
(3) In section 48 (scope of Chapter 8 of Part 2: workers’ services provided through intermediaries)—
(a) In subsection (1), after “through an intermediary” insert “, but not where the services are provided to a public authority”, and
(b) after subsection (2) insert—
“(3) In this Chapter “public authority” has the same meaning as in Chapter 10 of this Part (see section 61L).”
(4) In section 49 (engagements to which Chapter 8 of Part 2 applies)—
(a) in subsection (1), after paragraph (a) insert—
“(aa) the client is not a public authority,”, and
(b) after subsection (4) insert—
“(4A) Holding office as statutory auditor of the client does not count as holding office under the client for the purposes of subsection (1)(c), and here “statutory auditor” means a statutory auditor within the meaning of Part 42 of the Companies Act 2006 (see section 1210 of that Act).”
(5) In section 52(2)(b) and (c) (conditions of liability under Chapter 8 where intermediary is a partnership), for “this Chapter” substitute “one or other of this Chapter and Chapter 10”.
(6) In section 61(1) (interpretation of Chapter 8), before the definition of “engagement to which this Chapter applies” insert—
““engagement to which Chapter 10 applies” has the meaning given by section 61M(5);”.
(7) In section 61A (scope of Chapter 9 of Part 2: workers’ services provided by managed service companies), after subsection (2) insert—
“(3) See also section 61D(4A) (disapplication of this Chapter if Chapter 10 applies).”
(8) In section 61D (deemed earnings where worker’s services provided by managed service company), after subsection (4) insert—
“(4A) This section does not apply where the provision of the relevant services gives rise (directly or indirectly) to an engagement to which Chapter 10 applies, and for this purpose it does not matter whether the client is also “the client” for the purposes of section 61M(1).”
(9) In section 61J(1) (interpretation of Chapter 9), before the definition of “managed service company” insert—
““engagement to which Chapter 10 applies” has the meaning given by section 61M(5),”.
(10) In Part 2 (employment income: charge to tax), after Chapter 9 insert—
“Chapter 10
workers’ services provided to public sector through intermediaries
61K Scope of this Chapter
(1) This Chapter has effect with respect to the provision of services to a public authority through an intermediary.
(2) Nothing in this Chapter—
(a) affects the operation of Chapter 7 of this Part (agency workers), or
(b) applies to payments or transfers to which section 966(3) or (4) of ITA 2007 applies (visiting performers: duty to deduct and account for sums representing income tax).
61L Meaning of “public authority”
(1) In this Chapter “public authority” means—.
(a) a public authority as defined by the Freedom of Information Act 2000,
(b) a Scottish public authority as defined by the Freedom of Information (Scotland) Act 2002 (asp 13),
(c) the Corporate Officer of the House of Commons,
(d) the Corporate Officer of the House of Lords,
(e) the National Assembly for Wales Commission, or
(f) the Northern Ireland Assembly Commission.
(2) An authority within paragraph (a) or (b) of subsection (1) is a public authority for the purposes of this Chapter in relation to all its activities even if provisions of the Act mentioned in that paragraph do not apply to all information held by the authority.
61M Engagements to which Chapter applies
(1) Sections 61N to 61R apply where—
(a) an individual (“the worker”) personally performs, or is under an obligation personally to perform, services for another person (“the client”),
(b) the client is a public authority,
(c) the services are provided not under a contract directly between the client and the worker but under arrangements involving a third party (“the intermediary”), and
(d) the circumstances are such that—
(i) if the services were provided under a contract directly between the client and the worker, the worker would be regarded for income tax purposes as an employee of the client or the holder of an office under the client, or
(ii) the worker is an office-holder who holds that office under the client and the services relate to the office.
(2) The reference in subsection (1)(c) to a “third party” includes a partnership or unincorporated association of which the worker is a member.
(3) The circumstances referred to in subsection (1)(d) include the terms on which the services are provided, having regard to the terms of the contracts forming part of the arrangements under which the services are provided.
(4) Holding office as statutory auditor of the client does not count as holding office under the client for the purposes of subsection (1)(d), and here “statutory auditor” means a statutory auditor within the meaning of Part 42 of the Companies Act 2006 (see section 1210 of that Act).
(5) In this Chapter “engagement to which this Chapter applies” means any such provision of services as is mentioned in subsection (1).
61N Worker treated as receiving earnings from employment
(1) If one of Conditions A to C is met, identify the chain of two or more persons where—
(a) the highest person in the chain is the client,
(b) the lowest person in the chain is the intermediary, and
(c) each person in the chain above the lowest makes a chain payment to the person immediately below them in the chain.
(See section 61U for cases where one of Conditions A to C is treated as being met.).
(2) In this section and sections 61O to 61S—
“chain payment” means a payment, or money’s worth or any other benefit, that can reasonably be taken to be for the worker’s services to the client,
“make”—
(a) in relation to a chain payment that is money’s worth, means transfer, and
(b) in relation to a chain payment that is a benefit other than a payment or money’s worth, means provide, and”
“the fee-payer” means the person in the chain immediately above the lowest.
(3) The fee-payer is treated as making to the worker, and the worker is treated as receiving, a payment which is to be treated as earnings from an employment (“the deemed direct payment”), but this is subject to subsections (5) to (7) and sections 61T and 61V.
(4) The deemed direct payment is treated as made at the same time as the chain payment made by the fee-payer.
(5) Subsections (6) and (7) apply, subject to sections 61T and 61V, if the fee-payer—
(a) is not the client, and
(b) is not a qualifying person
(6) If there is no person in the chain below the highest and above the lowest who is a qualifying person, subsections (3) and (4) have effect as if for any reference to the fee-payer there were substituted a reference to the client.
(7) Otherwise, subsections (3) and (4) have effect as if for any reference to the fee-payer there were substituted a reference to the person in the chain who—
(a) is above the lowest,
(b) is a qualifying person, and
(c) is lower in the chain than any other person in the chain who—
(i) is above the lowest, and
(ii) is a qualifying person.
(8) In subsections (5) to (7) a “qualifying person” is a person who—
(a) is resident in the United Kingdom or has a place of business in the United Kingdom,
(b) is not a person who is controlled by—
(i) the worker, alone or with one or more associates of the worker, or
(ii) an associate of the worker, with or without other associates of the worker, and
(c) if a company, is not one in which—
(i) the worker, alone or with one or more associates of the worker, or
(ii) an associate of the worker, with or without other associates of the worker,
has a material interest (within the meaning given by section 51(4) and (5)).
(9) Condition A is that—
(a) the intermediary is a company, and
(b) the conditions in section 61O are met in relation to the intermediary.
(10) Condition B is that—
(a) the intermediary is a partnership,
(b) the worker is a member of the partnership,
(c) the provision of the services is by the worker as a member of the partnership, and
(d) the condition in section 61P is met in relation to the intermediary.
(11) Condition C is that the intermediary is an individual.
(12) Where a payment, money’s worth or any other benefit can reasonably be taken to be for both—
(a) the worker’s services to the client, and
(b) anything else,
then, for the purposes of this Chapter, so much of it as can, on a just and reasonable apportionment, be taken to be for the worker’s services is to be treated as (and the rest is to be treated as not being) a payment, or money’s worth or another benefit, that can reasonably be taken to be for the worker’s services.
61O Conditions where intermediary is a company
(1) The conditions mentioned in section 61N(9)(b) are that—
(a) the intermediary is not an associated company of the client that falls within subsection (2), and
(b) the worker has a material interest in the intermediary.
(2) An associated company of the client falls within this subsection if it is such a company by reason of the intermediary and the client being under the control—
(a) of the worker, or
(b) of the worker and other persons.
(3) The worker is treated as having a material interest in the intermediary if—
(a) the worker, alone or with one or more associates of the worker, or
(b) an associate of the worker, with or without other associates of the worker,
has a material interest in the intermediary.
(4) For this purpose “material interest” has the meaning given by section 51(4) and (5).
(5) In this section “associated company” has the meaning given by section 449 of CTA 2010.
61P Conditions where intermediary is a partnership
(1) The condition mentioned in section 61N(10)(d) is—
(a) that the worker, alone or with one or more relatives, is entitled to 60% or more of the profits of the partnership, or
(b) that most of the profits of the partnership derive from the provision of services under engagements to which one or other of this Chapter and Chapter 8 applies—
(i) to a single client, or
(ii) to a single client together with associates of that client, or
(c) that under the profit sharing arrangements the income of any of the partners is based on the amount of income generated by that partner by the provision of services under engagements to which one or other of this Chapter and Chapter 8 applies.
(2) In subsection (1)(a) “relative” means spouse or civil partner, parent or child or remoter relation in the direct line, or brother or sister.
(3) Section 61(4) and (5) apply for the purposes of this section as they apply for the purposes of Chapter 8.
61Q Calculation of deemed direct payment
(1) The amount of the deemed direct payment is the amount resulting from the following steps—
Step 1
Identify the amount or value of the chain payment made by the person who is treated as making the deemed direct payment, and deduct from that amount so much of it (if any) as is in respect of value added tax.
Step 2
Deduct, from the amount resulting from Step 1, so much of that amount as represents the direct cost to the intermediary of materials used, or to be used, in the performance of the services.
Step 3
Deduct, at the option of the person treated as making the deemed direct payment, from the amount resulting from Step 2, so much of that amount as represents expenses met by the intermediary that would have been deductible from the taxable earnings from the employment if—
(a) the worker had been employed by the client, and
(b) the expenses had been met by the worker out of those earnings.
Step 4
If the amount resulting from the preceding Steps is nil or negative, there is no deemed direct payment. Otherwise, that amount is the amount of the deemed direct payment.
(2) For the purposes of Step 1 of subsection (1), any part of the amount or value of the chain payment which is employment income of the worker by virtue of section 863G(4) of ITTOIA 2005 (salaried members of limited liability partnerships: anti-avoidance) is to be ignored.
(3) In subsection (1), the reference to the amount or value of the chain payment means the amount or value of that payment before the deduction (if any) permitted under section 61S.
(4) If the actual amount or value of the chain payment mentioned in Step 1 of subsection (1) is such that its recipient bears the cost of amounts due under PAYE regulations or contributions regulations in respect of the deemed direct payment, that Step applies as if the amount or value of that chain payment were what it would be if the burden of that cost were not being passed on through the setting of the level of the payment.
(5) In Step 3 of subsection (1), the reference to expenses met by the intermediary includes—
(a) expenses met by the worker and reimbursed by the intermediary, and
(b) where the intermediary is a partnership and the worker is a member of the partnership, expenses met by the worker for and on behalf of the partnership.
(6) In subsection (4) “contributions regulations” means regulations under the Contributions and Benefits Act providing for primary Class 1 contributions to be paid in a similar manner to income tax in relation to which PAYE regulations have effect (see, in particular, paragraph 6(1) of Schedule 1 to the Act); and here “primary Class 1 contribution” means a primary Class 1 contribution within the meaning of Part 1 of the Contributions and Benefits Act.
61R Application of Income Tax Acts in relation to deemed employment
(1) The Income Tax Acts (in particular, Part 11 and PAYE regulations) apply in relation to the deemed direct payment as follows.
(2) They apply as if—
(a) the worker were employed by the person treated as making the deemed direct payment, and
(b) the services were performed, or to be performed, by the worker in the course of performing the duties of that employment.
(3) The deemed direct payment is treated in particular—
(a) as taxable earnings from the employment for the purpose of securing that any deductions under Chapters 2 to 6 of Part 5 do not exceed the deemed direct payment, and
(b) as taxable earnings from the employment for the purposes of section 232.
(4) The worker is not chargeable to tax in respect of the deemed direct payment if, or to the extent that, by reason of any combination of the factors mentioned in subsection (5), the worker would not be chargeable to tax if—
(a) the client employed the worker,
(b) the worker performed the services in the course of that employment, and
(c) the deemed direct payment were a payment by the client of earnings from that employment.
(5) The factors are—
(a) the worker being resident or domiciled outside the United Kingdom or meeting the requirement of section 26A,
(b) the client being resident outside, or not resident in, the United Kingdom, and
(c) the services being provided outside the United Kingdom.
(6) Where the intermediary is a partnership or unincorporated association, the deemed direct payment is treated as received by the worker in the worker’s personal capacity and not as income of the partnership or association.
(7) Where—.
(a) the client is the person treated as making the deemed direct payment,
(b) the worker is resident in the United Kingdom,
(c) the services are provided in the United Kingdom,
(d) the client is not resident in the United Kingdom, and
(e) the client does not have a place of business in the United Kingdom,
the client is treated as resident in the United Kingdom.
61S Deductions from chain payments
(1) This section applies if, as a result of section 61R, a person who is treated as making a deemed direct payment is required under PAYE Regulations to pay an amount to the Commissioners for Her Majesty’s Revenue and Customs (the Commissioners) in respect of the payment.
(But see subsection (4)).
(2) The person may deduct from the underlying chain payment an amount which is equal to the amount payable to the Commissioners, but where the amount or value of the underlying chain payment is treated by section 61Q(4) as increased by the cost of any amount due under PAYE Regulations, the amount that may be deducted is limited to the difference (if any) between the amount payable to the Commissioners and the amount of that increase.
(3) Where a person in the chain other than the intermediary receives a chain payment from which an amount has been deducted in reliance on subsection (2) or this subsection, that person may deduct the same amount from the chain payment made by them.
(4) This section does not apply in a case to which 61V(2) applies (services-provider treated as making deemed direct payment).
(5) In subsection (2) “the underlying chain payment” means the chain payment whose amount is used at Step 1 of section 61Q(1) as the starting point for calculating the amount of the deemed direct payment.
61T Information to be provided by clients and consequences of failure
(1) If the conditions in section 61M(1)(a) to (1)(c) are met in any case, and a person as part of the arrangements mentioned in section 61M(1)(c) enters into a contract with the client, the client must inform that person (in the contract or otherwise) of which one of the following is applicable—
(a) the client has concluded that the condition in section 61M(1)(d) is met in the case;
(b) the client has concluded that the condition in section 61M(1)(d) is not met in the case.
(2) If the contract is entered into on or after 6 April 2017, the duty under subsection (1) must be complied with—
(a) on or before the time of entry into the contract, or
(b) if the services begin to be performed at a later time, before that later time.
(3) If the contract is entered into before 6 April 2017, the duty under subsection (1) must be complied with on or before the date of the first payment made under the contract on or after 6 April 2017.
(4) If the information which subsection (1) requires the client to give to a person has been given (whether in the contract, as required by subsection (2) or (3) or otherwise), the client must, on a written request by the person, provide the person with a written response to any questions raised by the person about the client’s reasons for reaching the conclusion identified in the information.
(5) A response required by subsection (4) must be provided before the end of 31 days beginning with the day the request for it is received by the client.
(6) If—
(a) the client fails to comply with the duty under subsection (1) within the time allowed by subsection (2) or (3),
(b) the client fails to provide a response required by subsection (4) within the time allowed by subsection (5), or
(c) the client complies with the duty under subsection (1) but fails to take reasonable care in coming to its conclusion as to whether the condition in section 61M(1)(d) is met in the case,
section 61N(3) and (4) have effect in the case as if for any reference to the fee-payer there were substituted a reference to the client, but this is subject to section 61V.
61U Information to be provided by worker and consequences of failure
(1) In the case of an engagement to which this Chapter applies, the worker must inform the potential deemed employer of which one of the following is applicable—
(a) that one of conditions A to C in section 61N is met in the case,
(b) that none of conditions A to C in section 61N is met in the case
(2) If the worker has not complied with subsection (1), then for the purposes of section 61N(1), one of conditions A to C in section 61N is to be treated as met.
(3) In this section, “the potential deemed employer” is the person who, if one of conditions A to C in section 61N were met, would be treated as making a deemed direct payment to the worker under section 61N(3).
61V Consequences of providing fraudulent information
(1) Subsection (2) applies if in any case—
(a) a person (“the deemed employer”) would, but for this section, be treated by section 61N(3) as making a payment to another person (“the services-provider”), and
(b) the fraudulent documentation condition is met.
(2) Section 61N(3) has effect in the case as if the reference to the fee-payer were a reference to the services-provider, but—
(a) section 61N(4) continues to have effect as if the reference to the fee-payer were a reference to the deemed employer, and
(b) Step 1 of section 61Q(1) continues to have effect as referring to the chain payment made by the deemed employer.
(3) Subsection (2) has effect even though that involves the services-provider being treated as both employer and employee in relation to the deemed employment under section 61N(3).
(4) “The fraudulent documentation condition” is that a relevant person provided any person with a fraudulent document intended to constitute evidence—
(a) that the case is not an engagement to which this Chapter applies, or
(b) that none of conditions A to C in section 61N is met in the case.
(5) A “relevant person” is—
(a) the services-provider;
(b) a person connected with the services-provider;
(c) if the intermediary in the case is a company, an office-holder in that company.
61W Prevention of double charge to tax and allowance of certain deductions
(1) Subsection (2) applies where—
(a) a person (“the payee”) receives a payment or benefit (“the end-of-line remuneration”) from another person (“the paying intermediary”),
(b) the end-of-line remuneration can reasonably be taken to represent remuneration for services of the payee to a public authority,
(c) a payment (“the deemed payment”) has been treated by section 61N(3) as made to the payee,
(d) the underlying chain payment can reasonably be taken to be for the same services of the payee to that public authority, and
(e) the recipient of the underlying chain payment has (whether by deduction from that payment or otherwise) borne the cost of any amounts due, under PAYE regulations and contributions regulations in respect of the deemed payment, from the person treated by section 61N(3) as making the deemed payment.
(2) For income tax purposes, the paying intermediary and the payee may treat the amount of the end-of-line remuneration as reduced (but not below nil) by any one or more of the following—
(a) the amount (see section 61Q) of the deemed payment;
(b) the amount of any capital allowances in respect of expenditure incurred by the paying intermediary that could have been deducted from employment income under section 262 of CAA 2001 if the payee had been employed by the public authority and had incurred the expenditure;
(c) the amount of any contributions made, in the same tax year as the end-of-line payment, for the benefit of the payee by the paying intermediary to a registered pension scheme that if made by an employer for the benefit of an employee would not be chargeable to income tax as income of the employee.
(3) Subsection (2)(c) does not apply to—
(a) excess contributions paid and later repaid,
(b) contributions set under subsection (2) against another payment by the paying intermediary, or
(c) contributions deductible at Step 5 of section 54(1) in calculating the amount of the payment (if any) treated by section 50 as made in the tax year concerned by the paying intermediary to the payee.
(4) For the purposes of subsection (3)(c), the contributions to which Step 5 of section 54(1) applies in the case of the particular calculation are “deductible” at that Step so far as their amount does not exceed the result after Step 4 in that calculation.
(5) In subsection (1)(d) “the underlying chain payment” means the chain payment whose amount is used at Step 1 of section 61Q(1) as the starting point for calculating the amount of the deemed payment.
(6) Subsection (2) applies whether the end-of-line remuneration—
(a) is earnings of the payee,
(b) is a distribution of the paying intermediary, or
(c) takes some other form.
61X Interpretation
In this Chapter—
“associate” has the meaning given by section 60;
“company” means a body corporate or unincorporated association, and does not include a partnership;
“engagement to which Chapter 8 applies” has the meaning given by section 49(5).”
(11) In section 339A (travel for employment involving intermediaries), after subsection (6) insert—
“(6A) Subsection (3) does not apply in relation to an engagement if—
(a) sections 61N to 61R in Chapter 10 of Part 2 apply in relation to the engagement,
(b) one of Conditions A to C in section 61N is met in relation to the employment intermediary, and
(c) the employment intermediary is not a managed service company.
(6B)This section does not apply in relation to an engagement if—
(a) sections 61N to 61R in Chapter 10 of Part 2 do not apply in relation to the engagement because the circumstances in section 61M(l)(d) are not met,
(b) assuming those circumstances were met, one of Conditions A to C in section 61N would be met in relation to the employment intermediary, and
(c) the employment intermediary is not a managed service company.
(6C) In determining for the purposes of subsection (6A) or (6B) whether one of Conditions A to C in section 61N is or would be met in relation to the employment intermediary, read references to the intermediary as references to the employment intermediary.”
(12) The amendments made by paragraphs 2 to 9 and 11 of this Resolution have effect for the tax year 2017-18 and subsequent tax years.
(13) The amendment made by paragraph 10 of this Resolution has effect in relation to deemed direct payments treated as made on or after 6 April 2017, and does so even if relating to services provided before that date.
And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
8. Optional remuneration arrangements
Resolved,
That—
(1) In Part 3 of the Income Tax (Earnings and Pensions) Act 2003 (employment income: earnings and benefits etc treated as earnings), in Chapter 2 (taxable benefits: the benefits code), after section 69 insert—
“69A Optional remuneration arrangements
(1) Subsections (2) to (7) have effect for the purposes of the benefits code.
(2) A benefit provided for an employee is provided under “optional remuneration arrangements” so far as it is provided under arrangements of type A or B (regardless of whether those arrangements are made before or after the beginning of the person’s employment).
(3) “Type A arrangements” are arrangements under which, in return for the benefit, the employee gives up the right (or a future right) to receive an amount of earnings within Chapter 1 of Part 3.
(4) “Type B arrangements” are arrangements (other than type A arrangements) under which the employee agrees to be provided with the benefit rather than an amount of earnings within Chapter 1 of Part 3.
(5) A benefit provided for an employee is to be regarded as provided under optional remuneration arrangements (whether of type A or type B) so far as it is just and reasonable to attribute the provision of the benefit to the arrangements in question.
(6) Where a benefit is provided for an employee under any arrangements, the mere fact that under the arrangements the employee makes good, or is required to make good, any part of the cost of provision is not to be taken to show that the benefit is (to any extent) provided otherwise than under optional remuneration arrangements.
(7) Where a benefit is provided for an employee partly under optional remuneration arrangements and partly otherwise than under such arrangements, the benefits code is to apply with any modifications (including provision for just and reasonable apportionments) that may be required for ensuring that the benefit is treated—
(a) in accordance with the relevant provision in the column 2 of the table so far as it is provided under optional remuneration arrangements, and
(b) in accordance with the relevant provision in column 1 of the table so far as it is provided otherwise than under such arrangements.
69B Optional remuneration arrangements: supplementary
(1) For the purposes of the benefits code “the amount foregone”—
(a) in relation to a benefit provided for an employee under type A arrangements means the amount of earnings mentioned in section 69A(3);
(b) in relation to a benefit provided for an employee under type B arrangements means the amount of earnings mentioned in section 69A(4);
(c) in relation to a benefit provided for an employee partly under type A arrangements and partly under type B arrangements, means the sum of the amounts foregone under the arrangements of each type.
(2) Subsection (3) applies where, in order to determine the amount foregone with respect to a particular benefit mentioned in section 69A(3) or (4), it is necessary to apportion an amount of earnings to the benefit.
(3) The apportionment is to be made on a just and reasonable basis.
(4) In this section and section 69A references to a benefit provided for an employee include a benefit provided for a member of an employee’s family or household.
(5) In this section and section 69A—
“benefit” includes any benefit or facility, regardless of its form and the manner of providing it;
“earnings” means earnings within Chapter 1 of Part 3 (and includes a reference to amounts which would have been such earnings if the employee had received them).”
(2) Part 3 of the Income Tax (Earnings and Pensions) Act 2003 (employment income: earnings and benefits in kind etc treated as earnings) is amended as follows.
(3) Section 81 (benefit of cash voucher treated as earnings) is amended as follows.
(4) After subsection (1) insert—
“(1A) Where a cash voucher to which this Chapter applies is provided pursuant to optional remuneration arrangements—
(a) subsection (1) does not apply, and
(b) the relevant amount is to be treated as earnings from the employment for the tax year in which the voucher is received by the employee.
(1B) In this section “the relevant amount” means—
(a) the cash equivalent, or
(b) if greater, the amount foregone with respect to the benefit of the voucher (see section 69B).”
(5) At the end insert—
“(3) For the purposes of subsection (1B), assume that the cash equivalent is zero if the condition in subsection (4) is met.
(4) The condition is that the benefit of the voucher would be exempt from income tax but for section 228A (exclusion of certain exemptions).”
(6) After section 87 insert—
“87A Benefit of non-cash voucher treated as earnings: optional remuneration arrangements
(1) Where a non-cash voucher to which this Chapter applies is provided pursuant to optional remuneration arrangements—
(a) the relevant amount is to be treated as earnings from the employment for the tax year in which the voucher is received by the employee, and
(b) section 87(1) does not apply.
(2) To find the relevant amount, first determine which (if any) is the greater of—
(a) the cost of provision (see section 87(3)), and
(b) the amount foregone with respect to the benefit of the voucher (see section 69B).
(3) If the cost of provision is greater than or equal to the amount foregone, the “relevant amount”
is the cash equivalent of the benefit of the non-cash voucher (see section 87(2)).
(4) Otherwise, the “relevant amount” is the difference between—
(a) the amount foregone, and
(b) any part of the cost of provision that is made good by the employee, to the person incurring it, on or before 6 July following the relevant tax year.
(5) If the voucher is a non-cash voucher other than a cheque voucher, the relevant tax year is—
(a) the tax year in which the cost of provision is incurred, or
(b) if later, the tax year in which the employee receives the voucher.
(6) If the voucher is a cheque voucher, the relevant tax year is the tax year in which the voucher is handed over in exchange for money, goods or services.
(7) For the purposes of subsections (2) and (3), assume that the cost of provision is zero if the condition in subsection (8) is met.
(8) The condition is that the non-cash voucher would be exempt from income tax but for section 228A (exclusion of certain exemptions).”
(7) In section 88 (year in which earnings treated as received)—
(a) in subsection (1), after “87” insert “or 87A”;
(b) in subsection (2), after “87” insert “or 87A.”
(8) After section 94 insert—
“94A Benefit of credit-token treated as earnings: optional remuneration arrangements
(1) If the conditions in subsections (2) and (3) are met in relation to any occasions on which a credit-token to which this Chapter applies is used by the employee in a tax year to obtain money, goods or services—
(a) the relevant amount is to be treated as earnings from the employment for that year, and
(b) section 94(1) does not apply in relation to the use of the credit-token on those occasions.
(2) The condition in this subsection is that the credit-token is used pursuant to optional remuneration arrangements.
(3) The condition in this subsection is that AF is greater than the relevant cost of provision for the tax year.
In this section “AF” means so much of the amount foregone (see section 69B) as is attributable on a just and reasonable basis to the use of the credit-token by the employee in the tax year pursuant to the optional remuneration arrangements to obtain money, goods or services.
(4) The “relevant amount” is the difference between—
(a) AF, and
(b) any part of the relevant cost of provision for the tax year that is made good by the employee, to the person incurring it, on or before 6 July following the tax year which contains the occasion of use of the credit-token to which the making good relates.
(5) But the relevant amount is taken to be zero if the amount given by paragraph (b) of subsection (4) exceeds AF.
(6) For the purposes of this section the “relevant cost of provision for the tax year” is determined as follows—
Step 1
Find the cost of provision with respect to each occasion of use of the credit-token by the employee in the tax year pursuant to the optional remuneration arrangements to obtain money, goods or services.
Step 2
The total of those amounts is the relevant cost of provision for the tax year.
(7) But the relevant cost of provision for the tax year is to be taken to be zero if the condition in subsection (8) is met.
(8) The condition is that use of the credit token by the employee in the tax year pursuant to the optional remuneration arrangements to obtain money, goods or services would be exempt from income tax but for section 228A (exclusion of certain exemptions).
(9) In this section “cost of provision” has the same meaning as in section 94.”
(9) In section 97 (living accommodation to which Chapter 5 applies), in subsection (1A)(b), for “the cash equivalent of” substitute “an amount in respect of”.
(10) In section 98 (accommodation provided by local authority), in the words before paragraph (a), for “This Chapter” substitute “In section 102 (benefit of accommodation treated as earnings) subsection (1A) (accommodation provided otherwise than pursuant to optional remuneration arrangements)”.
(11) Section 99 (accommodation provided for performance of duties) is amended as follows.
(12) In subsection (1), for “This Chapter” substitute “In section 102 (benefit of accommodation treated as earnings) subsection (1A) (accommodation provided otherwise than pursuant to optional remuneration arrangements)”.
(13) In subsection (2), for “This Chapter” substitute “In section 102 (benefit of accommodation treated as earnings) subsection (1A)”.
(14) In section 100 (accommodation provided as result of security threat), in the words before paragraph (a), for “This Chapter” substitute “In section 102 (benefit of accommodation treated as earnings) subsection (1A) (accommodation provided otherwise than pursuant to optional remuneration arrangements)”.
(15) In section 100A (homes outside UK owned by company etc), in subsection (1), for “This Chapter” substitute “In section 102 (benefit of accommodation treated as earnings) subsection (1A) (accommodation provided otherwise than pursuant to optional remuneration arrangements)”.
(16) In section 101 (Chevening House), in the words before paragraph (a), for “This Chapter” substitute “In section 102 (benefit of accommodation treated as earnings) subsection (1A) (accommodation provided otherwise than pursuant to optional remuneration arrangements)”.
(17) Section 102 (benefit of living accommodation treated as earnings) is amended as follows.
(18) In subsection (1), for the words before paragraph (a) substitute “This section applies if living accommodation to which this Chapter applies is provided in any period (“the taxable period”)—”.
(19) The words in subsection (1) from “the cash equivalent” to the end become subsection (1A).
(20) After subsection (1A) insert—
“(1B) If the benefit of the accommodation is provided pursuant to optional remuneration arrangements—
(a) subsection (1A) does not apply, and
(b) the relevant amount is to be treated as earnings from the employment for that tax year.”
(21) Omit subsection (2).
(22) At the end insert—
“(4) Section 103A indicates how the relevant amount is determined.”
(23) In section 103 (method of calculating cash equivalent), in subsection (3), for “102(2)” substitute “102(1)”.
(24) After section 103 insert—
“103A Accommodation provided pursuant to optional remuneration arrangements: relevant amount
(1) To find the relevant amount, first determine which (if any) is the greater of—
(a) the modified cash equivalent of the benefit of the accommodation (see sections 105(2A) and 106(2A)), and
(b) the amount foregone with respect to the benefit of the accommodation (see section 69B).
(2) If the amount mentioned in subsection (1)(a) is greater than or equal to the amount mentioned in subsection (1)(b), the “relevant amount” is the cash equivalent of the benefit of the accommodation (see section 103).
(3) Otherwise, the “relevant amount” is the difference between—
(a) the amount foregone with respect to the benefit of the accommodation, and
(b) the deductible amount (see subsections (7) and (8)).
(4) If the amount foregone with respect to the benefit of the accommodation does not exceed the deductible amount, the relevant amount is taken to be zero.
(5) For the purposes of subsections (1) and (2), assume that the modified cash equivalent of the benefit of the accommodation is zero if the condition in subsection (6) is met.
(6) The condition is that the benefit of the accommodation would be exempt from income tax but for section 228A (exclusion of certain exemptions).
(7) If the cost of providing the living accommodation does not exceed £75,000, the “deductible amount” means any sum made good, on or before 6 July following the tax year which contains the taxable period, by the employee to the person at whose cost the accommodation is provided that is properly attributable to its provision.
(8) If the cost of providing the living accommodation exceeds £75,000, the “deductible amount” means the total of amounts A and B where—
A is equal to so much of MG as does not exceed RV;
B is the amount of any excess rent paid by the employee in respect of the taxable period;
MG is the total of any sums made good, on or before 6 July following the tax year which contains the taxable period, by the employee to the person at whose cost the accommodation is provided that are properly attributable to its provision (in the taxable period);
RV is the rental value of the accommodation for the taxable period as set out in section 105(3) or (4A)(b) (as applicable).
(9) In subsection (8) “excess rent” means so much of the rent in respect of the taxable period paid—
(a) by the employee,
(b) in respect of the accommodation,
(c) to the person providing it, and
(d) on or before 6 July following the tax year which contains the taxable period, as exceeds the rental value of the accommodation.
(10) Where it is necessary for the purposes of subsection (1)(b) and (3)(a) to apportion an amount of earnings to the benefit of the accommodation in the taxable period, the apportionment is to be made on a just and reasonable basis.
In this subsection “earnings” is to be interpreted in accordance with section 69B(5).”
(25) Section 105 (cash equivalent: cost of accommodation not over £75,000) is amended as follows.
(26) In subsection (1), after “equivalent” insert “or modified cash equivalent”.
(27) After subsection (2) insert—
“(2A) The modified cash equivalent is equal to the rental value of the accommodation for the taxable period.”
(28) Section 106 (cash equivalent: cost of accommodation over £75,000) is amended as follows.
(29) In subsection (1), after “equivalent” insert “or modified cash equivalent”.
(30) After subsection (2) insert—
“(2A) to calculate the modified cash equivalent—
(a) apply steps 1 to 3 in subsection (2), as if the words “cash equivalent” in step 1 were “modified cash equivalent (for the purposes of section 105)”;
(b) calculate the modified cash equivalent by adding together the amounts calculated under steps 1 and 3 as applied by paragraph (a).”
(31) Section 109 (priority of Chapter 5 over Chapter 1 of Part 3 of the Act) is amended as follows.
(32) In subsection (1)(a), for “the cash equivalent of the benefit of living accommodation” substitute “an amount”.
(33) In subsection (2), for “of the cash equivalent” substitute “mentioned in subsection (1)(a)”.
(34) In subsection (4), in the words before paragraph (a), for “cash equivalent of the benefit of the living accommodation” substitute “amount mentioned in subsection (1)(a)”.
(35) In section 114 (cars, vans and related benefits), in subsection (2)—
(a) in paragraph (a), for “the cash equivalent of” substitute “an amount in respect of”;
(b) in paragraph (b), for “the cash equivalent of” substitute “an amount in respect of”;
(c) in paragraph (c), for “the cash equivalent of” substitute “an amount in respect of”;
(d) in paragraph (d), for “the cash equivalent of” substitute “an amount in respect of”.
(36) Section 119 (where alternative to benefit of car or van offered) is amended as follows.
(37) For subsection (1) substitute—
“(1) This section applies where in a tax year—
(a) a car is made available as mentioned in section 114(1),
(b) the car’s CO2 emissions figure (see sections 133 to 138) does not exceed 75 grams per kilometre, and
(c) an alternative to the benefit of the car is offered.”
(38) In the heading, before “car” insert “low emission”.
(39) In section 120 (benefit of car treated as earnings), after subsection (3) insert—
“(4) This section is subject to section 120A.”
(40) After section 120 insert—
“120A Benefit of car treated as earnings: optional remuneration arrangements
(1) Where this Chapter applies to a car in relation to a particular tax year and the conditions in subsection (3) are met—
(a) the relevant amount (see section 121A) is to be treated as earnings from the employment for that tax year, and
(b) section 120(1) does not apply.
(2) In such a case (including a case where the relevant amount is nil) the employee is referred to in this Chapter as being chargeable to tax in respect of the car in the tax year.
(3) The conditions are that—
(a) the car is made available to the employee or member of the employee’s household pursuant to optional remuneration arrangements,
(b) the amount foregone (see section 69B) with respect to the benefit of the car for the tax year is greater than the modified cash equivalent of the benefit of the car for the tax year (see section 121B), and
(c) the car’s CO2 emissions figure (see sections 133 to 138) exceeds 75 grams per kilometre.”
(41) After section 121 insert—
“121A Optional remuneration arrangements: method of calculating relevant amount
(1) To find the relevant amount for the purposes of section 120A, take the following steps—
Step 1
Take the amount foregone with respect to the benefit of the car for the tax year.
Step 2
Make any deduction under section 132A in respect of capital contributions made by the employee to the cost of the car or accessories.
The resulting amount is the provisional sum.
Step 3
Make any deduction from the provisional sum under section 144 in respect of payments by the employee for the private use of the car.
The result is the “relevant amount” for the purposes of section 120A.
(2) Where it is necessary, for the purpose of determining the “amount foregone” under step 1 of subsection (1), to apportion an amount of earnings to the benefit of the car for the tax year, the apportionment is to be made on a just and reasonable basis.
In this subsection “earnings” is to be interpreted in accordance with section 69B(5).
“121B Meaning of “modified cash equivalent”
(1) The “modified cash equivalent” of the benefit of a car for a tax year is calculated in accordance with the following steps (which must be read with subsections (2) to (4))—
Step 1
Find the price of the car in accordance with sections 122 to 124A.
Step 2
Add the price of any accessories which fall to be taken into account in accordance with sections 125 to 131.
The resulting amount is the interim sum.
Step 3
Find the appropriate percentage for the car for the year in accordance with sections 133 to 142.
Step 4
Multiply the interim sum by the appropriate percentage for the car for the year.
The resulting amount is the interim sum.
Step 5
Make any deduction under section 143 for any periods when the car was unavailable.
The resulting amount is the modified cash equivalent of the benefit of the car for the year.
(2) Where the car is shared the modified cash equivalent is calculated under this section in accordance with section 148.
(3) The modified cash equivalent of the benefit of a car for a tax year is to be taken to be zero if the condition in subsection (4) is met.
(4) The condition is that the benefit of car for the tax year would be exempt from income tax but for section 228A (exclusion of certain exemptions).
(5) The method of calculation set out in subsection (1) is modified in the special cases dealt with in—
(a) section 146 (cars that run on road fuel gas), and
(b) section 147A (classic cars: optional remuneration arrangements).”
(42) In section 126 (amounts taken into account in respect of accessories), in subsection (1), in the words before paragraph (a), after “121(1)” insert “and step 2 of section 121B(1)”.
(43) Section 131 (replacement accessories) is amended as follows.
(44) In subsection (1), in the words before paragraph (a), after “applies” insert “for the purposes of sections 121(1) and 121B(1)”.
(45) After subsection (1) insert—
“(1A) In the application of this section for the purposes of section 121B(1)—
(a) references to the cash equivalent of the benefit of the car for the tax year are to be read as references to the modified cash equivalent of the benefit of the car for the tax year, and
(b) references to step 2 of section 121(1) are to be read as references to step 2 of section 121B(1).”
(46) In section 132 (capital contributions by employee), in subsection (1), in the words before paragraph (a), after “applies” insert “for the purposes of section 121(1)”.
(47) After section 132 insert—
“132A Capital contributions by employee: optional remuneration arrangements
(1) This section applies for the purposes of section 121A(1) if the employee contributes a capital sum to expenditure on the provision of—
(a) the car, or
(b) any qualifying accessory which is taken into account in calculating under section 121B the modified cash equivalent of the benefit of the car.
(2) A deduction is to be made from the amount carried forward from step 1 of section 121A(1)—
(a) for the tax year in which the contribution is made, and
(b) for all subsequent tax years in which the employee is chargeable to tax in respect of the car by virtue of section 120A.
(3) The amount of the deduction allowed in any tax year is found by multiplying the capped amount by the appropriate percentage.
(4) In subsection (3) the reference to “the appropriate percentage” is to the appropriate percentage for the car for the tax year (determined in accordance with sections 133 to 142).
(5) In this section “the capped amount” means the lesser of—
(a) the total of the capital sums contributed by the employee in that year and any earlier years to expenditure on the provision of—
(i) the car, or
(ii) any qualifying accessory which is taken into account in calculating under section 121B the modified cash equivalent of the benefit of the car for the tax year in question, and
(b) £5,000.
(6) This section is modified by section 147A (optional remuneration arrangements: classic cars).”
(48) Section 143 (deduction for periods when car unavailable) is amended as follows.
(49) Before subsection (1) insert—
“(A1) This section has effect for the purposes of—
(a) section 121(1) (method of calculating the cash equivalent of the benefit of a car), and
(b) section 121B(1) (optional remuneration arrangements: meaning of “modified cash equivalent”).”
(50) In subsection (1), after “121(1)” insert “or (as the case may be) step 4 of section 121B(1)”.
(51) In subsection (3), in the definition of “A”, at the end insert “of section 121(1) or (as the case may be) step 4 of section 121B(1)”.
(52) Section 144 (deduction for payments for private use) is amended as follows.
(53) In subsection (1), for “calculated under step 7 of section 121(1)” substitute “(see subsection (1A))”.
(54) After subsection (1) insert
“(1A) In this section “the provisional sum” means the provisional sum calculated under—
(a) step 7 of section 121(1) (method of calculating the cash equivalent of the benefit of a car), or
(b) step 2 of section 121A(1) (optional remuneration arrangements: method of calculating relevant amount”).”
(55) In subsection (2), for the words from “so that” to the end substitute “so that—
(a) in a case within subsection (1A)(a), the cash equivalent of the benefit of the car for the year is nil, or
(b) in a case within subsection (1A)(b), the relevant amount for the purposes of section 120A is nil.”
(56) In subsection (3)—
(a) for “In any other case” substitute “Where subsection (2) does not apply,” and
(b) for the words from “give” to the end substitute “give—
(a) in a case within subsection (1A)(a), the cash equivalent of the benefit of the car for the year, or
(b) in a case within subsection (1A)(b), the relevant amount for the purposes of section 120A.”
(57) Section 145 (modification of provisions where car temporarily replaced) is amended as follows.
(58) In subsection (1), for paragraph (c) substitute—
“(c) the employee is chargeable to tax—
(i) in respect of both the normal car and the replacement car by virtue of section 120, or
(ii) in respect of both the normal car and the replacement car by virtue of section 120A, and”.
(59) After subsection (5) insert—
“(6) Where this section applies by virtue of subsection (1)(c)(ii), the condition in subsection (5)(b) is to be taken to be met if it would be met on the assumption that the cash equivalent of the benefit of the cars in question is to be calculated under section 121 (1).”
(60) Section 146 (cars that run on road fuel gas) is amended as follows.
(61) In subsection (1), in the words before paragraph (a), after “applies” insert “for the purposes of sections 121 and 121B”.
(62) In subsection (2), after “121(1)” insert “or (as the case may be) step 1 of section 121B(1)”.
(63) After subsection 147 insert—
“147A Classic cars: optional remuneration arrangements
(1) This section applies in calculating the relevant amount in respect of a car for a tax year for the purposes of section 120A (benefit of car treated as earnings: optional remuneration arrangements) if—
(a) the age of the car at the end of the year is 15 years or more,
(b) the market value of the car for the year is £15,000 or more, and
(c) that market value exceeds the specified amount (see subsection (4)).
(2) In calculating the modified cash equivalent of the benefit of the car, for the interim sum calculated under step 2 of section 121B(1) substitute the market value of the car for the tax year in question.
(3) Section 132A (capital contributions by employee: optional remuneration arrangements) has effect as if—
(a) in subsection (1)(b) the reference to calculating under section 121B the modified cash equivalent of the benefit of the car were to determining the market value of the car, and
(b) in subsection (5)(a)(ii) the reference to calculating under section 121B the modified cash equivalent of the benefit of the car for the tax year in question were to determining the market value of the car for the tax year in question.
(4) The “specified amount” is found as follows.
Step 1
Find what would be the interim sum under step 2 of section 121B(1) (if subsection (2) of this section did not have effect).
Step 2
(Assuming for this purpose that the reference in section 132(2) to step 2 of section 121(1) includes a reference to step 1 of this subsection) make any deduction under section 132 for capital contributions made by the employee to the cost of the car or accessories.
The resulting amount is the specified amount.
(5) The market value of a car for a tax year is to be determined in accordance with section 147(3) and (4).”
(64) Section 148 (reduction of cash equivalent where car is shared) is amended as follows.
(65) In subsection (1)—
(a) in the words before paragraph (a), after “applies” insert “for the purposes of sections 121 and 121B”;
(b) in the words after paragraph (c), for “section 120” substitute “sections 120 and 120A”.
(66) For subsection (2) substitute—
“(2) The amount to be treated as earnings in respect of the benefit of the car is to be calculated separately for each of those employees for that tax year (whether under section 120 or section 120A).”
(67) In subsection (2A), at the beginning insert “In the case of an employee chargeable to tax in respect of the car by virtue of section 120”.
(68) After subsection (2A) insert—
“(2B) In the case of an employee chargeable to tax in respect of the car by virtue of section 120A, the modified cash equivalent (as determined under section 121B(1)) is to be reduced on a just and reasonable basis.”
(69) In section 149 (benefit of car fuel treated as earnings), in subsection (1)(b), at the end insert “or 120A”.
(70) After section 149 insert—
“149A Benefit of car fuel treated as earnings: optional remuneration arrangements
(1) This section applies if—
(a) fuel is provided for a car in a tax year by reason of an employee’s employment,
(b) the employee is chargeable to tax in respect of the car in the tax year by virtue of section 120 or 120A, and
(c) the fuel is provided pursuant to optional remuneration arrangements.
(2) If the condition in subsection (3) is met—
(a) the amount foregone with respect to the benefit of the fuel (see section 69B) is to be treated as earnings from the employment for the tax year, and
(b) section 149(1) does not apply.
(3) The condition mentioned in subsection (2) is that the amount foregone with respect to the benefit of the fuel is greater than the cash equivalent of the benefit of the fuel.
(4) For the purposes of subsection (3), assume that the cash equivalent of the benefit of the fuel is zero if the condition in subsection (5) is met.
(5) The condition mentioned in subsection (4) is that the benefit of the fuel would be exempt from income tax but for section 228A (exclusion of certain exemptions).
(6) References in this section to fuel do not include any facility or means for supplying electrical energy or any energy for a car which cannot in any circumstances emit CO2 by being driven.
(7) Where it is necessary for the purposes of subsections (2)(a) and (3) to apportion an amount of earnings to the benefit of the fuel in the tax year, the apportionment is to be made on a just and reasonable basis. In this subsection “earnings” is to be interpreted in accordance with section 69B(5).”
(71) In section 154 (benefit of van treated as earnings), after subsection (3) insert—
“(4) This section is subject to section 154A.”
(72) After section 154 insert—
“154A Benefit of van treated as earnings: optional remuneration arrangements
(1) Where this Chapter applies to a van in relation to a particular tax year and the conditions in subsection (2) are met—
(a) the relevant amount is to be treated as earnings from the employment for that tax year, and
(b) section 154(1) does not apply.
In such a case (including a case where the relevant amount is nil) the employee is referred to in this Chapter as being chargeable to tax in respect of the van in the tax year.
(2) The conditions are that—
(a) the van is made available to the employee or member of the employee’s household pursuant to optional remuneration arrangements, and
(b) the amount foregone with respect to the benefit of the van (see section 69B) is greater than the modified cash equivalent of the benefit of the van.
(3) To find the relevant amount for the purposes of this section take the following steps—
Step 1
Take the amount foregone with respect to the benefit of the van for the tax year.
Step 2
Make any deduction under section 158A in respect of payments by the employee for the private use of the van.
The result is “relevant amount”.
(4) In subsection (2) the reference to the “modified cash equivalent” is to the amount which would be the cash equivalent of the benefit of the van (after any reductions under section 156 or 157) if this Chapter had effect the following modifications—
(a) omit paragraph (c) of section 155(8);
(b) omit section 158;
(c) in section 159(2)(b), for “155, 157 and 158” substitute “155 and 157”.
(5) For the purposes of subsection (2) assume that the modified cash equivalent of the benefit of the van is zero if the condition in subsection (6) is met.
(6) The condition is that the benefit of the van would be exempt from income tax but for section 228A (exclusion of certain exemptions).
(7) Where it is necessary for the purposes of subsection (2)(b) and step 1 of subsection (3) to apportion an amount of earnings to the benefit of the van in the tax year, the apportionment is to be made on a just and reasonable basis.
In this subsection “earnings” is to be interpreted in accordance with section 69B(5).”
(73) After section 158 insert—
“158A Van provided pursuant to optional remuneration arrangements: private use
(1) In calculating the relevant amount under section 154A in relation to a van and a tax year, a deduction is to be made under step 2 of subsection (3) of that section if, as a condition of the van being available for the employee’s private use, the employee—
(a) is required in that year to pay (whether by way of deduction from earnings or otherwise) an amount of money for that use, and
(b) pays that amount on or before 6 July following that year.
(2) The amount of the deduction is—
(a) the amount paid as mentioned in subsection (1)(b) by the employee in respect of the year, or
(b) if less, the amount that would reduce the relevant amount to nil.
(3) In this section the reference to the van being available for the employee’s private use includes a reference to the van being available for the private use of a member of the employee’s family or household.”
(74) Section 160 (benefit of van fuel treated as earnings) is amended as follows.
(75) In subsection (1)(b), after “154” insert “or 154A”.
(76) At the end insert—
“(5) This section is subject to section 160A.”
(77) After section 160 insert—
“160A Benefit of van fuel treated as earnings: optional remuneration arrangements
(1) This section applies if—
(a) fuel is provided for a van in a tax year by reason of an employee’s employment,
(b) the benefit of the fuel is provided pursuant to optional remuneration arrangements, and
(c) the employee is chargeable to tax in respect of the van in the tax year by virtue of section 154 or 154A.
(2) If the condition in subsection (3) is met—
(a) the amount foregone with respect to the benefit of the fuel (see section 69B) is to be treated as earnings from the employment for that year, and
(b) section 160(1) does not apply.
(3) The condition mentioned in subsection (2) is that the amount foregone with respect to the benefit of the fuel is greater than the cash equivalent of the benefit of the fuel.
(4) For the purposes of subsection (3), assume that the cash equivalent of the benefit of the fuel is zero if the condition mentioned in subsection (5) is met.
(5) The condition mentioned in subsection (4) is that the benefit of the fuel would be exempt from income tax but for section 228A (exclusion of certain exemptions).
(6) Where it is necessary for the purposes of subsections (2)(a) and (3) to apportion an amount of earnings to the benefit of the fuel in the tax year, the apportionment is to be made on a just and reasonable basis. In this subsection “earnings” is to be interpreted in accordance with section 69B(5).”
(78) In section 170 (orders etc relating to Chapter 6 of Part 3), in subsection (1)—
(a) after paragraph (c) insert—
“(ca) section 132A(5)(b) (corresponding provision with respect to optional remuneration arrangements),”;
(b) omit “or” at the end of paragraph (d);
(c) after paragraph (e) insert—
“(f) section 147A(1)(b) (classic car: minimum value: optional remuneration arrangements).”
(79) In section 173 (loans to which Chapter 7 applies), in subsection (1A)(b), for the words from “provide” to the end substitute “make provision about amounts which, in the case of a taxable cheap loan, are to be treated as earnings in certain circumstances”.
(80) In section 175 (benefit of taxable cheap loan treated as earnings), for subsection (1) substitute—
“(A1) This section applies where an employment-related loan is a taxable cheap loan in relation to a tax year.
(1) The cash equivalent of the benefit of the loan is to be treated as earnings from the employee’s employment for the tax year.
(1A) If the benefit of the loan is provided pursuant to optional remuneration arrangements and the condition in subsection (1B) is met—
(a) subsection (1) does not apply, and
(b) the relevant amount (see section 175A) is to be treated as earnings from the employee’s employment for the tax year.
(1B) The condition is that the amount foregone with respect to the benefit of the loan for the tax year (see section 69B) is greater than the modified cash equivalent of the benefit of the loan for the tax year (see section 175A).”
(81) After section 175 insert—
“175A Optional remuneration arrangements: “relevant amount” and “modified cash equivalent”
(1) In section 175(1A) “the relevant amount”, in relation to a loan the benefit of which is provided pursuant to optional remuneration arrangements, means the difference between—
(a) the amount foregone (see section 69B) with respect to the benefit of the loan, and
(b) the amount of interest (if any) actually paid on the loan for the tax year.
(2) For the purposes of section 175 the “modified cash equivalent” of the benefit of an employment-related loan for a tax year is the amount which would be the cash equivalent if section 175(3) had effect with the following modifications—
(a) in the opening words, omit “the difference between”;
(b) omit paragraph (b) and the “and” before it.”
(3) But the modified cash equivalent of the benefit of the loan is to be taken to be zero if the condition in subsection (4) is met.
(4) The condition is that the benefit of the loan for the tax year would be exempt from income tax but for section 228A (exclusion of certain exemptions).
(5) For the purpose of calculating the modified cash equivalent of the benefit of an employment-related loan, assume that section 186(2) (replacement loans: aggregation) and section 187(3) (aggregation of loans by close company to a director) do not have effect.
(6) Where it is necessary for the purposes of section 175(1B) and subsection (1) of this section to apportion an amount of earnings to the benefit of the loan for the tax year, the apportionment is to be made on a just and reasonable basis.
In this subsection “earnings” is to be interpreted in accordance with section 69B(5).”
(82) In section 180 (threshold for benefit of loan to be treated as earnings), in subsection (1), for the words before paragraph (a) substitute “Section 175 does not have effect in relation to an employee and a tax year—”.
(83) In section 184 (interest treated as paid), in subsection (1), for the words from “the cash equivalent” to the end substitute “—
(a) the cash equivalent of the benefit of a taxable cheap loan is treated as earnings from an employee’s employment for a tax year under section 175(1), or
(b) the relevant amount in respect of the benefit of a taxable cheap loan is treated as earnings from an employee’s employment for a tax year under section 175(1A).”
(84) In section 202 (excluded benefits), after subsection (1) insert—
“(1A) But a benefit provided to an employee or member of an employee’s family or household is to be taken not to be an excluded benefit by virtue of subsection (1)(c) so far as it is provided under optional remuneration arrangements.”
(85) After section 203 insert—
“203A Employment-related benefit provided under optional remuneration arrangements
(1) Where an employment-related benefit is provided pursuant to optional remuneration arrangements—
(a) the relevant amount is to be treated as earnings from the employment for the tax year in which the benefit is provided, and
(b) section 203(1) does not apply.
(2) To find the relevant amount, first determine which (if any) is the greater of—
(a) the cost of the employment-related benefit, and
(b) the amount foregone with respect to the benefit (see section 69B).
(3) If the cost of the employment-related benefit is greater than or equal to the amount foregone, the “relevant amount” is the cash equivalent (see section 203(2)).
(4) Otherwise, the “relevant amount” is—
(a) the amount foregone with respect to the employment-related benefit, less
(b) any part of the cost of the benefit made good by the employee, to the persons providing the benefit, on or before 6 July following the tax year in which it is provided.
(5) For the purposes of subsections (2) and (3), assume that the cost of the employment-related benefit is zero if the condition in subsection (6) is met.
(6) The condition is that the employment-related benefit would be exempt from income tax but for section 228A (exclusion of certain exemptions).
(7) Where it is necessary for the purposes of subsections (2)(b) and (4) to apportion an amount of earnings to the benefit provided in the tax year, the apportionment is to be made on a just and reasonable basis.
In this subsection “earnings” is to be interpreted in accordance with section 69B(5).”
(86) In Part 4 of the Income Tax (Earnings and Pensions) Act 2003 (employment income: exemptions), after section 228 insert—
“228A General exclusion from exemptions: optional remuneration arrangements
(1) A relevant exemption does not apply (whether to prevent liability to income tax from arising or to reduce liability to income tax) in respect of a benefit or facility so far as the benefit or facility is provided pursuant to optional remuneration arrangements.
(2) For the purposes of subsection (1) it does not matter whether the relevant exemption would (apart from that subsection) have effect as an employment income exemption or an earnings-only exemption.
(3) For the purposes of this section an exemption conferred by this Part is a “relevant exemption” unless it is—
(a) a special case exemption (see subsection (4)), or
(b) an excluded exemption (see subsection (5)).
(4) “Special case exemption” means an exemption conferred by any of the following provisions—
(a) section 289A (exemption for paid or reimbursed expenses);
(b) section 289D (exemption for other benefits);
(c) section 308B (independent advice in respect of conversions and transfers of pension scheme benefits);
(d) section 312A (limited exemption for qualifying bonus payments);
(e) section 317 (subsidised meals);
(f) section 320C (recommended medical treatment);
(g) section 323A (trivial benefits provided by employers).
(5) “Excluded exemption” means an exemption conferred by any of the following provisions—
(a) section 239 (payments and benefits connected with taxable cars and vans and exempt heavy goods vehicles);
(b) section 244 (cycles and cyclist’s safety equipment);
(c) section 266(2)(c) (non-cash voucher regarding entitlement to exemption within section 244);
(d) section 270A (limited exemption for qualifying childcare vouchers);
(e) section 308 (exemption of contribution to registered pension scheme);
(f) section 308A (exemption of contributions to overseas pension scheme);
(g) section 308C (provision of pensions advice);
(h) section 309 (limited exemptions for statutory redundancy payments);
(i) section 310 (counselling and other outplacement services);
(j) section 311 (retraining courses);
(k) section 318 (childcare: exemption for employer-provided care);
(l) section 318A (childcare: limited exemption for other care).
(6) In this section “benefit or facility” includes anything which constitutes employment income or in respect of which employment income is treated as arising to the employee (regardless of its form and the manner of providing it).
(7) In this section “optional remuneration arrangements” has the same meaning as in the benefits code (see section 69A).
(8) The Treasury may by order amend subsections (4) and (5) by adding or removing an exemption conferred by Part 4.”
(87) Section 19 of the Income Tax (Earnings and Pensions) Act 2003 (receipt of non-money earnings) is amended as follows.
(88) In subsection (2), after “94” insert “or 94A”.
(89) In subsection (3), after “87” insert “or 87A”.
(90) In section 95 of the Income Tax (Earnings and Pensions) Act 2003 (disregard for money, goods or services obtained), in subsection (1), in the words before paragraph (a), after “credit-token” insert “or the relevant amount in respect of a cash voucher, a non-cash voucher or a credit-token”.
(91) In section 236 of the Income Tax (Earnings and Pensions) Act 2003 (interpretation of Chapter 2 of Part 4: exemptions for mileage allowance relief etc), in subsection (2)(b)—
(a) in the words before sub-paragraph (i), for “the cash equivalent of” substitute “an amount in respect of”;
(b) in sub-paragraph (i), after “120” insert “or 120A”;
(c) in sub-paragraph (ii), after “154” insert “or 154A”;
(d) in sub-paragraph (iii), after “203” insert “or 203A”.
(92) In section 236 of the Income Tax (Earnings and Pensions) Act 2003 (interpretation of Chapter 2 of Part 4), in subsection (2)(c), for “the cash equivalent of” substitute “an amount in respect of”.
(93) Section 239 of the Income Tax (Earnings and Pensions) Act 2003 (payments and benefits connected with taxable cars and vans etc) is amended as follows.
(94) In subsection (3)—
(a) after “149” insert “or 149A”;
(b) after “160” insert “or 160A”.
(95) In subsection (6), for “the cash equivalent of” substitute “an amount (whether the cash equivalent or the relevant amount) in respect of”.
(96) In section 362 of the Income Tax (Earnings and Pensions) Act 2003 (deductions where non-cash voucher provided), in subsection (1)(a), for “87(1) (cash equivalent” substitute “87(1) or 87A(1) (amount in respect”.
(97) In section 318A of the Income Tax (Earnings and Pensions) Act 2003 (childcare: limited exemption for other care), in subsection (1)(b), for “cash equivalent of the benefit” substitute “amount treated as earnings in respect of the benefit by virtue of section 203(1) or 203A(1) (as the case may be)”.
(98) In section 363 of the Income Tax (Earnings and Pensions) Act 2003 (deductions where credit-token provided), in subsection (1)(a), for “94(1) (cash equivalent” substitute “94(1) or 94A(1) (amount in respect”.
(99) In section 693 of the Income Tax (Earnings and Pensions) Act 2003 (cash vouchers), in subsection (1), for “section 81(2)” substitute “subsection (2) of, or (as the case may be) referred to in subsection (1A)(b) of, section 81”.
(100) In section 694 of the Income Tax (Earnings and Pensions) Act 2003 (non-cash vouchers), in subsection (1), after “87(2)” insert “or 87A(4)”.
(101) In section 695 of the Income Tax (Earnings and Pensions) Act 2003 (benefit of credit-token treated as earnings), after subsection (1) insert—
“(1A) If the credit-token is provided pursuant to optional remuneration arrangements, the reference in subsection (1) to the amount ascertained under section 94(2) is to be read as a reference to what that amount would be were the credit-token provided otherwise than pursuant to optional remuneration arrangements.
In this subsection “optional remuneration arrangements” is to be interpreted in accordance with section 69A.”
(102) In Part 2 of Schedule 1 to the Income Tax (Earnings and Pensions) Act 2003 (index of defined expressions), at the appropriate places insert—
(103) In Part 2 of Schedule 1 to the Income Tax (Earnings and Pensions) Act 2003 (index of defined expressions), in the entry relating to “the taxable period”, for “102(2)” substitute “102(1)”.
(104) The amendments made by paragraphs (1), (91)(a), (92) and (102) of this Resolution have effect for the tax year 2017-18 and subsequent tax years.
(105) The amendments made by paragraphs (2) to (90), (91)(b) to (d), (93) to (101) and (103) of this Resolution have effect for the tax year 2017-18 and subsequent tax years.
(106) But paragraph (105) does not apply in relation to benefits provided pursuant to pre-6 April 2017 arrangements.
(107) In relation to a benefit provided pursuant to pre-6 April 2017 arrangements, the amendment made by paragraph (86) has effect for the tax year 2018-19 and subsequent tax years.
(108) In relation to a benefit provided pursuant to pre-6 April 2017 arrangements, the amendments made by paragraphs (9) to (78), (91)(b) and (c), (93) to (95) and (103) (and paragraph (2), so far as relating to those paragraphs) have effect for the tax year 2021-22 and subsequent tax years.
(109) In relation to a benefit provided pursuant to pre-6 April 2017 arrangements, the amendments made by paragraphs (3) to (8), (79) to (85), (87) to (90), (91)(d) and (96) to (101) (and paragraph (2), so far as relating to those paragraphs) have effect for the tax year 2018-19 and subsequent tax years (but see paragraph (115)).
(110) If any terms of a pre-6 April 2017 arrangement which relate to the provision of a particular benefit are varied on or after 6 April 2017, that benefit is treated, with effect from the beginning of the day on which the variation takes effect, as not being provided pursuant to pre-6 April 2017 arrangements for the purposes of this Resolution.
(111) If pre-6 April 2017 arrangements are renewed on or after 6 April 2017, this Resolution has effect as if those arrangements were entered into at the beginning of the day on which the renewal takes effect (and are distinct from the arrangements existing immediately before that day).
(112) In paragraph (111) the reference to renewal includes a renewal which takes effect automatically.
(113) In paragraph (110) the reference to variation does not include any variation which is required in connection with accidental damage to a benefit provided under the arrangements, or otherwise for reasons beyond the control of the parties to the arrangements.
(114) In paragraph (110) the reference to variation does not include any variation which occurs in connection with a person’s entitlement to statutory sick pay, statutory maternity pay, statutory adoption pay, statutory paternity pay or statutory shared parental pay.
(115) In relation to relevant school fee arrangements which were entered into before 6 April 2017—
(a) paragraph (109) is to be read as if it did not include a reference to paragraph (85);
(b) the amendment made by paragraph (85) has effect for the tax year 2021-22 and subsequent tax years.
(116) Relevant school fee arrangements to which an employee is a party (“the continuing arrangements”) are to be regarded for the purposes of this Resolution as the same arrangements as any relevant school fee arrangements to which the employee was previously a party (“the previous arrangements”) if the continuing arrangements and the previous arrangements relate—
(a) to employment with the same employer,
(b) to the same school, and
(c) to school fees in respect of the same child.
(117) Paragraphs (110) and (111) do not have effect in relation to relevant school fee arrangements.
(118) If a non-cash voucher is provided under pre-6 April 2017 arrangements and is used to obtain anything (whether money, goods or services) that is provided on or after 6 April 2018 (“delayed benefits”), so much of the benefit of the voucher as it is reasonable to regard as being applied to obtain the delayed benefits is to be treated for the purposes of this Resolution as not having been provided pursuant to pre-6 April 2017 arrangements.
(119) For the purposes of this Resolution arrangements are “relevant school fee arrangements” if the benefit mentioned in section 69A(1) of the Income Tax (Earnings and Pensions) Act 2003 consists in the payment or reimbursement (in whole or in part) of, or a waiver or reduction of, school fees.
(120) In this Resolution—
(a) “arrangements” means optional remuneration arrangements (as defined in section 69A of the Income Tax (Earnings and Pensions) Act 2003);
(b) “benefit” includes any benefit or facility, regardless of the manner of providing it;
(c) “non-cash voucher” has the same meaning as in Chapter 4 of Part 3 of the Income Tax (Earnings and Pensions) Act 2003;
(d) “pre-6 April 2017 arrangements” means arrangements which are entered into before 6 April 2017.
And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
9. TAXABLE BENEFITS (MAKING GOOD)
Resolved,
That provision may be made about making good the cost of taxable benefits.
10. Taxable Benefits (Assets made available without transfer)
Resolved,
That—
(1) The Income Tax (Earnings and Pensions) Act 2003 is amended as follows.
(2) In section 205 (cost of taxable benefit subject to the residual charge: asset made available without transfer)—
(a) in subsection (1), for paragraph (a) substitute—
“(a) the benefit consists in an asset being made available for private use, and”,
(b) after subsection (1) insert—
“(1A) In this section and section 205A, “private use” means private use by the employee or a member of the employee’s family or household.
(1B) ) For the purposes of subsection (1) and sections 205A and 205B, an asset made available in a tax year for use by the employee or a member of the employee’s family or household is to be treated as made available throughout the year for private use unless—
(a) at all times in the year when it is available for use by the employee or a member of the employee’s family or household, the terms under which it is made available prohibit private use, and
(b) no private use is made of it in the year.
(1C) The cost of the taxable benefit is—
(a) the annual cost of the benefit determined in accordance with subsection (2), less
(b) any amount required to be deducted by section 205A (deduction for periods when asset unavailable for private use).
(1D) In certain cases, the cost of the taxable benefit is calculated under this section in accordance with section 205B (reduction of cost of taxable benefit where asset is shared).”, and
(c) in subsection (2), in the words before paragraph (a), for “cost of the taxable” substitute “annual cost of the”.
(3) After section 205 insert—
“Deduction for periods when asset unavailable for private use
(1) A deduction is to be made under section 205(1C)(b) if the asset mentioned in section 205(1) has been unavailable for private use on any day during the tax year concerned.
(2) For the purposes of this section an asset is “unavailable” for private use on any day if—
(a) that day falls before the day on which the asset is first available to the employee,
(b) that day falls after the day on which the asset is last available to the employee,
(c) for more than 12 hours during that day the asset—
(i) is not in a condition fit for use,
(ii) is undergoing repair or maintenance,
(iii) could not lawfully be used,
(iv) is in the possession of a person who has a lien over it and who is not the employer, not a person connected with the employer, not the employee, not a member of the employee’s family and not a member of the employee’s household, or
(v) is used in a way that is neither use by, nor use at the direction of, the employee or a member of the employee’s family or household, or
(d) on that day the employee—
(i) uses the asset in the performance of the duties of the employment, and
(ii) does not use the asset otherwise than in the performance of the duties of the employment.
(3) The amount of the deduction is given by—
Where—
U is the number of days, in the tax year concerned, on which the asset is unavailable for private use,
Y is the number of days in that year, and
A is the annual cost of the benefit of the asset determined under section 205(2).
(4) The reference in subsection (2)(a) to the time when the asset is first available to the employee is to the earliest time when the asset is made available, by reason of the employment and without any transfer of the property in it, for private use.
(5) The reference in subsection (2)(b) to the time when the asset is last available to the employee is to the last time when the asset is made available, by reason of the employment and without any transfer of the property in it, for private use.
205B Reduction of cost of taxable benefit where asset is shared
(1) This section applies where the cost of an employment-related benefit (“the taxable benefit”) is to be determined under section 205.
(2) If, for the whole or part of the tax year concerned, the same asset is available for more than one employee’s private use at the same time, the total of the amounts which are the cost of the taxable benefit for each of those employees is to be limited to the annual cost of the benefit of the asset determined in accordance with section 205(2).
(3) The cost of the taxable benefit for each employee is determined by taking the amount given by section 205(1C) and then reducing that amount on a just and reasonable basis.
(4) For the purposes of this section, an asset is available for an employee’s private use if it is available for private use by the employee or a member of the employee’s family or household.”
(4) In section 365 (deductions where employment-related benefit provided)—
(a) in subsection (1)—
(i) omit the “and” at the end of paragraph (a), and
(ii) after that paragraph insert—
“(aa) the cost of the benefit was determined under section 204 or 206, and”,
(b) in subsection (3), for “sections 204 to 206” substitute “section 204 or 206”, and
(c) in the heading, for “employment-related benefit” substitute “certain employment-related benefits”.
(5) The amendments made by this Resolution have effect for the tax year 2017-18 and subsequent tax years.
And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
11. Pensions
Resolved,
That provision may be made about the taxation of pensions.
12. Pensions (Offshore Transfers)
Resolved,
That—
(1) Schedule 34 to the Finance Act 2004 (non-UK pension schemes: application of certain charges) is amended as follows.
(2) Paragraph 1 (application of member payment charges to relevant non-UK schemes) is amended as follows.
(3) After sub-paragraph (6) insert—
“(6A) There are three types of relevant transfer—
(a) an original relevant transfer,
(b) a subsequent relevant transfer, and
(c) any other (including, in particular, all relevant transfers before 9 March 2017).
(6B) “An original relevant transfer” is—
(a) a relevant transfer within sub-paragraph (6)(a) made on or after 9 March 2017,
(b) a relevant transfer within sub-paragraph (6)(b), made on or after 9 March 2017, of the whole or part of the UK tax-relieved fund of a relieved member of a qualifying recognised overseas pension scheme, or
(c) a relevant transfer within sub-paragraph (6)(b), made on or after 6 April 2017, of the whole or part of the UK tax-relieved fund of a relieved member of a relevant non-UK scheme that is not a qualifying recognised overseas pension scheme.
(6C) The sums or assets transferred as a result of an original relevant transfer constitute a ring-fenced transfer fund, and the key date for that fund is the date of the transfer.
(6D) Where in the case of a ring-fenced transfer fund (“the source fund”) there is a relevant transfer of the whole or part of the fund—
(a) the sums or assets transferred as a result of the transfer constitute a ring-fenced transfer fund,
(b) that fund has the same key date as the source fund, and
(c) the transfer is “a subsequent relevant transfer”, and is not an original relevant transfer.
(6E) Sub-paragraph (6D) applies whether the source fund is a ring-fenced transfer fund as a result of sub-paragraph (6C) or as a result of sub-paragraph (6D).
(6F) The Commissioners for Her Majesty’s Revenue and Customs may by regulations provide that sums or assets identified in accordance with the regulations are not included in a ring-fenced transfer fund as a result of sub-paragraph (6D)(a).”
(4) Paragraph 2 (member payment provisions apply to payments out of non-UK schemes if member is UK resident or has been UK resident in any of the preceding 5 tax years) is amended as follows.
(5) The existing text becomes sub-paragraph (1).
(6) In that sub-paragraph, after “scheme” insert “so far as it is referable to 5-year-rule funds”.
(7) After that sub-paragraph insert—
“(2) The member payment provisions do not apply in relation to a payment made (or treated by this Part as made) to or in respect of a relieved member of a relevant non-UK scheme so far as it is referable to 10-year rule funds unless the member—
(a) is resident in the United Kingdom when the payment is made (or treated as made), or
(b) although not resident in the United Kingdom at that time, has been resident in the United Kingdom earlier in the tax year in which the payment is made (or treated as made) or in any of the 10 tax years immediately preceding that year.
(3) The member payment provisions do not apply in relation to a payment made (or treated by this Part as made) to or in respect of a transfer member of a relevant non-UK scheme, so far as it is referable to any particular ring-fenced transfer fund of the member’s under the scheme which has a key date of 6 April 2017 or later, unless—
(a) the member is resident in the United Kingdom when the payment is made (or treated as made), or
(b) although the member is not resident in the United Kingdom at that time—
(i) the member has been resident in the United Kingdom earlier in the tax year containing that time, or
(ii) the member has been resident in the United Kingdom in any of the 10 tax years immediately preceding the tax year containing that time, or
(iii) that time is no later than the end of 5 years beginning with the key date for the particular fund.
(4) In this paragraph—
“5-year rule funds”, in relation to a payment to or in respect of a relieved member of a relevant non-UK scheme, means so much of the member’s UK tax-relieved fund under the scheme as represents tax-relieved contributions, or tax-exempt provision, made under the scheme before 6 April 2017;
“5-year rule funds”, in relation to a payment to or in respect of a transfer member of a relevant non-UK scheme, means—
(a) the member’s relevant transfer fund under the scheme, and
(b) any of the member’s ring-fenced transfer funds under the scheme that has a key date earlier than 6 April 2017;
“10-year rule funds”, in relation to a payment to or in respect of a relieved member of a relevant non-UK scheme, means so much of the member’s UK tax-relieved fund under the scheme as represents tax-relieved contributions, or tax-exempt provision, made under the scheme on or after 6 April 2017.
(5) See also—
paragraph 1(6C), (6D) and (6F) (meaning of “ring-fenced transfer fund”),
paragraph 3 (meaning of “UK tax-relieved fund”, “tax-relieved contributions” and “tax-exempt provision” etc), and
paragraph 4 (meaning of “relevant transfer fund” etc).”
(8) Paragraph 3 (payments to or in respect of relieved members of schemes) is amended as follows.
(9) After sub-paragraph (5) insert—
“(5A) The Commissioners for Her Majesty’s Revenue and Customs may by regulations provide that, in circumstances specified in the regulations, something specified in the regulations is to be treated as done by, to in respect of or in the case of a relieved member of a relevant non-UK scheme.”
(10) In sub-paragraph (6) (power to specify whether payments by scheme are referable to UK tax-relieved fund) after “payments made (or treated as made) by” insert “, or other things done by or to or under or in respect of or in the case of,”.
(11) After sub-paragraph (7) insert—
“(8) Where regulations under sub-paragraph (6) make provision for a payment or something else to be treated as referable to a member’s UK tax-relieved fund under a scheme, regulations under that sub-paragraph may make provision for the payment or thing, or any part or aspect of the payment or thing, also to be treated as referable to a particular part of that fund.”
(12) Paragraph 4 (payments to or in respect of transfer members of schemes) is amended as follows.
(13) In sub-paragraph (1), after “relevant transfer fund” insert “, or ring-fenced transfer funds,”.
(14) In sub-paragraph (2) (meaning of “relevant transfer fund”), before “so much of” insert “, subject to sub-paragraph (3A),”.
(15) After sub-paragraph (3) insert—
“(3A) The member’s relevant transfer fund under the scheme does not include sums or assets that are in any of the member’s ring-fenced transfer funds under the scheme.”
(16) After sub-paragraph (4) insert—
“(5) The Commissioners for Her Majesty’s Revenue and Customs may by regulations provide that, in circumstances specified in the regulations, something specified in the regulations is to be treated as done by, to, in respect of or in the case of a transfer member of a relevant non-UK scheme.
(6) Regulations made by the Commissioners for Her Majesty’s Revenue and Customs may make provision for determining whether payments or transfers made (or treated as made) by, or other things done by or to or under or in respect of or in the case of, a relevant non-UK scheme are to be treated as referable to a member’s ring-fenced transfer funds under the scheme (and so whether or not they reduce the funds or any of them).
(7) Where regulations under sub-paragraph (6) make provision for a payment or transfer or something else to be treated as referable to a member’s ring-fenced transfer funds under a scheme, regulations under that sub-paragraph may make provision for the payment or transfer or other thing, or any part or aspect of the payment or transfer or thing, also to be treated as referable to a particular one of those funds.
(17) In paragraph 7(2)(c) (regulations about application of member payment provisions), after “relevant transfer fund” insert “or ring-fenced transfer funds”.
(18) Paragraph 9ZB (application of section 227G) is amended as follows.
(19) In sub-paragraph (2), after “relevant transfer fund” insert “or ring-fenced transfer funds”.
(20) After sub-paragraph (3) insert—
“(4) The reference in sub-paragraph (2) to the individual’s ring-fenced transfer funds under the relevant non-UK scheme is to be read in accordance with paragraph 1.”
(21) The amendments made by paragraphs (4) to (7) of this Resolution apply in relation to payments made (or treated as made) on or after 6 April 2017, and the amendments made by paragraphs (3) and (8) to (20) of this Resolution come into force on 9 March 2017.
(22) Section 576A of the Income Tax (Earnings and Pensions) Act 2003 (as it applies where the year of departure is the tax year 2013-14 or a later tax year) is amended as follows.
(23) In subsection (6)(b) (pension income: temporary non-residents: non-application where payment not referable to relevant transfer fund)—
(c) for “not referable” substitute “referable neither”, and
(d) after “relevant transfer fund” insert “, nor to the member’s ring-fenced transfer funds,”.
(24) In subsection (10) (interpretation), at the end insert—
““member’s ring-fenced transfer fund” (see paragraph 1(6C) and (6D).”
(25) Section 576A of the Income Tax (Earnings and Pensions) Act 2003, as it applies where the year of departure is the tax year 2012-13 or an earlier tax year, is amended as follows.
(26) In subsection (6) (pension income: temporary non-residents: non-application unless payment referable to relevant transfer fund), after “member’s relevant transfer fund” insert “, or the member’s ring-fenced transfer funds,”.
(27) In subsection (8) (interpretation), before the definition of “scheme pension” insert—
““member’s ring-fenced transfer funds” has the same meaning as in that Schedule (see paragraph 1(6C) and (6D));”.
(28) The amendments made by paragraphs (22) to (27) of this Resolution apply in relation to relevant withdrawals on or after 6 April 2017.
(29) In Part 4 of the Finance Act 2004 (pension schemes etc), after section 244 insert—
“Non-UK schemes: the overseas transfer charge
244A Overseas transfer charge
(1) A charge to income tax, to be known as the overseas transfer charge, arises where—
(a) a recognised transfer is made to a QROPS, or
(b) an onward transfer is made during the relevant period for the original transfer, and
and the transfer is not excluded from the charge by or under any of sections 244B to 244H.
(2) Sections 244B to 244H are subject to section 244I (circumstances in which exclusions do not apply).
(3) In this group of sections, an “onward transfer” is a transfer of sums or assets held for the purposes of, or representing accrued rights under, an arrangement under a QROPS or former QROPS in relation to a member so as to become held for the purposes of, or to represent rights under, an arrangement under another QROPS in relation to that person as a member of that other QROPS.
(4) In this group of sections “relevant period” means—
(a) in the case of a recognised transfer made on 6 April in any year, the 5 years beginning with the date of the transfer,
(b) in the case of any other recognised transfer, the period consisting of the combination of—
(i) the period beginning with the date of the transfer and ending with the next 5 April, and
(ii) the 5 years beginning at the end of that initial period,
(c) in the case of an onward transfer, the period—
(i) beginning with the date of the transfer, and
(ii) ending at the end of the relevant period for the original transfer (see paragraphs (a) and (b) or, as the case may be, paragraphs (d) and (e)),
(d) in the case of a relevant transfer that—
(i) is made on 6 April in any year, and
(ii) is the original transfer for an onward transfer,
the 5 years beginning with the date of the relevant transfer, and
(e) in the case of a relevant transfer that—
(i) is made otherwise than on 6 April in any year, and
(ii) is the original transfer for an onward transfer,
the period consisting of the combination of: the period beginning with the date of the relevant transfer and ending with the next 5 April; and the 5 years beginning at the end of that initial period.
(5) In this group of sections “the original transfer”, in relation to an onward transfer, means (subject to subsection (6))—
(a) the recognised transfer in respect of which the following conditions are met—
(i) it is from a registered pension scheme to a QROPS,
(ii) the sums and assets transferred by the onward transfer directly or indirectly derive from those transferred by it, and
(iii) it is more recent than any other recognised transfer in respect of which the conditions in sub-paragraphs (i) and (ii) are met, or
(b) where there is no such recognised transfer, the relevant transfer (see paragraph 1(6) of Schedule 34) in respect of which the following conditions are met—
(i) it is from a relevant non-UK scheme (see paragraph 1(5) of Schedule 34),
(ii) it is a transfer of the whole or part of the UK-tax relieved fund (see paragraph 3 of Schedule 34) of a member of the scheme,
(iii) it is to a QROPS, and
(iv) the sums and assets transferred by the onward transfer directly or indirectly derive from those transferred by it.
(6) Where apart from this subsection there would be different original transfers for different parts of an onward transfer, each such part of the onward transfer is to be treated as a separate onward transfer for the purposes of this group of sections.
(7) In this section and sections 244B to 244N—
“QROPS” means a qualifying recognised overseas pension scheme, and “former QROPS” means a scheme that has at any time been a QROPS;
“ring-fenced transfer fund”, in relation to a QROPS or former QROPS, has the meaning given by paragraph 1 of Schedule 34;
“this group of sections” means this section and sections 244B to 244N.
244B Exclusion: member and receiving scheme in same country
(1) A recognised transfer to a QROPS is excluded from the overseas transfer charge if during the relevant period—
(a) the member is resident in the country or territory in which the QROPS is established, and
(b) there is no onward transfer—
(i) for which the recognised transfer is the original transfer, and
(ii) which is not excluded from the charge.
(2) If the member is resident in that country or territory at the time of the transfer mentioned in subsection (1), it is to be assumed for the purposes of subsection (1) that the member will be resident in that country or territory during the relevant period; but if, at a time before the end of the relevant period, the transfer ceases to be excluded by subsection (1) otherwise than by reason of the member’s death—
(a) that assumption is from that time no longer to be made, and
(b) the charge on the transfer is treated for the purposes of sections 244L and 254 as charged at that time.
(3) An onward transfer to a QROPS (“transfer A”) is excluded from the overseas transfer charge if during so much of the relevant period as is after the time of the transfer A—
(a) the member is resident in the country or territory in which the QROPS is established, and
(b) there is no subsequent onward transfer that—
(i) is of sums and assets which, in whole or part, directly or indirectly derive from those transferred by transfer A, and
(ii) is not excluded from the charge.
(4) If the member is resident in that country or territory at the time of transfer A, it is to be assumed for the purposes of subsection (3) that the member will be resident in that country or territory during so much of the relevant period as is after the time of transfer A; but if, at a time before the end of the relevant period, the transfer ceases to be excluded by subsection (3) otherwise than by reason of the member’s death—
(a) that assumption is from that time no longer to be made, and
(b) the charge on transfer A is treated for the purposes of sections 244L and 254 as charged at that time.
244C Exclusion: member and receiving scheme in EEA states
(1) This section applies to a transfer to a QROPS established in an EEA state.
(2) If the transfer is a recognised transfer, the transfer is excluded from the overseas transfer charge if during the relevant period—
(a) the member is resident in an EEA state (whether or not the same EEA state throughout that period), and
(b) there is no onward transfer—
(i) for which the recognised transfer is the original transfer, and
(ii) which is not excluded from the charge.
(3) If the member is resident in an EEA state at the time of the recognised transfer mentioned in subsection (2), it is to be assumed for the purposes of this section that the member will be resident in an EEA state during the relevant period; but if, at a time before the end of the relevant period, the transfer ceases be excluded by subsection (2) otherwise than by reason of the member’s death—
(a) that assumption is from that time no longer to be made, and
(b) the charge on the transfer is treated for the purposes of sections 244L and 254 as charged at that time.
(4) If the transfer is an onward transfer (“transfer B”), the transfer is excluded from the overseas transfer charge if during so much of the relevant period as is after the time of the onward transfer—
(a) the member is resident in an EEA state (whether or not the same EEA state at all of those times), and
(b) there is no subsequent onward transfer that—
(i) is of sums and assets which, in whole or part, directly or indirectly derive from those transferred by transfer B, and
(ii) is not excluded from the charge.
(5) If the member is resident in an EEA state at the time of transfer B, it is to be assumed for the purposes of subsection (4) that the member will be resident in an EEA state during so much of the relevant period as is after the time of transfer B; but if, at a time before the end of the relevant period, the transfer ceases to be excluded by subsection (4) otherwise than by reason of the member’s death—
(a) that assumption is from that time no longer to be made, and
(b) the charge on transfer B is treated for the purposes of sections 244L and 254 as charged at that time.
244D Exclusion: receiving scheme is an occupational pension scheme
A transfer to a QROPS is excluded from the overseas transfer charge if—
(a) the QROPS is an occupational pension scheme, and
(b) when the transfer is made, the member is an employee of a sponsoring employer of the QROPS.
244E Exclusion: receiving scheme set up by international organisation
(1) A transfer to a QROPS is excluded from the overseas transfer charge if—
(a) the QROPS is established by an international organisation and has effect so as to provide benefits for, or in respect of, past service as an employee of the organisation, and
(b) when the transfer is made, the member is an employee of the organisation.
(2) In this section “international organisation” means an organisation to which section 1 of the International Organisations Act 1968 applies by virtue of an Order in Council under subsection (1) of that section.
244F Exclusion: receiving scheme is an overseas public service scheme
(1) A transfer to a QROPS is excluded from the overseas transfer charge if—
(a) the QROPS is an overseas public service pension scheme, and
(b) when the transfer is made, the member is an employee of an employer that participates in the scheme.
(2) A QROPS is an “overseas public service pension scheme” for the purposes of this section if—
(a) either—
(i) it is established by or under the law of the country or territory in which it is established, or
(ii) it is approved by the government of that country or territory, and
(b) it is established solely for the purpose of providing benefits to individuals for or in respect of services rendered to—
(i) that country or territory, or
(ii) any political subdivision or local authority of that country or territory.
(3) For the purposes of this section, an employer participates in a QROPS that is an overseas public service pension scheme if the scheme has effect so as to provide benefits to or in respect of any or all of the employees of the employer in respect of their employment by the employer.
244G Exclusions: avoidance of double charge, and transitional protections
(1) A recognised transfer to a QROPS is excluded from the overseas transfer charge if it is made in execution of a request made before 9 March 2017.
(2) An onward transfer (“the current onward transfer”) is excluded from the overseas transfer charge if—
(a) the charge was paid on the original transfer and the amount paid is not repayable, or
(b) the charge was paid on an onward transfer (“the earlier onward transfer”) in respect of which the conditions in subsection (4) are met and the amount paid is not repayable, or
(c) the original transfer was made before 9 March 2017, or
(d) the original transfer was made on or after 9 March 2017 in execution of a request made before 9 March 2017.
(3) An onward transfer is excluded from the overseas transfer charge so far as the transfer is made otherwise than out of the member’s ring-fenced transfer funds under the scheme from which the onward transfer is made.
(4) The conditions mentioned in subsection (2)(b) are—
(a) that the earlier onward transfer was made before the current onward transfer,
(b) that the earlier onward transfer was made after the original transfer, and
(c) that all the sums and assets transferred by the current onward transfer directly or indirectly derive from those transferred by the earlier onward transfer.
244H Power to provide for further exclusions
The Commissioners for Her Majesty’s Revenue and Customs may by regulations make provision for a recognised transfer to a QROPS, or an onward transfer, to be excluded from the overseas transfer charge if the transfer is of a description specified in the regulations.
244I Circumstances in which exclusions do not apply
(1) Subsection (2) applies if a recognised transfer to a QROPS, or an onward transfer, would (but for this section) be excluded from the overseas transfer charge by any of sections 244B to 244F.
(2) The transfer is not excluded from the charge if the member has, in connection with the transfer, failed to comply with the relevant information regulation.
(3) In subsection (2) “the relevant information regulation” means whichever of the following is applicable—
(a) regulation 11BA of the Registered Pension Schemes (Provision of Information) Regulations 2006 (S.I. 2006/567), or any regulation having effect in place of any of that regulation, as (in either case) from time to time amended, and
(b) regulation 3AE of the Pension Schemes (Information Requirements for Qualifying Overseas Pension Schemes, Qualifying Recognised Overseas Pension Schemes and Corresponding Relief) Regulations 2006 (S.I. 2006/208), or any regulation having effect in place of any of that regulation, as (in either case) from time to time amended.
244J Persons liable to charge
(1) In the case of a recognised transfer to a QROPS, the persons liable to the overseas transfer charge are—
(a) the scheme administrator of the registered pension scheme from which the transfer is made, and
(b) the member
and their liability is joint and several.
(2) In the case of an onward transfer, the persons liable to the overseas transfer charge are—
(a) the scheme manager of the QROPS, or former QROPS, from which the transfer is made, and
(b) the member
and their liability is joint and several.
(3) Subsections (1) and (2) are subject to subsection (4), and subsections (2) and (4) are subject to subsection (5).
(4) If a transfer is one required by section 244B or 244C to be initially assumed to be excluded by that section but an event occurring before the end of the relevant period means that the transfer is not so excluded, the persons liable to the overseas transfer charge in the case of the transfer are—
(a) the scheme manager of any QROPS, or former QROPS, under which the member has, at the time of the event, ring-fenced transfer funds in which any of the sums and assets referred to in section 244K(6) in the case of the transfer are represented, and
(b) the member,
and their liability is joint and several.
(5) The scheme manager of a former QROPS is liable to the overseas transfer charge in the case of a transfer (“the transfer concerned”) only if the former QROPS—
(a) was a QROPS when a relevant inward transfer was made, and
(b) where a relevant inward transfer was made before 9 March 2017, was a QROPS at the start of 9 March 2017;
and here “relevant inward transfer” means a recognised or onwards transfer to the former QROPS (at a time when it was a QROPS) of sums and assets which, to any extent, are represented by sums or assets transferred by the transfer concerned.
(6) A person is liable to the overseas transfer charge whether or not—
(a) that person, and
(b) any other person who is liable to the charge,
are resident or domiciled in the United Kingdom.
244K Amount of charge
(1) Where the overseas transfer charge arises in the case of a transfer, the charge is 25% of the transferred value.
(2) If the transfer is from a registered pension scheme established in the United Kingdom, the transferred value is the total of—
(a) the amount of any sums transferred, and
(b) the value of any assets transferred,
but this is subject to subsections (5) to (9).
(3) If the transfer is from a registered pension scheme established in a country or territory outside the United Kingdom, the transferred value is the total of—
(a) the amount of any sums transferred that are attributable to UK-relieved funds of the scheme, and
(b) the value of any assets transferred that are attributable to UK-relieved funds of the scheme,
but this is subject to subsections (5) to (9).
(4) If the transfer is from a QROPS or former QROPS, the transferred value is the total of—
(a) the amount of any sums transferred that are attributable to the member’s ring-fenced transfer funds under the scheme, and
(b) the value of any assets transferred that are attributable to the member’s ring-fenced transfer funds under the scheme,
but this is subject to subsections (5) to (9).
(5) If the lifetime allowance charge arises in the case of the transfer and is to be deducted from the transfer, paragraphs (a) and (b) of subsections (2) to (4) are to be read as referring to what is to be transferred after deduction of the lifetime allowance charge.
(6) If the transfer is one initially assumed to be excluded by section 244B or 244C but an event occurring before the end of the relevant period means that the transfer is not so excluded, the sums and assets mentioned in whichever of subsections (2) to (4) is applicable include only those that at the time of the event are represented in any of the member’s ring-fenced transfer funds under any QROPS or former QROPS.
(7) If the operator pays the charge on the transfer and does so—
(a) otherwise than by deduction from the transfer, and
(b) out of sums and assets held for the purposes of, or representing accrued rights under, the scheme from which the transfer is made,
the transferred value is the amount given by subsections (2) to (6) grossed up by reference to the rate specified in subsection (1).
(8) If the operator pays the charge on the transfer and does so by deduction from the transfer, the transferred value is the amount given by subsections (2) to (6) before the deduction.
(9) If the member pays the charge on the transfer, the transferred value is the amount given by subsections (2) to (6) without any deduction for the charge.
(10) If the lifetime allowance charge arises in the case of the transfer, the provisions of this Part relating to the lifetime allowance charge apply (whether or not in relation to the transfer) as if the overseas transfer charge did not arise in the case of the transfer.
(11) In this section—
“the operator” means—
(a) the scheme administrator of the scheme from which the transfer is to be made if that scheme is a registered pension scheme, or
(b) the scheme manager of the scheme from which the transfer is to be made if that scheme is a QROPS or former QROPS;
“UK-relieved funds”, in relation to a registered pension scheme established in a country or territory outside the United Kingdom, has the meaning given by section 242B.
244L Accounting for overseas transfer charge by scheme managers
(1) In this section “charge” means overseas transfer charge for which the scheme manager of a QROPS or former QROPS is liable.
(2) The Commissioners for Her Majesty’s Revenue and Customs may by regulations make provision for or in connection with—
(a) the payment of charge, including due dates for payment,
(b) the charging of interest on charge not paid on or before its due date,
(c) notification by the scheme manager of errors in information provided by the scheme manager to the Commissioners in connection with charge or the scheme manager’s liability for overseas transfer charge,
(d) repayments to scheme managers under section 244M of amounts paid by way of charge, and
(e) the making of assessments, repayments or adjustments in cases where the correct amount of charge has not been paid by the due date for payment of the charge.
(3) The regulations may, in particular—
(a) modify the operation of any provision of the Tax Acts, or
(b) provide for the application of any provision of the Tax Acts (with or without modification).
244M Repayments of charge on subsequent excluding events
(1) This section applies if—
(a) overseas transfer charge arose on a transfer at the time the transfer was made, and
(b) at a time during the relevant period for the transfer, circumstances arise such that, had those circumstances existed at the time the transfer was made, the transfer would at the time it was made have been excluded from the charge by sections 244B to 244F or under section 244H.
(2) Any amount paid in respect of charge on the transfer is to be repaid by the Commissioners for Her Majesty’s Revenue and Customs so far as not already repaid.
(3) Subsection (2) does not give rise to entitlement to repayment of, or cancellation of liabilities to, interest or penalties in respect of late payment of charge on the transfer.
(4) Repayment under this section to the scheme administrator of a registered pension scheme, or the scheme manager of a QROPS or former QROPS, is conditional on prior compliance with any requirements to give information to the Commissioners, about the circumstances in which the right to the repayment arises, that are imposed on the prospective recipient under section 169 or 251 (but repayment is not conditional on compliance with any time limits so imposed for compliance with any such requirements).
(5) Repayment under this section is not a relievable pension contribution.
(6) Where—
(a) an amount is repaid under this section to the scheme administrator of a registered pension scheme, and
(b) there is a recognised transfer from that scheme to a QROPS of some or all of that amount,
that transfer is not benefit crystallisation event 8 in relation to the member (but this does not affect the amount crystallised by the benefit crystallisation event consisting of the making of the transfer mentioned in subsection (1)).
(7) Repayment under this section to the member is conditional on making a claim, and such a claim must be made no later than one year after the end of the relevant period for the transfer concerned.
(8) The Commissioners for Her Majesty’s Revenue and Customs may by regulations make provision for or in connection with claims or repayments under this section, including provision—
(a) requiring claims,
(b) about who may claim,
(c) imposing conditions for making claims, including conditions about time limits,
(d) as to additional circumstances in which repayments may be made,
(e) modifying the operation of any provision of the Tax Acts, or
(f) applying any provision of the Tax Acts (with or without modifications).
244N Discharge of liability of scheme administrator or manager
(1) In this section “operator” means—
(a) the scheme administrator of a registered pension scheme, or
(b) the scheme manager of a QROPS or former QROPS.
(2) If an operator is liable under section 244J, the operator may apply to an officer of Revenue and Customs for the discharge of the operator’s liability on the following ground.
(3) The ground is that—
(a) the operator reasonably believed that there was no liability to the offshore transfer charge on the transfer concerned, and
(b) in all the circumstances of the case, it would not be just and reasonable for the operator to the charge on the transfer.
(4) On receiving an application under subsection (2), an officer of Revenue and Customs must decide whether to discharge the operator’s liability.
(5) An officer of Revenue and Customs must notify the operator of the decision on the application.
(6) The discharge of the operator’s liability does not affect the liability of any other person to overseas transfer charge on the transfer concerned.
(7) The Commissioners for Her Majesty’s Revenue and Customs may by regulations make provision supplementing this section, including provision for time limits for making an application under this section.”
(30) Part 4 of the Finance Act 2004 is further amended as follows.
(31) Section 169 (recognised transfers, and definition and obligations of a QROPS) is amended as follows.
(32) In subsection (2) (what makes a recognised overseas pension scheme a QROPS), after paragraph (b) insert—
“(ba) the scheme manager has confirmed to an officer of Revenue and Customs that the scheme manager understands the scheme manager’s potential liability to overseas transfer charge and has undertaken to such an officer to operate the charge including by meeting the scheme manager’s liabilities to the charge,”.
(33) After subsection (2) insert—
“(2A) Regulations may make provision as to—
(a) information that is to be included in, or is to accompany, a notification under subsection (2)(a);
(b) the way and form in which such a notification, or any required information or evidence, is to be given or provided.”
(34) After subsection (4) insert—
“(4ZA) Regulations may require a member, or former member, of a QROPS or former QROPS to give information of a prescribed description to the scheme manager of a QROPS or former QROPS.”
(35) In subsection (4A) (inclusion of supplementary provision in regulations under subsection (4)), after “(4)” insert “or (4ZA)”.
(36) After subsection (4B) insert—
“(4C) Provision under subsection (2A)(b) or (4A)(a) may, in particular, provide for use of a way or form specified by the Commissioners.”
(37) After subsection (7) insert—
“(7A) Regulations may, in a case where—
(a) any of the sums and assets transferred by a relevant overseas transfer represent rights in respect of a pension to which a person has become entitled under the transferring scheme (“the original pension”), and
(b) those sums and assets are, after the transfer, applied towards the provision of a pension under the other scheme (“the new pension”),
provide that the new pension is to be treated, to such extent as is prescribed and for such of the purposes of this Part as are prescribed, as if it were the original pension.
(7B) For the purposes of subsection (7A), a “relevant overseas transfer” is a transfer of sums or assets held for the purposes of, or representing accrued rights under, a relevant overseas scheme (“the transferring scheme”) so as to become held for the purposes of, or to represent rights under—
(a) another relevant overseas scheme, or
(b) a registered pension scheme,
in connection with a member of that pension scheme.
(7C) In subsection (7B) “relevant overseas scheme” means—
(a) a QROPS, or
(b) a relevant non-UK scheme (see paragraph 1(5) of Schedule 34).
(7D) Regulations under subsection (7A) may—
(a) apply generally or only in specified cases, and
(b) make different provision for different cases.”
(38) In subsection (8) (interpretation)—
(e) in the opening words, after “subsections (4) to (6)” insert “, (7A) to (7D)”, and
(f) in the definition of “relevant requirement”, at the end insert “, or
(c) a requirement to pay overseas transfer charge, or interest on overseas transfer charge, imposed by regulations under section 244L(2) or by an assessment under such regulations.”
(39) After Chapter 5 insert—
“Chapter 5A
Registered pension schemes established outside the United Kingdom
242A Meaning of “non-UK registered scheme”
In this Chapter “non-UK registered scheme” means a registered pension scheme established in a country or territory outside the United Kingdom.
242B Meaning of “UK-relieved funds”
(1) For the purposes of this Chapter, the “UK-relieved funds” of a non-UK registered scheme are sums or assets held for the purposes of, or representing accrued rights under, the scheme—
(a) that (directly or indirectly) represent sums or assets that at any time were held for the purposes of, or represented accrued rights under, a registered pension scheme established in the United Kingdom,
(b) that (directly or indirectly) represent sums or assets that at any time formed the UK tax-relieved fund under a relevant non-UK scheme of a relieved member of that scheme, or
(c) that—
(i) are held for the purposes of, or represent accrued rights under, an arrangement under the scheme relating to a member of the scheme who on any day has been an accruing member of the scheme, and
(ii) in accordance with regulations made by the Commissioners for Her Majesty’s Revenue and Customs, are to be taken to have benefited from relief from tax.
(2) In section 242B “relevant contribution” has the meaning given by regulation 14ZB(8) of the Information Regulations.
(3) Paragraphs (7) and (8) of regulation 14ZB of the Information Regulations (meaning of “accruing member”) apply for the purposes of this section as for those of that regulation.
(4) “The Information Regulations” means the Registered Pension Schemes (Provision of Information) Regulations 2006 (S.I. 2006/567).”
(40) In section 254(6) (regulations about accounting for tax by scheme administrators), after paragraph (b) insert—
“(ba) repayments under section 244M to scheme administrators,”.
(41) In section 255(1) (power to make provision for assessments), after paragraph (d) insert—
“(da) liability of the scheme administrator of a registered pension scheme, or the scheme manager of a qualifying recognised overseas pension scheme or of a former such scheme, to the overseas transfer charge,”.
(42) In section 269(1)(a) (appeal against decision on discharge of liability), before “section 267(2)” insert “section 244N (discharge of liability to overseas transfer charge),”.
(43) In section 9(1A) of the Taxes Management Act 1970 (tax not within the scope of self-assessment), after paragraph (a) insert—
“(aa) is chargeable, on the scheme manager of a qualifying recognised overseas pension scheme or a former such scheme, under Part 4 of the Finance Act 2004,”.
(44) In Schedule 56 to the Finance Act 2009 (penalty for failure to make payments on time), in the Table in paragraph 1, after the entry for item 3 insert—
(45) In regulation 3(1) of the Registered Pension Schemes (Accounting and Assessment) Regulations 2005 (S.I. 2005/3454), in Table 1, at the end insert—
(46) The amendment made by paragraph (45) of this Resolution is to be treated as having been made by the Commissioners for Her Majesty’s Revenue and Customs under the applicable powers to make regulations conferred by section 254 of the Finance Act 2004.
(47) The Pension Schemes (Information Requirements for Qualifying Overseas Pension Schemes, Qualifying Recognised Overseas Pension Schemes and Corresponding Relief) Regulations 2006 (S.I. 2006/208) are amended as follows.
(48) In regulation 1(2) (interpretation), after the definition of “HMRC” insert—
“onward transfer” has the meaning given by section 244A;”.
(49) In regulation 3(2) (duty to provide information to HMRC)—
(a) in sub-paragraph (c), after “no relevant transfer fund remains” insert “and no ring-fenced transfer funds remain”, and
(b) after sub-paragraph (d) insert—
“(da) if the payment is made to a QROPS—
(i) whether the overseas transfer charge arises on the payment,
(ii) if the charge does arise, the transferred value and the amount of charge the scheme manager deducted from the payment before making it,
(iii) if the charge does not arise, why it does not, and
(iv) the total amount or value of the member’s relevant transfer fund, and ring-fenced transfer funds, remaining immediately after the payment;”.
(50) In regulation 3, after paragraph (2) insert—
“(2A) Paragraphs (2B) and (2C) apply where—
(a) a recognised transfer is made to a QROPS, or
(b) an onward transfer is made by a QROPS or former QROPS.
“(2B) Where an event occurring before the end of the relevant period for the transfer (see section 244A(4)) means that the transfer no longer counts as excluded from the overseas transfer charge or that entitlement to repayment under section 244M arises, the scheme manager of the QROPS or former QROPS must, within 90 days after the date the scheme manager is notified of the event, provide to HMRC notification of—
(a) the occurrence, nature and date of the event,
(b) the transferred value of the transfer,
(c) the amount of overseas transfer charge on the transfer,
(d) whether, and to what extent, the scheme manager has accounted, or intends to account, for the charge, and
(e) the total amount or value of the member’s relevant transfer fund, and ring-fenced transfer funds, remaining immediately after the event.
This paragraph is subject to the qualification in paragraph (3A).
(2C) Where the scheme manager of the QROPS or former QROPS becomes aware that the member has at any time in the relevant period for the transfer acquired a new residential address that is neither—
(a) in the country or territory in which the QROPS or former QROPS is established, nor
(b) in an EEA state,
the scheme manager is to notify that address to HMRC within 3 months after the date on which the scheme manager becomes aware of it.”
(51) In regulation 3, after paragraph (3) insert—
“(3A) No obligation arises under paragraph (2B) in relation to a transfer if the following conditions are met—
(a) at the date of the transfer more than 10 years has elapsed since the key date for the ring-fenced transfer fund arising from the transfer (see paragraph 1 of Schedule 34); and
(b) the relevant member to whom the transfer is made is a person to whom the member payment provisions do not apply.”
(52) In regulation 3(6), in the definition of “relevant member”, after “relevant transfer fund” insert “or any ring-fenced transfer fund”.
(53) In regulation 3AB(4), for the words from “as a result” to the end substitute “as a result of—
(a) a transfer of the member’s relevant transfer fund,
(b) a transfer of any of the member’s ring-fenced transfer funds, or
(c) a recognised transfer,
after the date of the relevant event concerned.”
(54) In regulation 3AC—
(a) in paragraph (1)(a), before the “or” at the end of paragraph (i) insert—
“(ia) any of the member’s ring-fenced transfer funds;”, and
(b) in the title omit “relevant”.
(55) In regulation 3AD—
(a) in paragraph (1)(a), before the “or” at the end of paragraph (i) insert—
“(ia) any of the member’s ring-fenced transfer funds;”,
(b) in paragraph (2), after sub-paragraph (a) insert—
“(aa) where any of the transferred sums or assets are referable to the member’s UK-tax relieved fund, the value of so many of them as are referable to tax-relieved contributions, or tax-exempt provision, made under the scheme before 9 March 2017;
(ab) the value of so many of the transferred sums or assets as are referable to any of the member’s ring-fenced transfer funds (if any);”,
(c) in paragraph (2)(b) omit the “and” at the end,
(d) in paragraph (2)(c)(i), after “fund” insert “or any of the member’s ring-fenced transfer funds”,
(e) in paragraph (2)(c), in the words after paragraph (ii)—
(i) omit “it is”, and
(ii) after “the date of that transfer” insert “and the date it was requested”,
(f) in paragraph (2), after sub-paragraph (c) insert—
“(d) whether the overseas transfer charge arises on the transfer;
(e) if the charge does arise on the transfer—
(i) the transferred value of the transfer, and
(ii) the amount in respect of the charge deducted by the scheme manager from the transfer;
(f) if the transfer is excluded from the charge—
(i) the reason for its exclusion, and
(ii) where section 244G(2)(a) or (b) (charge paid on earlier transfer) is the reason for its exclusion, the date of the earlier transfer on which the charge was paid and the amount of charge paid on that earlier transfer; and.”, and
(g) the relevant period for the transfer (see section 244A(4)).”, and
(g) in the title omit “relevant”.
(56) After regulation 3AD insert—
“3AE Information provided by member to QROPS: onward transfers
(1) Paragraph (4) applies where a member of a QROPS or former QROPS makes a request to the scheme manager to make an onward transfer to a QROPS.
(2) But paragraph (4) does not apply if—
(a) the transfer will be excluded from the overseas transfer charge by section 244G, or
(b) the transfer will take after the end of the relevant period (see section 244A(4)) for what would be the original transfer in relation to the requested onward transfer.
(3) In this regulation “original transfer”, in relation to an onward transfer, has the meaning given by section 244A(5).
(4) The member must provide to the scheme manager—
(a) the member’s name, date of birth and principal residential address,
(b) if the member is not UK resident for income tax purposes, the date when the member last ceased to be UK resident for those purposes,
(c) the member’s national insurance number or, where applicable, confirmation that the member does not qualify for a national insurance number,
(d) the name and address of the QROPS to which the transfer is to be made,
(e) the country or territory under the law of which that QROPS is established and regulated,
(f) the reference number, if any, given by the Commissioners for that QROPS,
(g) whether the member knows for certain that the transfer would be excluded from the overseas transfer charge by one of sections 244D, 244E and 244F, and if the member does know that for certain—
(i) the section concerned (if known),
(ii) the name and address of the member’s employer whose connection with the QROPS gives rise to exclusion of the transfer from the charge,
(iii) the member’s job title as an employee of that employer,
(iv) the date the member’s employment with that employer began, and
(v) if known, that employer’s tax reference for that employment, and
(h) the member’s acknowledgement in writing that the member—
(i) is aware that an onward transfer to a qualifying recognised overseas pension scheme may give rise to a liability to overseas transfer charge, and
(ii) is aware of the circumstances in which liability arises, in which liability is excluded from the outset and in which liability is excluded only if conditions continue to be met over a period of time.
(5) The information specified in paragraph (4) must be provided within 60 days beginning with the day the transfer request is made.
(6) The scheme manager must send the member notification of the requirements specified in this regulation within 30 days beginning with that day.
3AF Provision of information about liability for overseas transfer charge
(1) If an onward transfer is made from a QROPS or former QROPS and the overseas transfer charge arises on the transfer, the scheme manager of the QROPS or former QROPS must within 90 days after the date of the transfer provide the member with a notice stating—
(a) the date of the transfer,
(b) that overseas transfer charge arises on the transfer,
(c) the transferred value of the transfer,
(d) amount of the charge on the transfer,
(e) whether, and to what extent, the scheme manager has accounted, or intends to account, for the charge, and
(f) where the scheme manager has accounted for the charge, the date the scheme manager did so.
(2) If an onward transfer is made from a QROPS or former QROPS and the transfer is excluded from the overseas transfer charge by or under sections 244B to 244H, the scheme manager of the QROPS or former QROPS must within 90 days after the date of the transfer provide the member with a notice stating—
(a) the date of the transfer,
(b) that the transfer is excluded from the overseas transfer charge,
(c) the provision by reason of which the transfer is excluded, and
(d) where that provision is section 244B or 244C—
(i) when the relevant period for the transfer ends, and
(ii) how the transfer may turn out not to be excluded as a result of the member changing country or territory of residence within the relevant period for the transfer.
(3) Paragraph (4) applies if—
(a) a recognised transfer is made to a QROPS, or
(b) an onward transfer is made by a QROPS or former QROPS.
(4) Where an event occurring before the end of the relevant period for the transfer (see section 244A(4)) means that the transfer no longer counts as excluded from the overseas transfer charge or that entitlement to repayment under section 244M arises, the scheme manager of the QROPS or former QROPS must, within 90 days after the date the scheme manager is notified of the event, provide the member with a notice stating—
(a) the amount of overseas transfer charge on the transfer,
(b) whether, and to what extent, the scheme manager has accounted, or intends to account, for the charge, and
(c) where the scheme manager has accounted for the charge, the date the scheme manager did so.
3AG Accounting for overseas transfer charge on onward transfers
(1) Paragraph (2) applies where—
(a) overseas transfer charge arises on an onward transfer from a QROPS or former QROPS,
(b) the scheme manager has notified HMRC of the transfer or, where applicable, of the event triggering payability of the charge on the transfer, and
(c) HMRC have provided the scheme manager with an accounting reference for paying the charge on the transfer.
(2) The scheme manager must pay the charge to HMRC using the accounting reference.
(3) Payment of the charge is due at the end of the 91 days beginning with the date of issue of the accounting reference.
3AH Assessments of unpaid overseas transfer charge on onward transfers
(1) Where the correct amount of overseas transfer charge due from a scheme manager under regulation 3AG on an onward transfer has not been paid by the time it is due, an officer of Revenue and Customs must issue an assessment to tax to the scheme manager.
(2) Tax assessed under this regulation is payable within 30 days after the issue of the notice of assessment.
3AI Interest on overdue overseas transfer charge
(1) Tax which—
(a) becomes due and payable in accordance with regulation 3AG, or
(b) is assessed under regulation 3AH,
carries interest at the prescribed rate from the due date under regulation 3AG until payment (“the interest period”).
(2) Paragraph (1) applies even if the due date is a non-business day as defined by section 92 of the Bills of Exchange Act 1882.
(3) The “prescribed rate” means the rate applicable under section 178 of the Finance Act 1989 for the purposes of section 86 of TMA.
(4) Any change made to the prescribed rate during the interest period applies to the unpaid amount from the date of the change.
3AJ Adjustments, repayments and interest on overpaid charge
(1) If the correct tax due under regulation 3AG has not been paid on or before the due date, an officer of Revenue and Customs may make such adjustments or repayments as may be required for securing that the resulting liabilities to tax (including interest on unpaid or overpaid tax) whether of the scheme manager or of any other person are the same as they would have been if the correct tax had been paid.
(2)Tax overpaid which is repaid to the scheme manager or any other person carries interest at the prescribed rate from the later of the due date and the date on which the tax was paid until the date of repayment (“the interest period”).
(3) The “prescribed rate” means the rate applicable under section 178 of the Finance Act 1989 for the purposes of section 824 of the Income and Corporation Taxes Act 1988.
(4) Any change to the prescribed rate during the interest period applies to the overpaid amount from the date of the change.”
(57) In regulation 3B (information on cessation of a QROPS), after “relevant transfer fund”, in both places, insert “, or ring-fenced transfer fund,”.
(58) In regulation 3C (correction of information)—
(a) in paragraph (3)(a)(i), after “existence” insert “or, where the information relates to a ring-fenced transfer fund in respect of the relevant member, more than 10 years has elapsed beginning with the date on which that ring-fenced transfer fund came into existence”, and
(b) in paragraph (3)(b), at the end insert “and there are no ring-fenced transfer funds”.
(59) In regulation 5(1) (application of provisions providing for penalties)—
(a) after “3(2),” insert “(2B) or (2C),”, and
(b) before “or 3C(1)” insert “, 3AE(6), 3AF”.
(60) The amendments made by paragraphs (47) to (59) of this Resolution—
(a) are, so far as they insert new regulation 3AE(1) to (5), to be treated as having been made by the Commissioners for Her Majesty’s Revenue and Customs under the powers to make regulations conferred by section 169(4ZA) of the Finance Act 2004,
(b) are, so far as they insert new regulations 3AE(6) and 3AF and amend regulations 3 to 3AD and 3B to 5, to be treated as having been made by the Commissioners under the powers to make regulations under section 169(4) of the Finance Act 2004 (see section 169(4), (4A), (4B) and (4C) of that Act), and
(c) are, so far as they insert new regulations 3AG to 3AJ, to be treated as having been made by the Commissioners under the applicable powers to make regulations conferred by section 244L of the Finance Act 2004.
(61) The Registered Pension Schemes (Transfers of Sums and Assets) Regulations 2006 (S.I. 2006/499) are amended as follows.
(62) In regulation 5, the existing text becomes paragraph (1), and after that paragraph insert—
“(2)In paragraph (1)(a) “administration costs” includes, in particular, payments of overseas transfer charge.”
(63) The amendments made by paragraph (62) of this Resolution are to be treated as made by the Commissioners for Her Majesty’s Customs and Revenue under the powers to make regulations conferred by paragraph 2(4)(h) of Schedule 28 to the Finance Act 2004.
(64) The Registered Pension Schemes (Provision of Information) Regulations 2006 (S.I. 2006/567) are amended as follows
(65) In regulation 3(1) (provision of information by scheme administrators to HMRC), in column 2 of the entry in the Table for reportable event 9—
(a) after paragraph (g) insert—
“(ga) whether or not overseas transfer charge arises on the transfer;
(gb) if the transfer is excluded from the charge, the reason why it is excluded;
(gc) if the charge arises on the transfer—
(i) the transferred value, and
(ii) the amount in respect of the charge deducted from the transfer;”, and
(b) after paragraph (h) insert—
“(ha) the reference number, if any, given by the Commissioners for the QROPS;”.
(66) In regulation 3(7) (deadline for event report for reportable event 9), at the end insert “but, if the scheme administrator applies before the end of those 60 days for a repayment of overseas transfer charge on the transfer, the report must be delivered before the administrator applies for the repayment.”
(67) In regulation 11BA(2) (information about transfer to be provided by member to scheme administrator)—
(a) in sub-paragraph (a), omit paragraphs (vi) and (vii), including the “and” at the end,
(b) after sub-paragraph (a) insert—
“(aa) the name and address of, and (if known) the reference number given by the Commissioners for, the qualifying recognised overseas pension scheme (“the QROPS”);
(ab) the country or territory under the law of which the QROPS is established and regulated;
(ac) whether the member knows for certain that the transfer would be excluded from the overseas transfer charge by one of sections 244D, 244E and 244F, and if the member does know that for certain—
(i) the section concerned (if known),
(ii) the name and address of the member’s employer whose connection with the QROPS gives rise to exclusion of the transfer from the charge,
(iii) the member’s job title as an employee of that employer,
(iv) the date the member’s employment with that employer began, and
(v) if known, that employer’s tax reference for that employment;”, and
(c) after sub-paragraph (b) insert “; and
(c) the member’s acknowledgement in writing that the member—
(i) is aware that a recognised transfer to a qualifying recognised overseas pension scheme may give rise to a liability to overseas transfer charge, and
(ii) is aware of the circumstances in which liability arises, in which liability is excluded from the outset and in which liability is excluded only if conditions continue to be met over a period of time.”
(68) After regulation 11BA insert—
“11BB Information provided by members to scheme administrators: potentially excluded transfers
(1) Paragraph (2) applies where—
(a) a recognised transfer is made by a registered pension scheme to a qualifying recognised overseas pension scheme, and
(b) the transfer is required by section 244B or 244C to be initially assumed to be excluded from the overseas transfer charge by that section
(2) Each time during the relevant period for the transfer that the member—
(a) becomes resident in a country or territory, or
(b) ceases to be resident in a country or territory,
the member must, within 60 days after the date that happens, inform the scheme administrator of the registered pension scheme that it has happened.”
(69) After regulation 12 insert—
“12A Provision of information about liability for overseas transfer charge
(1) If a recognised transfer is made by a registered pension scheme to a qualifying recognised overseas pension scheme and the overseas transfer charge arises on the transfer, the scheme administrator of the registered pension scheme must within 90 days after the date of the transfer provide the member with a notice stating—
(a) the date of the transfer,
(b) that overseas transfer charge arises on the transfer,
(c) the transferred value of the transfer,
(d) the amount of the charge on the transfer,
(e) whether, and to what extent, the scheme administrator has accounted, or intends to account, for the charge, and
(f) where the scheme administrator has accounted for the charge, the date the scheme administrator did so.
(2) If a recognised transfer is made by a registered pension scheme to a qualifying recognised overseas pension scheme and the transfer is excluded from the overseas transfer charge by or under sections 244B to 244H, the scheme administrator of the registered pension scheme must within 90 days after the date of the transfer provide the member with a notice stating—
(a) the date of the transfer,
(b) that the transfer is excluded from the overseas transfer charge,
(c) the provision by reason of which the transfer is excluded, and
(d) where that provision is section 244B or 244C, how the transfer may turn out not to be excluded as a result of the member changing country or territory of residence within the relevant period for the transfer.
(3) If overseas transfer charge on a transfer is repaid to the scheme administrator of a registered pension scheme, the scheme administrator must within 90 days after the date of the repayment provide the member with a notice stating—
(a) the date of the repayment,
(b) the amount of the repayment, and
(c) the reason for the repayment.”
(70) After regulation 14ZC insert—
“14ZCA Further information provided by scheme administrators on recognised transfers to overseas schemes
(1) This regulation applies if there is a recognised transfer from a registered pension scheme to a qualifying recognised overseas pensions scheme.
(2)The scheme administrator of the registered pension scheme must provide the scheme manager of the qualifying recognised overseas pension scheme with a statement—
(a) stating whether or not the overseas transfer charge arose on the transfer, and
(b) stating—
(i) if the charge arose, the amount of the charge, and
(ii) if the transfer is excluded from the charge, the reason why it is excluded.
(3) The requirement under paragraph (2) is to be complied with before the end of the 31 days beginning with the date of the transfer.
(4) Paragraph (5) applies if overseas transfer charge on the transfer is repaid to the scheme administrator of the registered pension scheme.
(5) The scheme administrator of the registered pension scheme must provide the scheme manager of the qualifying recognised overseas pension scheme with—
(a) a copy of the statement under paragraph (2),
(b) a statement that the original statement is inaccurate and that the overseas transfer charge on the transfer has been repaid to the scheme administrator, and
(c) the reason why the transfer is excluded from the charge.
(6) The requirement under paragraph (5) is to be complied with before the end of the 31 days beginning with the date of the repayment.”
(71) The amendments made by paragraphs (64) to (70) of this Resolution are to be treated as made by the Commissioners for Her Majesty’s Revenue and Customs under the applicable powers to make regulations conferred by section 251 of the Finance Act 2004.
(72) Subject to paragraphs (73) to (75) of this Resolution, the amendments made by paragraphs (29) to (70) of this Resolution have effect in relation to transfers made on or after 9 March 2017.
(73) The new section 169(2)(ba) of the Finance Act 2004—
(a) has effect on and after 9 March 2017 in the case of a recognised overseas pension scheme where—
(i) the notification mentioned in section 169(2)(a) of the Finance Act 2004 (notification that scheme is a recognised overseas pension scheme) is given on or after 9 March 2017, or
(ii) although that notification is given before 9 March 2017, the letter from the Commissioners for Her Majesty’s Revenue and Customs advising the scheme of the reference number allocated to the scheme is dated on or after 9 March 2017, and
(b) has effect on and after 14 April 2017 in the case of a recognised overseas pension scheme where that letter is dated before 9 March 2017.
(74) The other amendments in section 169 of the Finance Act 2004, and the amendment in section 255 of that Act, come into force on 9 March 2017.
(75) The amendments in regulation 3(2) of the Pension Schemes (Information Requirements for Qualifying Overseas Pension Schemes, Qualifying Recognised Overseas Pension Schemes and Corresponding Relief) Regulations 2006 have effect in relation to payments made on or after 9 March 2017; and the new regulation 3AE inserted into those Regulations, and the reference to the new regulation 3AE(6) inserted into regulation 5(1) of those Regulations, have effect in relation to requests made on or after 9 March 2017.
(76) Overseas transfer charge on transfers made in the period beginning with 9 March 2017 and ending with 30 June 2017 is, for the purposes of section 254 of the Finance Act 2004, to be treated as charged in the 3 months ending with 30 September 2017.
And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
13. Trade and property business profits
Resolved,
That provision may be made about the calculation of profits of trades, professions, vocations and property businesses for the purposes of income tax.
14. Deduction of income tax at source
Resolved,
That—
(1) In Chapter 3 of Part 15 of the Income Tax Act 2007 (deduction of tax from certain payments of yearly interest), after section 888A insert—
“888B Designated dividends of investment trusts
The duty to deduct a sum representing income tax under section 874 does not apply to a dividend so far as it is treated as a payment of yearly interest by regulations under section 45 of FA 2009 (dividends designated by investment trust or prospective investment trust).
888C Interest distributions of certain open-ended investment companies
The duty to deduct a sum representing income tax under section 874 does not apply to a payment of yearly interest under section 373 of ITTOIA 2005 (in the case of certain open-ended investment companies, payments of yearly interest treated as made where distributable amount shown in accounts as yearly interest).
888D Interest distribution of certain authorised unit trusts
The duty to deduct a sum representing income tax under section 874 does not apply to a payment of yearly interest under section 376 of ITTOIA 2005 (in the case of certain authorised unit trusts, payments of yearly interest treated as made where distributable amount shown in accounts as yearly interest).”
(2) In section 45(2) of the Finance Act 2009 (provision that regulations may make about dividends of investment trusts) omit paragraph (c) (power to disapply duty to deduct tax under section 874 of the Income Tax Act 2007).
(3) In Chapter 3 of Part 15 of the Income Tax Act 2007 (deduction of tax from certain payments of yearly interest), after section 888D (inserted by this Resolution) insert—
“888E Interest on certain peer-to-peer lending
(1) The duty to deduct a sum representing income tax under section 874 does not apply to a payment of interest on an amount of peer-to-peer lending.
(2) In subsection (1) “peer-to-peer lending” means credit in relation to which the condition in subsection (4) is met.
(3) In this section—
“original borrower”, in relation to any credit, means the person to whom the credit is originally provided,
“credit” includes a cash loan and any other form of financial accommodation, and
“original lender”, in relation to any credit, means the person who originally provides the credit.
(4) The condition is that—
(a) the original borrower and the original lender enter the agreement under which the credit is provided at the invitation of a person (“the operator”),
(b) the operator makes the invitation in the course of, or in connection with, operating an electronic system,
(c) the operator’s operation of the electronic system is an activity specified in article 36H(1) or (2D) of the Order (operating an electronic system in relation to lending), and
(d) the operator has permission under Part 4A of FISMA 2000 to carry on that activity.
(5) For the purposes of subsection (4), it does not matter if the agreement mentioned in subsection (4)(a) is not an article 36H agreement (as defined in article 36H of the Order).
(6) The Commissioners for Her Majesty’s Revenue and Customs may by regulations make such amendments of the preceding provisions of this section as they consider appropriate in consequence of—
(a) the Order, or any part of it, being replaced (or further replaced) by provision in another instrument, or
(b) any amendment of the Order or any such other instrument.
(7) In this section “the Order” means the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544).”
(4) The new sections 888B to 888D of the Income Tax Act 2007, and the repeal of section 45(2)(c) of the Finance Act 2009, have effect in relation to amounts treated as payments of yearly interest made on or after 6 April 2017.
(5) The new section 888E of the Income Tax Act 2007 has effect in relation to payments of interest made on or after 6 April 2017.
And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
15. Gains from contracts for life insurance etc
Resolved,
That provision may be made amending Chapter 9 of Part 4 of the Income Tax (Trading and Other Income) Act 2005.
16. Venture capital trusts (exchange of non-qualifying shares and securities)
Resolved,
That provision may be made amending section 330 of the Income Tax Act 2007.
17. Social investment tax relief
Resolved,
That provision may be made about social investment tax relief.
18. The “no disqualifying arrangements requirement”
Resolved,
That provision may be made about the “no disqualifying arrangements requirement” for the purposes of the enterprise investment scheme, the seed enterprise investment scheme and venture capital trusts.
19. Business investment relief
Question put.
That provision may be made about business investment relief in Chapter A1 of Part 14 of the Income Tax Act 2007.
(1) | (2) | (3) | (4) |
|---|---|---|---|
Exceeding | Not Exceeding | Reduced Rate | Standard Rate |
g/km | g/km | £ | £ |
100 | 110 | 10 | 20 |
110 | 120 | 20 | 30 |
120 | 130 | 105 | 115 |
130 | 140 | 125 | 135 |
140 | 150 | 140 | 150 |
150 | 165 | 180 | 190 |
165 | 175 | 210 | 220 |
175 | 185 | 230 | 240 |
185 | 200 | 270 | 280 |
200 | 225 | 295 | 305 |
225 | 255 | 510 | 520 |
255 | — | 525 | 515” , and |
Description of wine or made-wine | Rates of duty per hectolitre £ |
Wine or made-wine of a strength not exceeding 4% | 88.93 |
Wine or made-wine of a strength exceeding 4% but not exceeding 5.5% | 122.30 |
Wine or made-wine of a strength exceeding 5.5% but not exceeding 15% and not being sparkling | 288.65 |
Sparkling wine or sparkling made-wine of a strength exceeding 5.5% but less than 8.5% | 279.46 |
Sparkling wine or sparkling made-wine of a strength of 8.5% but not exceeding 15% | 369.72 |
Wine or made-wine of a strength exceeding 15% but not exceeding 22% | 384.82 |
Description of wine or made-wine | Rates of duty per hectolitre £ |
Wine or made-wine of a strength exceeding 22% | 28.74”. |
1. Cigarettes | An amount equal to 16.5 per cent of the retail price plus £207.99 per thousand cigarettes |
2. Cigars | £259.44 per kilogram |
3. Hand-rolling tobacco | £209.77 per kilogram |
4. Other smoking tobacco and chewing tobacco | £114.06 per kilogram”. |
“1. Cigarettes | An amount equal to the higher of— |
(a) 16.5% of the retail price plus £207.99 per thousand cigarettes, or | |
(b) £268.63 per thousand cigarettes.” |
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
On a point of order, Mr Deputy Speaker. Early this afternoon, the Government published a letter from the Social Security Advisory Committee regarding the Government’s emergency legislation to cut personal independence payment support for more than 160,000 chronically ill and disabled people. You will recall that the Government did not consult the Social Security Advisory Committee before introducing these regulations on 23 February, and they are due to come into force in just two days’ time. The Committee subsequently examined the regulations, and in its damning finding, it highlights the need for the Government to consult more widely on these PIP changes and to test the proposed changes. Crucially, it also warns that they could have an impact on existing PIP awards, in direct contradiction to Ministers, who have repeatedly claimed that no current recipient of PIP would lose out.
Mr Deputy Speaker, could you tell me whether you have received any indication from Ministers as to when they plan to make a statement on this issue and on how, in two days’ time, they intend to action the Committee’s recommendations? I also seek guidance on how I can ensure that this policy is effectively scrutinised and that the Government are properly held to account on this issue.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Two things: I thank the hon. Lady for giving me notice of her point of order; and we actually have the relevant Minister, who wants to respond now, which may be helpful.
The Minister for Disabled People, Health and Work (Penny Mordaunt)
The Social Security Advisory Committee decided not to take the regulations on formal reference or to consult further. It made two recommendations, which we are considering and will respond to in due course. As the Secretary of State for Work and Pensions has said from the Dispatch Box, there is no change to our policy, our budget or the award amounts. We can be confident that no one’s award will be altered, all things being equal, if and when they are reassessed, because prior to the relevant case, the case law was conflated and confused, and therefore no assessment providers changed their scoring and no DWP decision makers altered or increased the award amounts. It is very important that we reassure people on that benefit that there is no change to the policy, to the budget or to the award amounts, and that if their condition is the same, they will continue to receive the award.
Debbie Abrahams
Further to that point of order, Mr Deputy Speaker. The Minister’s statement is in direct contradiction to the letter that she has received, and I seek further—[Interruption.]
Mr Deputy Speaker
Order. We cannot have the debate now, but if the hon. Lady is unsatisfied with that response, she knows how to use the usual channels and that would be the best way forward.
Business Without Debate
Mr Deputy Speaker (Mr Lindsay Hoyle)
With the leave of the House, we shall take motions 3 to 19 together.
Delegated Legislation
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Local Government
That the draft Barnsley, Doncaster, Rotherham and Sheffield Combined Authority (Election of Mayor) (Amendment) Order 2017, which was laid before this House on 6 February, be approved.
That the draft Tees Valley Combined Authority (Functions and Amendment) Order 2017, which was laid before this House on 6 February, be approved.
That the draft Liverpool City Region Combined Authority (Functions and Amendment) Order 2017, which was laid before this House on 6 February, be approved.
Northern Ireland
That the draft Collection of Fines etc. (Northern Ireland Consequential Amendments) Order 2017, which was laid before this House on 6 February, be approved.
Local Government
That the draft Greater Manchester Combined Authority (Fire and Rescue Functions) Order 2017, which was laid before this House on 6 February, be approved.
That the draft Greater Manchester Combined Authority (Transfer of Police and Crime Commissioner Functions to the Mayor) Order 2017, which was laid before this House on 20 February, be approved.
Constitutional Law
That the draft Air Weapons and Licensing (Scotland) Act 2015 (Consequential Provisions) Order 2017, which was laid before this House on 6 February, be approved.
Water Industry
That the draft Water Industry Designated Codes (Appeals to the Competition and Markets Authority) Regulations 2017, which were laid before this House on 3 February, be approved.
That the draft Water Supply Licence and Sewerage Licence (Modification of Standard Conditions) Order 2017, which was laid before this House on 30 January, be approved.
Environmental Protection
That the draft Water Act 2014 (Consequential Amendments etc.) Order 2017, which was laid before this House on 30 January, be approved.
Social Security
That the draft Mesothelioma Lump Sum Payments (Conditions and Amounts) (Amendment) Regulations 2017, which were laid before this House on 25 January, be approved.
That the draft Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) (Amendment) Regulations 2017, which were laid before this House on 25 January, be approved.
Regulatory Reform
That the draft Economic Growth (Regulatory Functions) Order 2017, which was laid before this House on 6 December 2016, be approved.
Deregulation
That the draft Growth Duty Statutory Guidance, a copy of which was laid before this House on 12 December 2016, be approved.
Social Security
That the draft Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2017, which were laid before this House on 16 January, be approved.
That the draft Tax Credits and Guardian’s Allowance Up-rating etc. Regulations 2017, which were laid before this House on 6 February, be approved.
Insolvency
That the draft Deregulation Act 2015, the Small Business, Enterprise and Employment Act 2015 and the Insolvency (Amendment) Act (Northern Ireland) 2016 (Consequential Amendments and Transitional Provisions) Regulations 2017, which were laid before this House on 18 January, be approved.—(Mark Spencer.)
Question agreed to.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Crown
That the draft Sovereign Grant Act 2011 (Change of Percentage) Order 2017, which was laid before this House on 26 January, be approved.—(Mark Spencer.)
The Deputy Speaker’s opinion as to the decision of the Question being challenged, the Division was deferred until Wednesday 15 March (Standing Order No. 41A).
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Financial Services and Markets
That the draft Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2017, which was laid before this House on 9 February, be approved.—(Mark Spencer.)
Question agreed to.
Fuel Poverty
(7 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Paul Scully (Sutton and Cheam) (Con)
The UK has one of the largest economies in the world, growing quicker than many of its neighbours. We have record levels of employment and a welfare system that, despite differences of opinions across the political divide, provides an effective safety net in most cases and stacks up well in comparison with several countries around the world. However, we still have a number of vulnerable people, including children and the elderly, who make incredibly difficult choices about whether to eat or heat each day.
It is estimated that around 2.4 million households in England are in fuel poverty, the definition of which varies somewhat. In the past, the Government considered a household that needs to spend more than 10% of its income to maintain an adequate heating regime to be in fuel poverty. That is still the case in Scotland and Northern Ireland. However, I can see the Government’s concern that that definition is too loose, with “income” and “adequate heating regime” meaning different things to different organisations. That is why fuel poverty in England is now measured using the low income, high costs indicator, whereby a household is considered to be fuel-poor if its required fuel costs are above the national median level and it would be left with a residual income below the official poverty line were it to spend that amount. Admittedly it is more technical and less snappy, but LIHC allows for a more focused approach to identify those in most immediate need.
The different methodologies make it more complicated to compare numbers across the UK, but the best estimate is that a total of 4 million households are in fuel poverty.
Jim Shannon (Strangford) (DUP)
Fuel poverty is an important issue for us in Northern Ireland. The hon. Gentleman will know that 17% of people across the UK are in fuel poverty, but in Northern Ireland the figure is 42%, which is massive. Does he agree that any fuel poverty strategy and funding allocation must take a co-ordinated, UK-wide approach to address that shocking statistic, which speaks more of fuel poverty levels in a developing country than in the United Kingdom of Great Britain and Northern Ireland?
Paul Scully
I am glad that the hon. Gentleman has had a chance to air that important point, because I understand the situation in Northern Ireland.
Governments have recognised fuel poverty as a problem and have put strategies in place. The numbers affected by fuel poverty have reduced over the past decade overall, but slowly, by around 1%. Cavity walls now insulated have doubled over that period, and Government figures clearly show that houses with solid walls and in which portable heaters are used, rather than central heating, are far more likely to be in fuel poverty. There are still some 600,000 houses without central heating. People who are privately renting are twice as likely to be in fuel poverty than those in local authority or housing authority properties. However, all the numbers are still too high.
There is regional variation, as we have heard, with the north-east of England having the highest proportion of households in fuel poverty despite also seeing the largest percentage decrease, some 5% over the past 11 years. However, there are also many hidden cases. The London Borough of Sutton is a relatively prosperous borough, but it has pockets of deprivation that can easily be overlooked when considering London on a macro level. Within those pockets live people who get stuck between the cracks when it comes to low pay, welfare support, high energy prices and homes that are not energy efficient. That is likely to include older people on a small fixed income who are living in a large house that may be difficult to heat. Downsizing may or may not be an option, but it is one part of the solution.
Age UK has calculated that there have been 2.5 million avoidable deaths among older people in England and Wales due to winter cold over the past 60 years. Cold weather causes a massive spike in associated health problems, such as heart attacks and strokes, and there is a strong relationship between poor insulation and inadequate heating of houses, low indoor temperatures and excess winter deaths among older people. Age UK goes on to estimate that, each winter, one older person dies every seven minutes from the cold weather. Age UK has a number of advice guides that I strongly recommend colleagues share with constituents, particularly the elderly.
Beyond the impact on the frail and elderly, we all know from our casework that children living in damp and mouldy homes are particularly at risk. They are almost three times as likely to suffer from coughing, wheezing and respiratory illness. Evidence also highlights that infants living in cold conditions are at greater risk of admission to hospital or primary care facilities. In turn, living in such conditions also affects educational achievement, either through increased school absence due to illness or because children are unable to find a quiet, warm place to study at home.
Financial stress about energy bills causes huge anxiety that can exacerbate mental health problems, leading to depression and, unfortunately, potentially suicide. Currently, more than one in four adolescents living in a cold house is at risk of multiple mental health problems. There are three particular variables that affect the figures: income levels, energy prices and the energy efficiency of people’s homes.
The Government have sought to tackle low incomes by addressing the underlying causes of poverty, rather than by using cash transfers that just lift people over an arbitrary threshold in the short term. Rising tax thresholds have taken 1.3 million of the lowest paid out of income tax entirely since the start of this Parliament and have allowed others to keep more of what they earn. The introduction of the national living wage, which is due to reach £9 by 2020, is delivering a pay rise for millions of low-paid workers. The lowest-paid workers saw their pay go up by more than 6% in 2015-16, well above inflation, through those and other measures. Working parents are also benefiting from increased support with childcare costs.
There are a number of reasons why energy prices remain stubbornly high, including the fact that oil prices have doubled from their low point since early last year. SSE has become the last of the big six energy companies to review its current prices, with 2.8 million of its standard tariff customers facing a 6.9% increase. On Thursday, my hon. Friend the Member for Weston-super-Mare (John Penrose) will lead a debate in the Chamber in which he will call on the Government to introduce a relative price cap that brings the worst-value standard variable tariffs within a margin of the best-value fixed deals. His premise is to maintain competition by not introducing a strict cap, while seeking to end the exploitation of loyal customers—the set of people who, in a properly functioning market, would be the first to be rewarded.
Price-wise, it is important to address prepayment meters, which are used by many people in or around the fuel poverty category. The best way to keep prices low is to switch more—through competition—but that is often easier said than done. Although the number of people who switched rose by 30% last year, around two thirds of bill payers are still on the worst-value standard tariffs, despite Energy UK data that suggest that energy switching rates in Britain are the highest of any large energy market in the world.
Together, the big six energy companies have a commanding share of the market, in spite of their losing market share in both domestic and non-domestic supply. Between April 2015 and March 2016, 14 new licensed suppliers became active in the domestic market. The new entrants have a variety of business models, such as not-for-profit, renewable and local supply schemes. The increase in competition is to be welcomed, with small and medium-sized suppliers growing to account for 14% of the domestic market in March 2016.
If I may be parochial for a moment, I should point out that not every alternative small supplier adds to the liberalisation of the market. The London Borough of Sutton, my home borough, has launched an initiative called SDEN—the Sutton decentralised energy network—which takes the energy generated by a new, unpopular incinerator in Beddington on the Croydon border and pipes it to a new estate of houses that is currently under construction in nearby Hackbridge. Although few residents in Beddington wanted an incinerator as their new neighbour, the concept of using recovered energy in new homes seemed reasonable at first glance. However, last year our local paper, the Sutton Guardian, reported a proposed tariff that was some 21% more expensive than Sainsbury’s Energy was charging at the time. Such a decentralised network, piping energy in this way, prohibits residents from buying their energy from any other source, thus forcing them to take it up and locking them into a contract without the possibility of switching—the very opposite of liberalisation, and from a Liberal Democrat-run council.
Smart meters have been touted as a way to reduce energy use and fixed costs and to allow easier switching. They allow energy companies to harvest a lot of data and remove the costs of meter readings from their bottom line, but will they serve the customer well? The first generation of smart meters, SMETS1—smart meter equipment technical specification 1—worked while the customer was with the particular supplier that installed the meter, but they were not flexible enough in their interoperability. The next generation, the SMETS2 meters, are meant to solve that problem, but unfortunately the roll-out date has been delayed.
An open system will allow for the greatest flexibility. Apps that can nudge customers into energy reduction and more efficient use of their appliances and heating can be of huge benefit. Time and again we see how open source means better, faster and more flexible innovation. A few years ago, Windsor and Maidenhead Council put its money where its mouth is and fitted very visible meters on council buildings to show its energy use, leading to considerable reductions in energy consumption. That is nudge theory working really well. That could and should happen in domestic settings, too, with technology used to highlight high usage and so change behaviour, rather than people getting a shock from a high bill sometime later down the line.
The Government are working to improve the energy efficiency of homes throughout the country. Households that struggle with their bills are eligible for insulation measures, including solid wall insulation, through the energy company obligation scheme. Homeowners and those in privately rented homes who are on specific benefits may also be eligible for support through heating improvements, including oil-fired boiler replacements, through the ECO affordable warmth scheme. I welcome the fact that more than 2 million energy efficiency measures have been installed in more than 1.6 million homes since 2013, and the Government have made a commitment to insulate a further million homes by 2020.
I further welcome the fact that a greater focus of this support for low-income households will be on working families, and that the Government will continue to ring-fence a proportion of delivery for rural areas. The warm home discount scheme continues to help ensure that households at risk of fuel poverty can afford to heat their homes. This helps more than 2 million households a year with £140 going towards their energy bills. Pensioners also get further help through the winter fuel allowance.
The Government retain the goal of insulating 1 million more homes by 2020. However, I remain concerned that the Committee on Fuel Poverty, which advises the Government on this matter, raised serious doubts in September 2016 that the 2020 and 2025 fuel poverty energy efficiency milestones can be achieved. It believes that, over time, the £2.1 billion per year spent on fuel poverty programmes such as the warm home discount and winter fuel payments needs to be better targeted at those most in need of assistance.
The WHD will be reviewed in this Parliament and, currently, only 15% of it is targeted towards those in fuel poverty. The winter fuel payment is universal and so clearly not targeted, but it is also committed until 2020. The Committee also believes that the Government should seek to attract new sources of funding to assist in meeting the fuel poverty strategy milestones. Examples it cites include modifying existing legislation to require private landlords to upgrade the energy efficiency levels of their properties; giving the same priority to improving household energy efficiency as to generating new renewable energy; and modifying existing legislation to attract more third-party capital. I would be grateful to the Minister if he commented on those thoughts in his response.
I was motivated to raise this matter after hearing about an initiative by the local Sutton business, MaximEyes. This energy consultancy has succeeded in winning a number of awards by working with its clients on energy management and efficiency as well as utility infrastructure and procurement. Its core business is about the best use of energy, so it is well placed to examine and help tackle fuel poverty as part of its corporate social responsibility. It approached me to help identify households in need that it could help to turn around as part of its Fuel the Change initiative.
The company aims to take 1,000 homes out of fuel poverty by 2020 as its business develops. It has created a solid partnership with the Foundations Independent Living Trust, which has the expertise and infrastructure to ensure that the funding is used in the most efficient way and that it reaches those who are most in need.
Businesses that address issues to which they can relate directly tend to have more effect. Writing a cheque gives bosses a warm, short-term glow, but using a company’s resources to tackle something connected to its core business, market or interests can have a far bigger effect on the beneficiaries.
I am delighted that a Sutton business is taking a lead, encouraging other businesses to join it and to put something back, especially in an area that can really save lives. I hope that Members will join me in the Macmillan Room next Tuesday at 1 pm to speak about this further with the MaximEyes team and with representatives of related businesses. Businesses can, and should, be a force for good. I know that the Minister and my Government colleagues take this matter seriously. There is much to commend them for in the way that they are tackling low pay. We need to continue to improve competition in the energy market and look at how we can grow our investment in our housing stock to ensure that homes are energy efficient. We must also use emerging technology, such as apps, to influence behaviour; battery storage, such as Tesla’s Powerwall; and of course renewables. We must also work with the construction industry and allied businesses to ensure that they play their part. I look forward to my hon. Friend informing this House about what more can be done in the future by Government, energy providers, businesses such as MaximEyes, charities and individuals in this really important area of fuel poverty.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Jesse Norman)
What a delight it is, Mr Deputy Speaker, to see you in the Chair. I thank my hon. Friend the Member for Sutton and Cheam (Paul Scully) for selecting such an important issue for debate this evening. I am very grateful to him not just for his interest in fuel poverty, but for his leadership in hosting a discussion in the Palace of Westminster next week. You may have detected, Mr Deputy Speaker, the subtle way in which he wove in the details of the time and place into his speech on how we can support efforts to tackle fuel poverty in the UK.
The Government recognise that fuel poverty is a significant issue, affecting households throughout the United Kingdom, as the Committee on Fuel Poverty rightly highlighted in its 2016 report. I massively welcome the insight and challenge to Government that the committee brings. I also welcome the fact that it can help us, by those means, to deliver a suite of solutions for those who need help that is as effective as possible. Only this morning, I spoke to David Blakemore, the chair of the committee since November last year, and I look forward to working with him and the committee over the coming years.
As my hon. Friend has said, fuel poverty is measured in England by the low income, high costs indicator. According to that indicator, a household is fuel poor if it has an income below the poverty line and, at the same time, higher than typical energy costs. It is a relative indicator that is essentially a balance of two averages. It is fair to say that the total number of households living in fuel poverty has been relatively static over the past few years. However, there has been a fall over time between 2010, when there were just under 2.5 million households in fuel poverty in England—as my hon. Friend will know, this is a devolved matter—and 2014, when the latest official statistics record 2.38 million households. Those households face an average fuel poverty gap of some £371, which is itself a measure of the severity of the problem.
Perhaps I can assure my hon. Friend that, as he has rightly acknowledged, the Government are committed to helping households in fuel poverty, or on lower incomes and living in homes that are expensive to heat. I congratulate him on rightly highlighting the broader measures that the Government have taken in recent years by raising income tax thresholds and introducing the national living wage. Both those things are, at the broadest level, important contributions to solving the problem. He also rightly focused on the significant public concerns about recent announcements of price increases by the energy suppliers. I am glad that, as a result of action by the Competition and Markets Authority, in February this year Ofgem announced details of a cap on the amount that suppliers can charge prepayment meter customers. This will take effect from April and will help to protect those customers from high energy costs.
Energy suppliers have delivered nearly 700,000 measures in 500,000 low-income and vulnerable households since the energy company obligation began in 2013. That is part of a total of some 1.6 million homes that have been improved over that period, but this Government are going further to take action to tackle the root cause of fuel poverty, recognising that improving household energy efficiency is the most sustainable long-term solution to tackling the problem. Next week, the Electricity and Gas (Energy Company Obligation) (Amendment) Order 2017 will be debated in both houses to extend the scheme from 1 April 2017 to 30 September 2018. The measure will seek to reform ECO so that 70% of the support under the scheme will now be directed at low-income homes. That represents an increase from £310 million to £450 million a year that will be invested in improving the energy efficiency of homes that most need support. We expect that the reformed ECO will improve about 500,000 homes over the coming 18 months, and the Government have made a commitment to insulate 1 million homes over the life of this Parliament.
Recognising the fact that people also need immediate support with energy bills, we also have in place the warm home discount, which my hon. Friend recognised. The scheme provides more than 2 million low-income and vulnerable households with a £140 rebate off their energy bill each winter, when temperatures are lowest and bills highest. Together, the schemes mean that there will be at least £770 million of support for low-income and vulnerable consumers over the period 2017-18.
Jim Shannon
In my intervention on the hon. Member for Sutton and Cheam (Paul Scully), who introduced the debate, I mentioned having a co-ordinated plan across the whole of the United Kingdom of Great Britain and Northern Ireland so that we can collectively—in all the regions—take on the energy companies and work together. Has the Minister given any thought to how we could progress that?
Jesse Norman
As I have said, this is a devolved matter, so that does not specifically bear on it. However, on the wider question of whether there is scope for more joined-up thinking, I would absolutely welcome the hon. Gentleman’s suggestions, or indeed suggestions from the Northern Ireland Executive, as to how those things could be done, and we would give them a very warm interrogation. I am not sure what would come out—we would have to see the suggestions—but the warmth and the interest from our side are certainly there.
I should add that the role of regulation will also be important as we take action to ensure that tenants can live in a home that keeps them comfortably warm. The private rented sector regulations will target the least efficient, F and G-rated properties from 2018 by requiring landlords to improve those properties to at least a band E, unless a valid exemption applies. My Department is considering options for the implementation of the regulations, with a view to ensuring they can be implemented effectively by April 2018.
Of course, there is more work to be done. One important area will be to improve targeting on the households most in need—a topic my hon. Friend rightly raised. The Digital Economy Bill, which is going through Parliament, will be important in that regard, as it will make available better data on householders and properties. That, in turn, will reduce the costs obligated suppliers face in identifying households that are most in need, and it will allow more measures to be installed for the same cost.
I hope my hon. Friend will agree that the Government are taking this matter with the appropriate level of seriousness, but what I have described are all Government-led actions, whereas fuel poverty is a problem for all of society, and the Government cannot tackle it alone, as he rightly said. That is why partnership is a key theme of the fuel poverty strategy. It is important for the Government to play a leadership role, but it is also important for them to work alongside initiatives from local government, businesses, individuals and the charitable sector. Only by making the most of the varied skills and resources of each of these partners—the collective resources of society as a whole—can we collaboratively tackle the long-term social problems of fuel poverty.
In that context, I welcome the Fuel the Change initiative, which is due to be launched next week, and which my hon. Friend mentioned. I am looking forward to hearing the outcomes from the discussion led by my hon. Friend and Baroness Verma of how businesses can support the fight to tackle fuel poverty in the UK. This debate, and my colleague’s excellent speech this evening, are important contributions to that further conversation.
Question put and agreed to.
Draft Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2017
(7 years, 9 months ago)
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The Economic Secretary to the Treasury (Simon Kirby)
I beg to move,
That the Committee has considered the draft Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2017.
What a pleasure it is to serve under your chairmanship, Mr Flello. The draft order will amend the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001. This statutory instrument is proposed in the regulatory context of the revised markets in financial instruments directive and the markets in financial instruments regulation. I shall refer to those collectively as MiFID II. They were agreed by the EU in 2014 to strengthen the regulation and transparency of financial and commodity markets—an important commitment by the G20. MiFID II applies from 3 January 2018, and member states are required to transpose the directive into national law by 3 July this year. In the UK, that is being achieved through legislation and regulators’ rules.
I am pleased to say that last month we concluded our consultation on the legislation needed to transpose MiFID II, and now this draft order seeks to amend the regulated activities order, which sets the scope of our financial regulation, to give effect to MiFID II. The key changes are as follows. First, the draft order will allow the new investments and activities that are introduced by MiFID II, including, for example, emission allowances and the operation of an organised trading facility. Secondly, it will transfer the regulation of binary options from the Gambling Commission to the Financial Conduct Authority, where they will be regulated as financial instruments. That will allow consumers to benefit from strengthened consumer protection measures. Thirdly, the draft order will make a number of technical amendments, including the updating of definitions and references.
I am keen not to detain the Committee unnecessarily. However, I am happy to take questions and give answers later.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
Good morning, Mr Flello; it is indeed a pleasure to see you in the Chair.
We find ourselves in a slightly unusual position with this procedure today—we do live in unusual times. As we have heard from the Minister, it is the Government’s intention to continue with the transposition of elements of the second markets in financial instruments directive into UK law. However, this process takes place while a huge question mark hangs over our future relationship with the European Union, under whose auspices the directive was drawn up. Although there seems to be an indication of a broad consensus that there will be no bonfire of EU regulation, we have yet to receive any real clarity or guarantees from the Government in that regard.
MiFID II has been the subject of much discussion among market participants since the referendum result. In particular, it has been mooted as potentially providing an answer to the financial services sector’s anxiety about securing passporting arrangements for the cross-border trading arrangements on which it depends to function. It is almost a decade since the original MiFID legislation was applied in the UK. It has achieved many of its original goals in creating a more harmonious investment landscape across Europe, and it is important that we preserve the elements of consumer protection that it has embedded in UK markets.
Best execution has played an important role in contributing to better outcomes for consumers and creating a more efficient trading landscape across Europe. Labour supports those efforts and sees the importance of a robust framework in which they can operate. For that reason, we support treating the operations of organised trading facilities as a regulated activity.
Labour supports moving binary options from the supervision of the Gambling Commission to the Financial Conduct Authority. That is not to say that we do not have some concerns about the regulation of binary options and how they are used by consumers, who are potentially vulnerable, but we believe that they have more in common with high-risk financial products than betting activities. We remain in dialogue with the FCA to ensure that those products come with the appropriate caveats. Structured deposits are an entirely different class of product, but the same principle applies: consumers must have full disclosure on the products that they are purchasing. Any further clarity in that regard will be welcome.
Labour also supports the ongoing efforts to transpose MiFID II into national law, which will help to harmonise standards across Europe and provide a higher standard of consumer protection in the UK. As we come to exit the EU, it is essential that we consider the benefits that historic regulation has brought us and how they can be protected in the future. Indeed, if equivalence is to be sought as we enter the negotiations, it is vital that we as policy makers ensure that these obligations continue to be diligently met, regardless of the overall climate of uncertainty.
George Kerevan (East Lothian) (SNP)
It is a pleasure to serve under your chairmanship for the first time, Mr Flello. I will be quite brief.
The principles behind MiFID II are laudable. Europe’s trading market is very fractured, which has limited the ability to mobilise capital across the European boundaries. It is particularly of interest therefore in the UK, where much of the capital is centred to operate more freely across Europe. The basic thrust of MiFID II is very acceptable. The obvious question to the Minister is: post-Brexit, can he guarantee that the broadening of the market base we are getting here, and with it acceptable regulation on bond traders, will continue? We need assurance on that. Given that the market has spent such an effort in time and money to get to this stage of MiFID II, to row back would be a bad thing.
There is, however, much talk in financial circles of a “MiFID III”. The American regulating authorities have been talking for some time about trying to go even further in trading regulation, to take us beyond what would be necessary and to impose costs, which most of the industry across the UK thinks would be invidious. Again, it is for the Government to ensure that, post-Brexit—all things being equal, and leaving aside recent events north of the border—if the UK found itself in a situation where it was negotiating directly with G20 and various international agencies regarding a prospective MiFID III, companies and traders operating in the UK would not be subject to further, more intensive regulation that suited the American market rather than companies here in Europe. Those are the basic points. The detail of the arrangements that have been negotiated is quite acceptable.
The Chair
I remind hon. Members to rise from their seats if they wish to catch my attention; that would be helpful.
Mr Peter Lilley (Hitchin and Harpenden) (Con)
It is old age, Mr Flello. It is a pleasure to serve under your chairmanship, even while standing. I have no objection to the draft order, but as a matter of interest, what would happen if we did amend or reject it? Would it still become law?
Simon Kirby
Let me start by welcoming the contributions made by right hon. and hon. Members. It is right and proper that we consider the draft order adequate and effective in meeting our important aim to tighten and reform our legislation, as a response to the weakness that has emerged from the financial crisis. We have consulted extensively on how we transpose these provisions effectively into UK law.
I will briefly touch on a few points. The hon. Members for East Lothian and for Stalybridge and Hyde asked what MiFID II means for Brexit. I will say two things. First, until exit negotiations conclude, the UK remains a full member of the EU, and all the rights and obligations of EU membership will remain in force. During that period, the Government will continue to negotiate, implement and apply EU legislation. Secondly, the outcome of the negotiations will determine what arrangements apply in relation to EU legislation in the future, once the UK has left the EU.
I think it fair to say that we have an open mind about MiFID III. It is about getting the correct balance between regulation and consumer protection; that must always be what we look out for. The hon. Member for Stalybridge and Hyde asked about binary options. It is important that consumers receive at least equivalent protection with binary options as with other derivative products.
The answer to whether the statutory instrument would still become law if rejected is no. We are here in our legislating capacity. This is secondary legislation. I urge all members of the Committee to ensure that we have increased transparency and resilience in our financial markets by supporting the draft order.
Question put and agreed to.
DRAFT National Minimum Wage (Amendment) REGULATIONS 2017
(7 years, 9 months ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Margot James)
I beg to move,
That the Committee has considered the draft National Minimum Wage (Amendment) Regulations 2017.
It is a pleasure to serve under your chairmanship, Sir Alan.
The purpose of the regulations is to increase the hourly rate of national minimum wage for all workers, including those who are entitled to the national living wage. The regulations also include an increase in the accommodation offset rate.
Our economy is fundamentally strong and it continues to grow. GDP growth was 0.6% in the last quarter of 2016, above market expectations, and the economy is now 8.7% larger than its pre-crisis peak. It is right that our economic success is shared by everyone. Through the national minimum wage and the national living wage, the Government continue to ensure that the lowest paid in our society are more fairly rewarded for their contribution to the economy. The latest employment figures are a testament to the success of this policy: our employment rate is at a record high of 74.6% and our unemployment rate remains low at 4.8%.
When the House met to debate the national minimum wage rises in September 2016, I informed hon. Members that from this April the national minimum wage and the national living wage will be uprated simultaneously. We have delivered on that commitment and the new rates will be effective from 1 April this year, to coincide with the start of the tax year. We hope that by aligning the cycles we can make it easier for employers to comply, while reducing their administrative burden.
The Government continue to be supported by the expert and independent advice of the Low Pay Commission, whose members I thank for their hard work and guidance. The LPC is asked to recommend the highest possible increase in the national minimum wage rates without damaging the employment prospects of low-paid workers, and to recommend the rate of the national living wage such that it reaches 60% of median earnings by 2020, subject to sustained economic growth. The LPC has carried out extensive research, consultation and analysis to inform its wage rate recommendations. We have considered and accepted all the recommendations as set out in the LPC’s autumn 2016 report.
I will take this opportunity to clearly set out the rates that will be effective from 1 April. The national living wage rate will increase by 30p to £7.50 per hour. It is projected that up to 2 million people will benefit from this increase, whereby a full-time worker in receipt of the national living wage will receive an annual increase of more than £500. All the national minimum wage rates will also be uprated above the rate of inflation. Those aged between 21 and 24 will be entitled to a minimum of £7.05 per hour, an annual increase of 3.2%. Those aged between 18 and 20 will be entitled to a minimum of £5.60 per hour, an annual increase of 3.1%. Those aged 16 and 17 will be entitled to a minimum of £4.05 per hour, an annual increase of 2.8%. Apprentices aged 19, or those aged 19 and over in the first year of their apprenticeship, will be entitled to £3.50 per hour, which is the largest annual increase of all the rates at 4.5%. Finally, the accommodation offset rate will be increased from £6 to £6.40 per day.
We recognise that as rates rise, the risk of non-compliance also rises. The Government will ensure that every worker in the UK who is entitled to the national minimum wage or national living wage receives it. We are actively taking steps to tackle non-compliance and sending a clear message to employers that minimum wage abuses will not go unpunished. That is why the Government continue to invest heavily in minimum wage enforcement, increasing the budget to £25.3 million for 2017-18, up from £13 million in 2015-16. In addition, the Government have invested £1.7 million in an awareness campaign to highlight the rights and responsibilities among workers and employers. The campaign was launched in January and will pick up pace as we approach 1 April.
Julian Sturdy (York Outer) (Con)
I welcome the proposals on the table, but will the Minister outline what representations she has had from small business, given that the increases come at the same time as auto-enrolment and other cost pressures?
Margot James
My hon. Friend makes a good point. I have had representations from small businesses, particularly in the retail sector, saying that they are finding it challenging to cope with the various cost increases, but they tell me that they agree that introducing the national living wage is the right thing to do. Despite the difficulties, I have not had any representations urging us to row back on the increases in the regulations.
This Government are committed to an economy that works for everyone. The ongoing success of the UK labour market proves that a rising minimum wage can go hand in hand with rising employment. I commend the regulations to the Committee.
Jack Dromey (Birmingham, Erdington) (Lab)
It is a pleasure to serve under your chairmanship, Sir Alan.
We will not oppose the statutory instrument, but it is important that we set out our concerns, including that the proposals do not match the necessary ambition, given the still severe and growing problem of low pay in our country. I was a founder member of the drive for the living wage back in 2002 and 2003, with TELCO—the East London Communities Organisation, which is now called the East London Citizens Organisation. As the head of the Transport and General Workers Union organising department, I helped to organise a campaign to win the then living wage for 4,000 cleaners in Canary Wharf and the City of London, thereby combating the obscenity of those who cleaned the boardrooms and the toilets of bankers earning millions being paid the minimum wage, often with minimum conditions of employment. After that, we organised the cleaners in the House of Commons. Some here will remember the first ever strike in the history of the House of Commons, which I was privileged to organise, to win the living wage for the House of Commons cleaners. It was wrong that those who cleaned this, the mother of Parliaments, should be on the minimum wage.
I have always taken the view that the case for the living wage is a moral case, but it is much more than that. The evidence is that the living wage is good for the worker—of course—and good for the worker’s family, because they typically do not have to do two or three jobs to make ends meet, often not seeing their kids from one day to the next. It is good for the employer, because the evidence is that it contributes to reducing turnover of labour on the one hand and promotes security, flexibility and co-operation on the other. It is good for the local economy, because someone on the living wage typically does not salt their money away in Swiss banks but spends it in the local community; and it is good for the national economy, because the workers concerned pay more in tax and claim less in benefits. The living wage is therefore good for Britain.
We have made real progress in this country. I am proud to say that in the city I represent, Birmingham, the very first action of the incoming Labour council in 2012 was to introduce the living wage for all its employees and then in the schools, and now we have dozens of private sector employers who pay the real living wage, including National Express and its 3,000 employees.
I am bound to say this, Sir Alan, but historically—this does not include the Minister here today—the Conservative party strongly opposed the measures for which we fought for many years, including the introduction of the national minimum wage. Indeed, the current Prime Minister is on record making colourful contributions at various times against the notion of a national minimum wage, in favour once it was introduced of a lower national minimum wage, and in favour of a series of geographical opt-outs from the national minimum wage. However, none other than Cardinal Cormac Murphy-O’Connor, on the great day of St Joseph the Worker’s mass in Westminster Cathedral, addressed a rally afterwards and urged employers and those of all political parties to embrace the living wage, saying that, if they do, in the spirit of the Catholic Church, those who repent shall be forgiven. If the Conservative party has repented of its resolute opposition to the then national minimum wage, that is to be welcomed.
Having said all that, the Government are seeking to hijack the language of the living wage when it is no such thing. It is not a real living wage, as the highly respected Living Wage Foundation has established with the evidence it adduced in favour of £9.75 in London and £8.45 outside London.
Stella Creasy (Walthamstow) (Lab/Co-op)
As my hon. Friend mentioned, east London, an area that I am proud to represent, was the birthplace of the living wage movement. Should we not judge this statutory instrument and the concerns that Conservative Members may put forward against the fact that, in this day and age, even in my part of town, 36% of people are paid below the living wage? The Government might talk about a living wage, but perhaps we ought to call in trading standards.
Jack Dromey
My hon. Friend makes a powerful point. One can put provisions on the statute book to tackle low pay, but whether that works in practice is another thing altogether.
The proposed living wage will not compensate for cuts to universal credit and other taxation and benefit changes. The 60% figure is arbitrary, and the Government’s proposals continue to discriminate against young people. I used to be chair of the Ministry of Defence trade unions, with a long association with the armed forces. North Birmingham, which I represent, historically has a strong defence culture and is a recruiting ground for the British Army. I know ex-squaddies of 23 or 24 years old who do a three or four-year stint and come out of the Army having fought for their country but not entitled to the full living wage, which simply cannot be right.
The GMB has been absolutely right to argue for an end to unacceptable age discrimination against young people. In addition, there are problems not just about how the wage is defined but, as my hon. Friend the Member for Walthamstow just said, how it is enforced. The Government have been lacklustre in the extreme in taking the necessary steps not just to name and shame but to use leverage and to enforce the law against recalcitrant, bad employers who refuse to pay the living wage. In too many employers, including those that were historically regarded as reputable, such as Marks and Spencer, there has been an industry of avoidance. First, they give the good news, “You get the living wage”—or at least the Government’s definition of it—but then there is the bad news that it is offset against other conditions of employment. My hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) has done an outstanding job in this place in exposing such practices.
The living wage is a cause about which many of us, as I do with my history, feel passionate. Is it welcome that the debate has moved on from where we were in the ’90s, with resolute opposition from the Conservative party even to a then national minimum wage? Of course it is welcome that some progress has been made. In the real world out there, from which I came, people will benefit as a consequence. Having said all that, the Government’s approach continues to lack ambition, which is why the Labour party has argued, in the strongest possible terms, for moving to a £10 an hour starting point, and then the living wage review body, based on the national minimum wage review mechanisms, can keep future increases under scrutiny.
James Berry
(Kingston and Surbiton): The hon. Gentleman is making a powerful speech, but the manifesto on which he stood did not commit to that increase.
Jack Dromey
I would caution Conservative Members against praying in aid manifestos. From when I worked for Alperton Carton Company, I remember an individual who would say that something that was false was “as sound as a nine-bob note”. I think that future Conservative manifestos will be interpreted creatively, because it is extraordinary not only that a manifesto commitment on national insurance was broken, but that there then followed an attempt to define it as not having been broken. The hon. Gentleman will forgive me for saying that I place no trust in his manifesto, but I do place trust in our determination to ensure that this country has a proper living wage.
That is all the more important because, sadly, as we have heard in recent times, including in the context of the most recent Budget, the country still faces years of austerity and squeezed living standards. Too many people are struggling to get by and that is why it is essential that we are much more ambitious, as a country and a Parliament, about a real living wage to end working poverty in Britain.
Neil Gray (Airdrie and Shotts) (SNP)
It is a pleasure to serve under your chairmanship, Sir Alan, and it is a genuine pleasure to follow the hon. Member for Birmingham, Erdington, who made a very good speech setting out our shared views.
We must be clear that the UK Government’s so-called national living wage is not the real living wage and it should not be referred to as such. It is not national, because disgracefully it does not cover under-25s, and it is not a living wage, because it falls well short of the real living wage, which is independently set by the Living Wage Foundation and based on living standards, the history of which was set out so well by the hon. Gentleman. The current real living wage is £8.45 an hour outside London and £9.75 an hour in London. The minimum wage premium rate under discussion is £7.50 an hour, which is a welcome rise from £7.20, but it is almost £1 an hour short of the rate outside London and more than £2 short of that in London.
I also note the proposed percentage pay rise for the different age brackets. The rate for over-25s will go up by 4.2% annually, which is welcome, but why is there not a fair rise across the board, to match that for over-25s? The apprentice rate will go up by 4.5% annually, which is fine, but that is the only special age-related rate that matches the rise for over-25s.
Mhairi Black (Paisley and Renfrewshire South) (SNP)
As hon. Members may know, I am under 25. Does my hon. Friend agree that it would be ridiculous to suggest that I should be paid less than anyone else in this room, purely on the basis of when I was born?
Neil Gray
Absolutely. I thank my hon. Friend for her intervention, which highlights perfectly the flaws in the Government’s argument—we will probably hear it shortly—that, somehow, someone who is under 25 does not have the experience or expertise to carry out their job. She personifies the argument that someone who is under 25 can be more than capable of doing their job just as well as, and possibly better than, someone who is over 25. She has made my point perfectly.
Turning to 18 to 20-year-olds, they will get a 0.9% rise of 5p an hour, which is an annual increase of 3.1%, while that for 16 to 17-year-olds will be just 2.8% annually. Given that they are already receiving significantly less, often for doing the exact same work, how can the Government justify a proportionately lower increase in their minimum rates? I refer again to my hon. Friend’s intervention.
This is important. In response to last week’s Budget, Katherine Chapman of the Living Wage Foundation said:
“Low-paid workers will be the worst hit by the rise in inflation set out in today’s budget forecasts.”
Rowena Mason from The Guardian has suggested that the rise in the minimum wage is not enough even to hit the Government’s trajectory to reach £9 an hour by 2020. We also need to consider these rises in the context of what Paul Johnson from the Institute for Fiscal Studies said last week:
“On current forecasts average earnings will be no higher in 2022 than they were in 2007…This is completely unprecedented”.
The Resolution Foundation has said that the period from 2011 to 2020 will have the worst record for pay growth in 210 years.
Although everyone accepts that employment is the best route out of poverty, it is no longer enough. We are seeing sharp rises in in-work poverty as the perfect storm of poor wage growth, social security cuts and rising inflation squeezes family budgets. For our part, Scotland remains the best performing of the four nations in the UK with the highest proportion of employees getting paid the real living wage—79.9%. That is because the Scottish Government have embraced the real leaving wage and championed it. We now have about 750 Scottish-based accredited living wage employers and we are pushing hard for more to sign up. We have championed the real living wage campaign while this Government try to undermine it by labelling their minimum wage premium in such a cynical way.
Requiring employers to pay their staff the living wage is a key part of Scottish public sector pay policy and since 2013-14 we have invested more than £1.5 million a year in the living wage rate across the public sector where the Scottish Government controls the pay bill, benefiting about 3,000 workers each year. I urge the Minister to look at the example being set by the Government up the road and to go further than what is being proposed today.
Owen Smith (Pontypridd) (Lab)
It is a great pleasure to serve under your chairmanship today, Sir Alan.
One might have thought that I would have learned in the summer that it is a big mistake to try to get one up on one’s elders and betters on the Front Bench, but I absolutely cannot resist. I will go back not to the 1980s and 1990s, but to 1910, when my great-great grandfather, Dafydd Humphrey Owen, was a Cambrian Combine stay-down striker in south Wales, striking for a living wage as part of the Labour movement. Members will no doubt remember from their history that the colliers were crushed by a future Conservative Prime Minister, who was then a Liberal. The Tory party at the time wholly opposed the introduction of a living wage of any sort.
Scrolling forward a few years to April 1999, when the last great Labour Government introduced the living wage, the Tory position had not changed one iota. They were still opposed to it and argued that 2 million jobs would be lost in this country. I remember that extremely well. Of course, we did not lose 2 million jobs. We did not lose a single job as a result of the introduction of the minimum wage, but we did increase the pay of more than a million low-paid people in this country by 15% overnight, lifting 1 million people in this country out of poverty at a stroke.
Playing forward to where we are today, the Tory party has ostensibly recanted, as my hon. Friend the Member for Birmingham, Erdington said, and supports measures to increase the pay of the lowest paid in this country. As last week’s Budget yet again illustrates, the reality, if we look through the rhetoric and beyond the soundbites, is a Tory party that still seeks to balance the economy on the backs of the poorest.
Not only is this not a real national living wage—I will not even indulge in the argument about the nature of the wage, as we all know that it is a minimum wage—but the Tories are not even honouring the commitment they made just a few months ago for it to rise to £9 over this period. It will rise only to £8.75, well short of the £10 that the Labour Opposition say we should be aiming for. Add that to the fact that low-paid workers in this country have already seen dramatic cuts to their income in the past few years, the latest being the increase in national insurance contributions for self-employed workers introduced just a few days ago. When we add that to the cuts to the work allowance and universal credit, low-paid workers in this country—people earning £15,000 or £16,000 a year, working 36 hours on the minimum wage—will be between £2,000 and £3,000 worse off as a result of the budgetary changes made by this Tory Government. That one fact blasts out of the water all the nonsense we have heard about the Tories being in favour of a proper national living wage in this country. The plain fact is that they are not providing living wages for people.
The Budget last week once more showed working people being asked to pay the price. The reason the Government are having to do that even more now, of course, is Brexit. What we saw in that Budget last week, beyond all the complacency and the quips and smirks from the Chancellor, was a devastating report on the state of our economy by the Office for Budget Responsibility.
In the past 11 months, the OBR has uprated the amount of borrowing it says this country will need over the spending period by £100 billion. If a business or some sort of public body had its forecast wrong to the tune of 100 billion quid, it would be in serious trouble. Just 12 months ago, the Government projected that we would see rising growth rates throughout the spending period, and then the OBR came back and downgraded growth in every single year out of the next five. If a business did that, its investors would start to look askance at the business plan.
Having seen that massive increase in borrowing and the projections for lesser growth over the next five years, did the Conservative party choose to prioritise the incomes of working people? Did the Government say, “What we really need to do is make sure that people at the bottom end of the income scale are the people who are protected from the downturn in our economy that the OBR is predicting”? No, they did not. They carried on with cuts to corporation tax. They pushed through the cut to inheritance tax. They did not reverse the cuts they had made to the top rate of tax.
They did not do anything that would ask those people with the broadest shoulders in our economy and society to bear the largest burden. Instead, they chose to take more money from the working people of this country by slowing the rate of growth in the national so-called living wage, meaning 1,400 quid less by the end of the period for average working families. They chose to push through the NICs changes, which will mean reductions of between 30 and 250 quid on top of the thousands of pounds in reductions in income that universal credit cuts have brought about.
The Opposition will take no lectures from the Tories about their intention to support working people in this country, because they have illustrated over a century and more that they do not.
Stella Creasy
I rise to ask a simple question of the Minister that seems to be at the heart of this statutory instrument. What difference does £2 make? That is the difference between what is being proposed and what a living wage actually is. I want to tell the Minister why that £2 makes all the difference to the communities we represent.
We are now living in a country where real wages are still, on average, below what they were a decade ago. It is not only a problem in the metropolitan, gold-plated streets of London, where 60% of our children are living in households that are in poverty. Across our country, whether in Portsmouth, Aldershot, Aberavon, Pontypridd or Bristol, there are families for whom £2 an hour would make all the difference to their problems.
We face a very simple challenge as a country: wages have not kept up with prices. There is too much month left at the end of people’s money. For the families on low wages that the statutory instrument will affect, this kind of change makes all the difference, because it does not include that extra two quid. Young people are cruelly discriminated against by our legislation. I wholeheartedly concur with the hon. Member from Scotland, whose constituency evades me; I am sure it is a wonderful place.
Stella Creasy
Exactly. It is completely inconceivable that age rather than proficiency should define someone’s employability.
There is an issue for us here about whether the statutory instrument will help Britain. We have to acknowledge a word that seems to be missing from the Government’s vocabulary but will in fact define these issues: Brexit. Our economic position is so uncertain. The chances are that inflation will continue to rise; that is clear to the Opposition. The question of what difference £2 makes will be all the more important in the years ahead that the legislation provides for.
In 4 million households in this country people are in work but in poverty. The point behind the living wage campaign, which I am so proud to have been a small part of in my part of town in east London, where all the best things come from—I will fight you all for that—is that it is not simply about living to work or working to live, but living a life worth living. That is why having a living wage makes a difference. This is about the cost of living. Just as inflation has risen and wages have not—for the first time wages have not kept up with growth in our country—so the costs of living are extraordinary.
I have the dubious distinction of representing the part of the country with the most estate agents per square mile. My part of town has had the highest rise in house prices of any part of the country. The Minister looks shocked, but Kirstie and Phil are the harbingers of doom for many people in my community because the cost of living, which their wages have to cover, is going up and up. That is why having a real living wage matters. Not having one means that we as a society have to deal with the consequences in a number of ways. We have to try to help people cover the cost of living, keep a roof over their head, feed their kids, put money in their electricity meter and take their kids to school. We also have to deal with the consequences of debt that we are now seeing in our country.
I look at these proposals in the context of the impact: 24% of people in this country now have mental health issues because of their personal finances and 41% of families are worried about their debt and whether their wages are going to cover such costs. One in six of those people is worried because they have borrowed money from a family friend or member. There are real human consequences to not having a real, genuine living wage: families are torn apart.
Owen Smith
I am sure my hon. Friend was about to come on to this. She is making a powerful speech and a powerful point about private debt in this country, but was she as gobsmacked as me during the Budget to see that public debt is now scheduled to go up to £1.9 trillion by the end of the spending period? That is a 150% increase in our public debt since the Tories came to power. Does she think for a moment that they can ever again use the line about not saddling our children with debt when they have saddled this country with such debt?
Stella Creasy
I was very taken with the point that my hon. Friend made about these regulations in his speech. If the financial director of a company came to their board seven years in a row having got their sums wrong, we would expect somebody to get the sack. The Chancellor and the Prime Minister certainly bear some responsibility for this.
We know that the Government expect private debt to pay the cost of that public debt, so the people who are on low wages and are going to get into more debt because we are not paying them the living wage are the very people who are going to pick up the tab for the debt that my hon. Friend describes. I want to understand why the Minister thinks we should celebrate at this point in time when we see that personal debt is rising.
People are struggling. The 36% of people in my community who are paid less than the living wage need that extra £2. We need them to earn that extra £2 so we do not have to pick up the cost, not just because we are going to face a very expensive bill for Brexit and because of the way in which the Government are managing the public finances but because of the human cost and the effect on talent and creativity. We know that families with children living in poverty struggle harder to achieve. We know that the next generation needs a better shot than the current generation if it is to contribute to the global land of milk and honey that Brexit will deliver for us. We know, therefore, that it is not enough to claim that this is a living wage. Call it a minimum wage. It is wonderful that there has been a damascene conversion to the idea that this is of economic and social benefit, but do not call it a living wage when so many people are not able to live on it.
Margot James
First, I congratulate the hon. Member for Birmingham, Erdington on all the work that he undertook to advance the concept of a national living wage, which he outlined at the beginning of his remarks. I agree with several points he made. There is more than a moral case for a living wage; it is indeed good for employers and the economy—especially local economies.
The hon. Gentleman kindly exempted me from the record of my party, which he alleged had always been against the introduction of the national minimum wage, but I gently remind him that I am not alone on the Government side of the House in being a keen supporter of a national minimum wage. We are comfortable that the Conservative party has changed in its roots. I can remember the 1990s and he is quite right that people just thought, “Well, if you have a national minimum wage, it’ll cost jobs”, and no more argument was brooked. People were wrong about that.
I turn now to the difference between what I think the hon. Gentleman was arguing for, which was a living wage more along the lines advocated by the Living Wage Foundation, and the national living wage that we have put into law. Of course, I want to see people on that sort of pay being paid more, but we have set the rate as it is, which is lower than the Living Wage Foundation supports, because we are very concerned that it does not cost jobs. [Laughter.] Hon. Members are laughing, but the living wage is set by the Government on the advice of the independent Low Pay Commission. The commission is tasked with assessing the rates of the national living wage and the national minimum wage against the performance of the economy overall, and gives its considered view about the impact of those wage rates on employment. That is why I think that setting the rates at the levels we do is justified.
My hon. Friend the Member for York Outer was quite right to make the point he did. As I have said, I have spoken to small businesses, particularly retailers, and some of them are really up against it in terms of costs, and if we were suddenly to override the advice of the Low Pay Commission and whack the minimum wage up to £10 an hour, I seriously think that a lot of people would lose their jobs.
Stella Creasy
I thank the Minister for giving way. Does she recognise that there is also quite a bit of evidence, given that growth is increasing, that companies are making profits? So what we are seeing now is employers not passing on the benefits of the productivity of employees to the people helping them to make that money. That disconnection between wages and growth is really troubling.
Margot James
I am glad that the hon. Lady concedes that the economy is in good shape and that it is indeed growing; I agree with her on that. I am also heartened by the fact that lots of employers are paying people more. In fact, the recent evidence about the national minimum wage is that it has not only protected the wages—the living wage—of people over the age of 25 but hauled the average wages of people younger than that up in its wake. That is because some employers who can afford it accept the point made by the hon. Lady earlier, namely that if they can afford to pay younger people more, they would rather have parity—
Several hon. Members rose—
Margot James
I will make some progress, because I want to respond to some of the points that the hon. Member for Airdrie and Shotts made. He was concerned about the rates for the under-25s, apart from the apprenticeship rates, which have gone up significantly. Again, the Government take the advice of the Low Pay Commission.
The issue that the hon. Gentleman did not mention is the rate of unemployment among younger people, which is significantly greater than it is among the over-25s. That is really the reason that the Low Pay Commission advises that there should be a lower rate for younger people, because it recognises that younger people need to get experience in order to command the higher rates and indeed to command a job in the first place, with the obvious exception of the hon. Member for Paisley and Renfrewshire South.
I remind Members that the unemployment rate for people aged between 16 and 24 is 12.6%. That is hugely greater than the unemployment rate for the over-25s, which is 3.6%. That is why the Low Pay Commission recommends a difference in the rates.
Peter Kyle
My hon. Friend the Member for Walthamstow made the point about young people—actually, people of all ages—struggling to get on to the housing ladder and being able to buy property. Does the Minister accept that our economy is stacked in favour of people who have assets and that people who are talent-rich but asset-poor really struggle to get on? That is why it is so important that we have more ambition for the minimum wage, so that everybody has access to the assets that will get them all the benefits that modern 21st-century life has to offer.
Margot James
The hon. Gentleman makes the point very well indeed. That is why we are trying as a Government to build a more inclusive society, in order to ensure that, as he says, people who are talent-rich but asset-poor get a fairer start in life. That is also why we are investing hugely in skills and infrastructure to try to bring better-paid jobs to all. It is not just about the minimum wage; it is also about the architecture of the economy surrounding people for whom there are few opportunities at the moment or opportunities just for low-paid work.
To correct the impression given by the hon. Member for Airdrie and Shotts in his remarks, real wages have grown every month for more than two years now. The average rate of growth across the economy of real wages was 2.6% over the last 12 months.
Owen Smith
I am very grateful. The impression that the Minister is giving and the Government have given repeatedly is that wages have really bounced back. The truth is that there has been a welcome bounce back in wages for the last 18 months or so, as she points out but, as the OBR said last week—five days ago—average wages will not reach their pre-2007 height until 2022. We are living through a decade-long recession in wages.
Margot James
As I said, real wages have risen every single month for the last 22 months.
Margot James
That is a fact—I am sorry if it displeases the hon. Gentleman. I accept what he says about the future projections—I am not going to start arguing with the OBR—but I am afraid that if he has his way and brings in a national minimum wage of £10 an hour overnight, that will result in more unemployment, which would set people’s chances back.
Margot James
I am sorry; I am going to carry on.
I want to deal with the extra £2 an hour, which is the same point as the one about raising the national living wage to almost £10 an hour. The hon. Member for Walthamstow made a very powerful speech. I completely accept that £2 an hour would make a big difference to people’s lives at the lowest end of the income scale. We want to get there as quickly as we can. The UK’s lowest earners have at least received the fastest pay rise in the last 20 years and their earnings have grown faster than other people’s further up the wage scale. More than 6% is the largest increase among the low paid for the last 20 years. Those figures are independent of Government.
I fear that one of the reasons why every Labour Government in history, I think, always leaves office with unemployment higher than when they entered office is that they want to escalate the pay rates before the country has earned it. I am afraid that is a recipe for more unemployment, which is a price that this Government are not prepared to pay. We would rather listen to the independent advice of the Low Pay Commission and put in place national living wage rates that protect employment, respect economic growth and what it is capable of paying people, and give the lower paid at least the best increase that they have had in the last 20 years. I want it to be more and I hope we will get to that point in future years—it could not come soon enough for me. I commend the regulations to the Committee.
Question put and agreed to.
Resolved,
That the Committee has considered the draft National Minimum Wage (Amendment) Regulations 2017.
Ministerial Correction
(7 years, 9 months ago)
Ministerial CorrectionsRead Full debate Read Hansard Text
Defence
(7 years, 9 months ago)
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Amanda Milling (Cannock Chase) (Con)
Mike Penning
Thirty-five years on, we not only continue but will enhance the protection of the Falkland Islands. I know that many colleagues from the House have visited the Falklands recently and seen the excellent work that our armed forces do far away from home. We will continue to support that with the Typhoons, the Rapier, and the other battalions that are there now. [Official Report, 13 March 2017, Vol. 623, c. 19.]
Letter of correction from Mike Penning:
An error has been identified in the answer given to the hon. Member for Cannock Chase (Amanda Milling) on 13 March 2017.
The correct response should have been:
Mike Penning
Thirty-five years on, we not only continue but will enhance the protection of the Falkland Islands. I know that many colleagues from the House have visited the Falklands recently and seen the excellent work that our armed forces do far away from home. We will continue to support that with the Typhoons, the Rapier, and the company that is there now.
Petition
Implementation of the 1995 and 2011 Pension Acts
Bus Services Bill [ Lords ] (First sitting)
Tuesday 14th March 2017
(7 years, 9 months ago)
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The Committee divided: - Ayes: 10 / Noes: 6 - Question accordingly agreed to.
The Chair
Before we come to the detailed consideration of the Bill, I have a few preliminary points to make. I remind hon. Members that mobile devices must be switched off or to silent, and that we do not allow tea or coffee to be drunk in the Committee Room during sittings. We will begin by considering the programme motion on the amendment paper, and we will then consider a motion to enable the reporting of written evidence for publication. I hope that we can take these matters formally, without debate.
Ordered,
That—
(1) the Committee shall (in addition to its first meeting at 9.25 am on Tuesday 14 March) meet—
(a) at 2.00 pm on Tuesday 14 March;
(b) at 11.30 am and 2.00 pm on Thursday 16 March;
(c) at 9.25 am and 2.00 pm on Tuesday 21 March;
(2) the proceedings shall be taken in the following order: Clauses 1 and 2; Schedule 1; Clauses 3 to 6; Schedule 2; Clauses 7 and 8; Schedule 3; Clauses 9 to 15; Schedule 4; Clauses 16 to 21; new Clauses; new Schedules; Clauses 22 to 26; remaining proceedings on the Bill;
(3) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 5.00 pm on Tuesday 21 March. —(Andrew Jones.)
Ordered,
That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.—(Andrew Jones.)
The Chair
Copies of written evidence that the Committee receives will now be made available in the Committee Room. We will now start the detailed, line-by-line consideration of the Bill. I will allow hon. Members to take off their jackets during the sitting if they wish. I again remind Members to ensure that mobile phones are switched off or to silent.
The selection list for today’s sitting is available in the Committee Room. It shows how selected amendments have been grouped together for debate. Those that have been grouped together are generally on the same or a similar issue. A Member who has put their name to the leading amendment—the first named amendment in a group—is called first. Any other Member is then free to catch my eye and indicate that they wish to speak on all or any one of the amendments within that group. A Member may, if they wish, speak more than once in a single debate on a group. I will work on the assumption that the Minister wishes the Committee to reach a decision on all the Government’s proposed amendments.
Please note that decisions on amendments take place not in the order in which they are debated, but in the order in which they appear on the amendment paper. In other words, debate occurs according to the selection and grouping list, but decisions are taken when we come to the clause that the amendment affects. I hope that explanation is helpful to Members. I will use my discretion as we go through proceedings, as will the other co-Chair, to decide whether to allow a separate stand part debate on individual clauses and schedules following debates on relevant amendments.
Clause 1
Advanced quality partnership schemes
The Parliamentary Under-Secretary of State for Transport (Andrew Jones)
I beg to move amendment 1, in clause 1, page 2, line 43, leave out from beginning to end of line 4 on page 3.
This amendment removes an order-making power under which the Secretary of State may confer on a local transport authority with an advanced quality partnership scheme power to enforce traffic offences.
The amendment removes the Secretary of State’s ability to confer the functions to enforce traffic offences on authorities that make advanced quality partnership schemes. English local authorities outside London that can enforce parking violations already have powers to enforce bus lane contraventions, including moving traffic violations in bus lanes. The measure that was made in the other place would broaden those powers beyond the scope of bus lanes and allow the enforcement of other moving traffic offences such as contraventions in yellow box junctions. There are already provisions in part 6 of the Traffic Management Act 2004 to permit the enforcement of other moving traffic violations.
The Government have not yet made a decision on whether to provide these powers to authorities, but we continue to discuss the issue with the Local Government Association and other organisations; I have met the LGA to discuss this issue on two occasions. A key concern remains that if the powers are granted, they could be misused to generate revenue for local authorities—indeed, I had a letter from a councillor only a few days ago suggesting that it would be a highly desirable thing to do from a revenue-raising perspective—but their primary purpose is traffic management, and that kind of attitude reinforces the Government’s concerns.
I recognise that congestion can have a major impact on local bus services, but authorities can take action to address it through new infrastructure measures and technological solutions, for example by enforcing moving traffic offences in bus lanes, as I mentioned earlier. Given the existing powers available to local authorities and the existence of part 6 of the Traffic Management Act, I hope that hon. Friends and colleagues on the Committee will agree that the additional legislation, particularly where it relates to only one type of partnership, is unlikely to achieve better outcomes.
Daniel Zeichner (Cambridge) (Lab)
It is a pleasure to serve under your chairmanship, Mr Nuttall. I am sure that the discussions we will have in Committee over the next six sittings will be civil and cordial, as they were on Second Reading. Indeed, the Opposition would be delighted to save everyone a lot of time and agree to the Bill as it now stands, because we believe that it was much improved in the other place—but we appreciate that the Government have other plans. At the outset, may I put on the record that for many years I have been a member of the trade union Unite? As it represents many members in the bus industry, I have regular conversations with it.
Government amendment 1 on moving traffic offences may be a curious place to commence our discussions, but it highlights the fact that, welcome though many of the Bill’s measures are, they are only a part of what is needed to achieve what we all want to see: a much more comprehensive and thriving bus sector. Although many more public transport journeys are made by bus than by any other form of public transport, sadly the number of journeys and, in many cases, their speed is declining. The industry tells us that part of the problem is traffic congestion, which is why enforcement of moving traffic offences matters, as the Minister indicated.
When I went to meet my local bus company soon after being elected, to continue the long period of constructive dialogue that local bus manager Andy Campbell of Stagecoach and I have had over many years, he was absolutely clear that one of the biggest problems facing buses in Cambridge was the snarl-ups at a major junction where the yellow box had been removed after a major reconfiguration. However, what is the point of a yellow box if everyone knows that there is no sanction for transgressing it? That point struck me last Friday as I did exactly that at another junction in the city, just as everyone else does. The measure introduced in the other place would give local councils the powers to do what the police no longer have the resources to do. That is not their fault, but a direct consequence of Government cuts—cuts add to congestion, and they add to delays on the buses.
This destructive Government amendment removes an order-making power under which the Secretary of State may confer on a local transport authority with an advanced quality partnership scheme the power to enforce traffic offences. Part 6 of the Traffic Management Act 2004 gave the Government the power to make regulations and publish guidance relating to the civil enforcement of road traffic contraventions, such as the regulations we have been talking about for parking and moving traffic offences. As I have outlined, we believe that it is important that all councils should have enforcement powers to deal with moving traffic matters such as banned turns and yellow box junctions, to help improve the reliability and punctuality of buses, which would in turn increase bus patronage, which is something we are all trying to achieve.
It is disheartening to see the Government refusing to enact the power. According to Department for Transport figures, road traffic levels and congestion are projected to increase by 55% and 86% by 2040. The powers could help local authorities with advanced quality partnership schemes to reduce congestion, improve punctuality and increase bus ridership, so why not do it? We know that the Government do not really trust councils and run scared of press columnists who whip up scare stories. In the meantime, every driver stuck by a gridlocked crossing, and every bus passenger stuck because their bus cannot move, is the loser. I exhort the Minister to be brave and make yellow boxes work. If that is good enough for London and Cardiff, why not for Cambridge and Yorkshire?
The Chair
May I ask at the outset that any hon. Member wishing to speak will indicate that clearly by standing up, as they would in the Chamber? I want to include everyone.
Huw Merriman (Bexhill and Battle) (Con)
I accept your invitation on that basis, Mr Nuttall. It would be incredibly remiss of me not to make at least a brief contribution, as I see a fellow member of the Transport Committee, the hon. Member for Blackley and Broughton, looking at me and no doubt remembering some of the things I said on this point in that Committee.
I live in a constituency where we do not even have civil parking enforcement. The hon. Member for Cambridge is correct that at the moment the police do not have the resources to deal with traffic offences. In my constituency they have even given up on dealing with people who park in a bay for two hours. As a result, many parts of the constituency are chock-a-block and no one is taking responsibility.
I am greatly concerned about the fact that there is no direction from above, conferring powers but also making sure that powers are used. I do not want to vote against the Government but I would ask the Minister to consider how they can ensure that councils take responsibility for powers that they can utilise, and how to improve council enforcement with respect to traffic movement.
The Transport Committee is currently undertaking an inquiry on urban congestion, and it is clear to us that difficult decisions must be taken. I would like local authorities to be granted more powers, and I would like us to ensure that they take them rather than arguing with the police about who does nothing.
Andrew Jones
My hon. Friend makes an interesting point. I think that councils, rather than arguing with the police about who does nothing, have significant powers, and we should encourage them to take action. I hope that we can move to much greater civil enforcement, and to people leading their councils with a view to shaping their local areas and making them better environments, in all respects, including traffic management. As for whether the Government trust councils—a point raised by the hon. Member for Cambridge—the Bill is an enabling one that gives councils powers. Clearly his underlying point is not correct.
The Government are unconvinced that, without further controls, the proposals would be anything other than the potential for revenue-raising by councils, rather than traffic management. That view is reinforced when I receive letters such as one that I had stating, “This is an opportunity for us to get some cash in.” However, I am not against the principle and will continue to talk with the Local Government Association. I discussed it only last Thursday with the LGA—Councillor Martin Tett, the leader of Buckinghamshire County Council, is leading on it—so there are live conversations.
I am happy to give the Committee my commitment that we shall continue with those discussions, but I want to make sure that we see the issue from the point of view of traffic management. If the LGA will do further work on that we can continue to talk. I do not think that the Bill is the right place to tackle moving traffic offences.
Graham Stringer (Blackley and Broughton) (Lab)
I understand what the Minister is saying, but the provision is not about enabling councils to carry out a function; it is about restricting current and future ministerial teams. Why does he want to restrict the powers of his Government and following Governments, if they think fit, to confer that power on local authorities?
Andrew Jones
I am happy to consider the commencement of these powers, but we have to go through a number of safeguards yet. I do not think that we are in a position to go any further. I am quite happy to keep this dialogue going, but the case has not been made in a way that has convinced me or other departmental colleagues. Indeed, I think that there are reservations across the House more broadly.
This is not about restricting powers; it is about granting powers to councils to enforce moving traffic offences. I know that they want them. These powers have been on the statute book for 13 years and not commenced. Our predecessors probably had some of the same reservations that I have had. I do not think that we can go any further than my commitment to keep talking and not to be against this in principle.
Lilian Greenwood (Nottingham South) (Lab)
I am sure that the Minister is aware of the report by Professor David Begg for Greener Journeys about the impact of congestion on bus passengers and the fact that bus journeys have been reducing by 10% each year. If that trend continues, will he look again at traffic management? Clearly, congestion hits buses harder than it hits other vehicles. If bus speeds are reducing, that can hit bus patronage. This goes against the very ethos of his Bill, which is to increase bus patronage and encourage the use of the bus as a means of transport.
Andrew Jones
The hon. Lady is absolutely right. The heart of the Bill is more powers to get more passengers on to buses. That is what the Bill is for. I am certainly aware of the report by Professor Begg; I have read it and discussed it with him. Indeed, we have spoken at a couple of conferences together and discussed the matter. I have no doubt that congestion is a factor. At the same time, the Government are taking significant action to tackle it. Only last Friday morning we announced a further £110 million of schemes to tackle congestion and particular pinch points on the strategic road network.
We are aware of the impact on congestion and are taking action. I am aware of the concerns in the industry. I support, for example, the introduction of bus priority measures, where it is appropriate and when councils, as local highway authorities, take these actions. That still does not mean that we are in the right place to take this issue forward today.
Amendment 1 agreed to.
Andrew Jones
I beg to move amendment 2, in clause 1, page 4, leave out lines 37 to 42.
This amendment removes a requirement that, under an advanced quality partnership scheme, new buses providing local services must meet eligibility requirements contained in the “Low Emission Bus Scheme” (a programme of grants to support the use of low and ultra-low emission vehicles), where the vehicle comes into service after 1 April 2019.
The Chair
With this it will be convenient to discuss the following:
Government amendments 6 and 11.
Andrew Jones
The amendments would remove the requirement that from 1 April 2019 all new buses used to deliver services as part of a partnership or franchising scheme in England must be low-emission vehicles. As a result of changes made in the other place, the Bill currently requires such vehicles to meet the eligibility requirements contained in the low emission bus scheme.
I support the spirit behind the changes made in the other place. We all want to see greater use of low-emission buses. Last July, we published details of the local authorities and operators that will be sharing the £30 million budget under the low emission bus scheme. That builds on budgets that have come from previous Governments in support of cleaner vehicles. In the autumn statement, my right hon. Friend the Chancellor of the Exchequer announced that a further £100 million will be made available over the next few years to help to spread the use of such buses.
The drafting of the Bill as it stands, however, is not the way to go about encouraging greater use of these very impressive vehicles. The requirement would tie the hands of authorities looking to implement franchising, advanced quality partnerships or enhanced partnerships. It would require them to specify standards for newer vehicles that are higher than in other parts of the country. It is a bit of a centralist approach, which goes against the principle of the Bill, and it would certainly result in additional costs, which could make the difference between whether schemes are viable or not. The likely consequence is that many local transport authorities would simply not pursue such schemes at all, which would lead to lower levels of bus use and potentially worse environmental outcomes than would have been achieved without the provisions. Even where schemes are set up, the provision could be circumvented for several years if authorities simply do not introduce any new buses at all, which would be a perverse consequence and the opposite of what it seeks to achieve.
Daniel Zeichner
I hear what the Minister says, and of course there is always a debate to be had about how to drive up standards, but the evidence is clear that unless such mechanisms are used, it does not happen. It is disappointing that the Government intend to remove the provisions in the Bill that would ensure that schemes require that new vehicles delivering local services meet the specifications of the low emission bus scheme as set out by the Office for Low Emission Vehicles.
However, we are a little cheered by the fact that the Government amended the Bill to specify that the standards of service that may be specified in a scheme include requirements about emissions or types of fuel or power. Our amendment says that schemes must ensure new vehicles party to the scheme meet the low-emission specifications, but the Government’s amendment says only that standards of service may include requirements about emissions, and does not set out what they may be.
The draft guidance is not much better. It says that the Department
“would encourage authorities to think about how they can use the tools in the Bill...to help improve the emission standards of the vehicles used and therefore local air quality”,
but adds
“it is important to remember however that these tools are designed to help authorities...not dictate standards.”
While that may be a very cosy way of arranging things, it does not do what is necessary to drive up standards.
We all know how pressing the air quality issues in this country are and how frequently the Government have been losing in the courts. We think this is a straightforward opportunity to take robust action, but sadly the Government’s response is to think about it. We need more robust action to make the buses in our country greener and cleaner.
Andrew Jones
To say that the Government are just thinking about it does not capture the spirit of what I said earlier about our low emission bus scheme and the further funding that was allocated in the autumn statement. I agree that air quality is a significant and pressing issue, and I have no doubt that progress with buses is at the heart of improving the air quality in our towns and cities. However, the Bill is explicit that emissions standards can be specified in partnership schemes or included in local service contracts, in the context of franchising. Emissions standards can be included in schemes, thus giving local authorities the flexibility to determine an approach that is right for their area.
I am not quite as doomy and gloomy as the hon. Gentleman on this issue. From my discussions with bus operators, I see a recognition that new low-emission vehicles present a fantastic opportunity. They are moving their fleets in that direction and we are supporting them in that work. In my constituency, the Harrogate Bus Company will move to an electric fleet for much of its service. It will be a leader for low-emission buses across the country and I have supported it in its enthusiasm.
That also has good public recognition but that does not mean we should dictate cost, which could have a perverse effect rather than the positive motive behind the amendment. That is the reason the Government have tabled it.
Amendment 2 agreed to.
Andrew Jones
I beg to move amendment 3, in clause 1, page 6, leave out line 1.
This amendment and amendment 4 remove a requirement to consult representatives of employees of affected bus operators about a proposed advanced quality partnership scheme. The representatives must be representatives of a trade union recognised by bus operators or, if there are no such representatives, appointed or elected representatives of the employees.
The Chair
With this it will be convenient to discuss the following:
Government amendments 4, 8 and 9.
Amendment 22, in clause 4, page 18, line 16, leave out “advanced quality partnership scheme” and insert “franchising scheme.”
This amendment would amend a provision in the franchising scheme section that refers to advanced quality partnership schemes.
Amendment 27, in clause 9, page 44, line 33, at end insert—
“(i) appropriate representatives of any affected employees”
This amendment would make appropriate representatives of any affected employees statutory consultees when a local authority is consulting on a proposed enhanced partnership.
Amendment 28, in clause 9, page 44, line 33, at end insert—
‘(6A) In subsection (6) (i) “appropriate representatives of any affected employees” means—
(a) representatives of a recognised trade union, if an independent trade union is recognised by existing operators in the area of the proposed franchising scheme; or
(b) in any other case, employee representatives appointed or elected by the affected employees who have authority from those employees to receive information and be consulted on their behalf.”
This amendment specifies what is meant by the term “appropriate representatives of any affected employees” in Amendment 27.
Andrew Jones
A number of amendments have been tabled by the Government, the hon. Members for Cambridge, for Nottingham South and for Scunthorpe that relate to the consultation of employee representatives in relation to proposed partnership and franchising schemes.
Government amendments 3, 4, 8 and 9 would remove the requirement for authorities to consult representatives of employees about proposed advanced quality partnership and franchising schemes.
The Government introduced amendments in the other place to require authorities to consult employee representatives about proposed franchising schemes, as it is those schemes that are likely to impact on staff. The Bill, therefore, already places a requirement on authorities to consult employee representatives in the appropriate circumstances, which ensures that any trade unions that represent employees will be consulted on franchising proposals.
The further amendments that were made in the other place in relation to consultation of employee representatives and trade unions on proposed franchising schemes therefore partly replicate Government amendments. Government amendments 8 and 9 would simply remove that duplication. In the light of that duplication, I hope the hon. Member for Cambridge will feel able to withdraw amendment 22, which would amend further that duplicated text.
I completely understand the need for employee representatives to be consulted on proposed franchising schemes because these proposals could have a direct impact on bus industry employees in an area. It is, therefore, completely correct that they are consulted and that employee representatives can be involved in that process. However, I do not consider it necessary to consult employee representatives when establishing an advanced quality partnership or an enhanced quality partnership, as amendments 27 and 28, tabled by the hon. Members for Cambridge, for Nottingham South and for Scunthorpe, would require.
In most cases, a partnership is likely to lead to changes such as multi-operated ticketing schemes. Only in a very individual, particular set of circumstances will an enhanced partnership lead to changes for employees that could be similar to those arising from franchising.
Government amendments 3 and 4 would remove the amendments made in the other place. I hope on the basis of my explanation, and the Government’s clear intention to support employee representatives speaking up on behalf of employees in an area where there will be changes, that the hon. Gentleman feels able to withdraw his amendments.
Daniel Zeichner
We were rather hoping that the Government would be minded to retain the parts in the Bill on employee consultation. It is disappointing that they feel the need to remove recognised representatives of affected employees from the list of statutory consultees when authorities are making advanced quality partnership and franchising schemes.
It seems a touch petty and perhaps an ideological dig at trade unions. I cannot imagine where in the Department that might have come from but I know the Minister is better than that, so I hope he might think again.
I do not understand why the Government think that local authorities should not hear from trade unions or other employee representatives when they are consulting on schemes that could have a profound impact on the local bus workforce. One thing that strikes me about the whole discussion about partnerships, which we all support, is how few people are actually aware of them in any area. Not many of my local councillors are aware of them. We have to dig deep to find that these wonderful partnerships already in place, so here is an opportunity to involve more people and to spread the word. The expertise of those frontline staff in providing the services is unique. I generally find that if I want to know what is going on, I talk to the people delivering the service on the ground. They often have a rather different take on what is happening, so if people want to know what is happening, go and talk to the drivers. Their expertise and their local knowledge is not, it seems, to be taken into account.
We are disappointed at the Government’s removal of what seemed to us to be harmless and sensible provisions. When this was discussed in the other place, the Minister, Lord Ahmad, said:
“I agree that it is important that employee groups are consulted appropriately on proposals to improve local bus services. I agree particularly that significant changes to local bus services could well impact local bus industry employees, so it is only fair that they are given the opportunity for input in such circumstances.”
He also said:
“I agree that employee groups and others affected by the proposals should always be consulted formally on franchising schemes”.—[Official Report, House of Lords, 29 June 2016; Vol. 773, c. 1651.]
I appreciate we are extending this to the other forms of partnership, but the principle seems fairly clear.
Amendments 22, 27 and 28 are partly related to drafting issues. We think that amendment 22 corrects a minor technical error in the Bill and clears up what we think must have been a typo, because clauses 4 to 6 relate to franchising schemes but clause 4 refers to “advance quality partnership schemes”. Amendments 27 and 28 would, in our view, simply tidy it up the Bill and bring clauses 9 to 15 on enhanced partnerships in line with those on advanced quality partnerships and franchising. My amendment inserts into the section on enhanced partnership plans and schemes a requirement that a local authority or authorities must consult appropriate representatives of any affected employees.
Huw Merriman
Just so that I am clear on this: the hon. Member is expecting that local authorities would consult with the employees of an organisation where they are already employed by a non-local authority employer. This is not relating to municipals on that basis. If that is the case, surely that opens up a Pandora’s box: whenever a local authority wishes to change a contractor for refuse services, it has to talk to all of the employees of all of the refuse companies. Where does this end? Where does this link to the desire to make the process simpler for local authorities? If this amendment were to be accepted it would make the process incredibly cumbersome.
Daniel Zeichner
I would not disagree that the processes are complicated. Our point is that if you are looking to redesign local services, who better to talk to than those that are actually involved in delivering them? I accept the hon. Gentleman’s point that it does raise other issues, and I would agree that talking to the people providing those services gives us a better chance of getting the end system better, whether it is the provision of refuse services or any other services,.
Huw Merriman
Is there not a danger that you spend a lot of time talking at great cost and actually delivering very little, which is exactly contrary to what we are trying to do with this Bus Services Bill?
Daniel Zeichner
When we are redesigning services that are going to have a major impact on people across a local area, it is certainly worth talking to people. Quite often, we are talking about representatives of people. It is a question of having one or two extra consultees, so I am not sure that it is a huge extra burden. My worry is that people who have the knowledge are being excluded from those discussions. My practical experience on the ground, as I already intimated, is that very few people know about these partnerships. The involvement of many more people would lead to a better outcome.
Amendment 27 refers to
“appropriate representatives of any affected employees”.
That means representatives of recognised trade unions or employee representatives who have been appointed or elected by the affected employees. The amendments effectively make trade union representatives statutory consultees when a local authority makes enhanced partnership schemes. That is already provided for elsewhere in the Bill—local authorities bringing in advanced quality partnership schemes or franchising schemes must consult with “appropriate representatives”. There is no reason why that should not also be the case for enhanced partnership schemes.
Graham Stringer
It is a pleasure to serve under your chairmanship for the first time, Mr Nuttall. I rise not to make a long speech, but to save you from telling me that an intervention on the Minister is too long—I suspect that such an intervention would be. I want to use these amendments to ask him on what principle he has decided what should be done at the centre—what should be the Secretary of State’s or Government’s decision—and what should be devolved.
We are on our third set of amendments. The Minister has argued that the Opposition amendments are otiose and too prescriptive and, in effect, that things would be better left to normal procedures. He said that traffic management would be better dealt with by current policies and that bus emissions schemes would be better left to local schemes. A number of amendments have been tabled—some by him—that take powers away from local authorities and give them to the centre, but he has also argued that some things should be left to local authorities.
This is a good Bill, which I want to support, even if the Government remove some improvements that have been inserted by the other place, as I am sure that they will. It will still remain a good Bill that I wish to support, but will the Minister explain what principles he is using to decide what should remain within his ambit and what should be devolved? At the moment, what has been devolved down and what has been left at the centre is very confusing, if not to say arbitrary.
Andrew Jones
There are a few questions to deal with. Let me start with the underlying principles. I agree that devolution has not been tidy over the past few years, but it has generally progressed from the ground up. I am a great supporter of devolution; we should trust people to make local decisions wherever possible. The hon. Member for Blackley and Broughton suggested that the principle was a little arbitrary, but actually, it comes down to whether there is governance and some kind of control. If we can ensure that we have governance and control, I am happy to see devolution progress. A further point could be accountability, which we might come on to during our debate on franchising.
I am all in favour of consultation with employee representatives when there are material changes to people’s working conditions. A franchising scheme would mean that, which is why we put employee representatives in that proposed new section in the Bill. That is unlikely to be the case for the simple, more structured partnership arrangements, which are about local authorities and bus companies coming together to agree and put forward a set of consumer offers.
Lilian Greenwood
I wonder whether the distinction that the Minister is making is right. Employee representatives clearly have a role and need to be consulted on issues that affect the terms and conditions of their members, but does he not accept the point made by my hon. Friend the Member for Cambridge? The people who deliver those services—the frontline workers in the bus industry—have valuable expertise, so there is value in consulting them and seeking their view on operational aspects and not just the bits that might affect their employee terms and conditions. Does he not accept that there is value in gaining their expertise as part of the process?
Andrew Jones
Yes, I do accept that. I worked in business for 25 years before coming to Parliament. If changes are going to be made or if a company seeks to improve, the best thing to do is to talk to people and take them with you. I fully recognise that; doing so is good practice.
I would expect any authority developing partnership schemes to talk very widely. The whole point of partnership schemes is to get people to come together to decide on a set of customer benefits and deliver those benefits to put more people on buses. The authority will be free to consult as widely as it wishes—that is fine, I am all for it doing that—but in areas where terms and conditions change, we need to go further and make it mandatory. That is the difference between us on the Bill; it is not a big difference.
Is consultation a good thing? Of course it is. Are employee representatives at the heart of that? Of course they are, but where terms and conditions are changing, we need to make it mandatory.
Question put, That the amendment be made.
Andrew Jones
One of the most interesting parts of the Bill is the proposal to see greater powers in the world of partnerships between the bus companies and local authorities. Clause 1 introduces new advanced quality partnerships, which build on the existing quality partnership schemes that were first introduced in the Transport Act 2000. Under the existing schemes, a local transport authority has to invest in bus-related infrastructure. That might be priority lanes, new bus stops or a bus station. Local bus operators that choose to use those facilities improve the quality of their services in return, so there is an offer from both the operators and the local authority. Indeed, operators that do not participate cannot use the facilities provided by the authority.
Advanced quality partnership schemes have a broader scope. In addition to, or instead of, the provision of facilities, an advanced quality partnership scheme can include measures taken by a local authority that will help buses. It might use other areas within its powers as an authority, such as traffic management policies or parking policy. The new advanced quality partnership schemes can therefore include a wider range of requirements that operators must meet, including in relation to the marketing of services and tickets, the provision of information to passengers, and even smartcard requirements.
An advanced quality partnership scheme may be made only by an LTA or LTAs working together in England. The existing quality partnership scheme provisions will continue to apply in Wales, as will such schemes made by an English authority in conjunction with a Welsh authority where we are dealing with cross-border services.
This is an interesting addition to the range of powers available on a local basis. There is strong support of partnership arrangements in the bus sector. Indeed, I have travelled around our country a lot over the past couple of years looking at different bus arrangements, and good partnership working has been at the heart of progress. We have seen that right across the country. Clause 1 is a welcome addition.
Daniel Zeichner
There is much to agree on here. We understand the case that a bus service cannot be run without infrastructure around it and the co-operation of the local authority, so we strongly welcome the extra flexibility that the advanced partnerships will bring.
However, I return to a point I made earlier about the lack of understanding in the wider world about what is going on with these schemes. I was slightly troubled by the response to my questions to the Department about analysis of the success of existing partnerships across the country. There seems to be a certain vagueness about that, which may reflect the fact that the Department has many other things to work on. I appreciate that, but as we move on to create extra types of partnership scheme, it is useful to know what has and has not worked around the country before. I encourage the Department to do a little more research on that, as we process these schemes.
There is a question over who exactly will be come forward to use these advanced quality partnerships and the enhanced partnerships that we will come to later in the Bill. I divert back to the moving traffic issue. The hon. Member for Bexhill and Battle probably created the soundbite of the day when he referred to the many years spent talking about doing nothing. There is a further danger. It is clear to me that very few people in the wider world understand what the Government are trying to achieve here.
This is a worthy intention, and we support the Government’s proposals on advanced quality partnerships. We are disappointed that they have not felt able to maintain the amendments made in the other place, but we appreciate that that is their role in life, and we strongly support advanced quality partnerships.
Andrew Jones
I have just a couple of comments. I agree that right across the country we are seeing good partnership working. I have seen it with my own eyes, and I also look at sales data that comes into the Department. The idea that the Department is ignorant of such matters is not entirely fair. I agree that knowledge of these things might be limited locally. I have no means of quantifying that, but I suspect that there could be some truth in it. The point remains that where there is good partnership working, we see more passengers on buses. I am not too worried about whether people know about the formal structures behind the scenes. I want to see the outcome of that planning and preparation, which is a stronger bus market that is growing in an area.
Question put and agreed to.
Clause 1, as amended, accordingly ordered to stand part of the Bill.
Clause 2 ordered to stand part of the Bill.
Schedule 1
Further amendments: advanced quality partnership schemes
Question proposed, That the schedule be the First schedule to the Bill.
Andrew Jones
The schedule contains only consequential amendments to the Transport Act 1985 and the Transport Act 2000 that are necessary for the effective implementation of the advanced quality partnership scheme provisions. They are technical amendments that will ultimately ensure that, once the advanced quality partnership scheme provisions are in force, the existing quality partnership provisions in sections 114 to 123 of the Transport Act 2000 will enable such schemes to be made only by Welsh authorities or jointly by English and Welsh authorities. The schedule also amends the Transport Act 2000 to require local authorities in England that make advanced quality partnership schemes to satisfy themselves that any adverse impacts on competition are outweighed by the benefits secured.
The amendments that the schedule will make are perhaps a little dry, but they are necessary.
Question put and agreed to.
Schedule 1 accordingly agreed to.
Clause 3
Transitional provision
Question proposed, That the clause stand part of the Bill.
Andrew Jones
The clause automatically turns all existing quality partnership schemes made by English authorities into advanced quality partnership schemes. Such schemes may then take advantage of the new provisions and flexibilities of the advanced quality partnership schemes, but will not be obliged to do so.
Graham Stringer
Will the Minister tell the Committee how many quality partnerships the clause affects?
Andrew Jones
The clause affects all the existing quality partnership schemes. I do not have an exact number for the hon. Gentleman but, having seen some schemes in action, I am aware that there are good schemes all over the country. I could not give a precise figure without checking but it is into double figures. [Interruption.] Inspiration is now arriving in the form of a written brief that gives the answer as 10.
Andrew Jones
Yes, it is double figures.
Clause 3 is a small measure that makes transitional arrangements to turn existing quality partnership schemes into advanced quality partnership schemes. I commend it to the Committee.
Daniel Zeichner
A theme is emerging through these discussions. I return to my point about the number of these schemes and the understanding that exists across the country. While I entirely take the Minister’s point that, for the bus passenger, the issues are whether the bus is running, the quality of the bus, the fares and all of the rest of it, my worry is that many of the people who should know a bit more about this locally—local authorities and local councillors—are probably unaware of what has happened in the past and what the opportunities might be in the future. I encourage the Department to talk more about these partnership schemes because, if we only have 10 across the country, that rather suggests that there are many areas that do not currently benefit from these schemes.
My part of the world in Cambridge is frequently cited as one of the good examples. Although I have robust conversations with my local bus company—we will perhaps come on to that later on—the relationship between the bus company and the local authority has helped deal with some very pressing issues over many years. That has meant that the traffic in Cambridge, although still grindingly slow, has not got any slower. I would suggest that the number of my local colleagues who know about how that has been achieved is relatively small. It is not talked about or discussed.
I think that there is a lot of potential to look at the good examples—and there are other good examples across the country—and make more of the opportunities that exist.
Andrew Jones
The hon. Gentleman and I will spend part of the day agreeing with each other, because I do agree on that point. Partnerships have been working—we have seen that. He has direct first-hand experience; I have direct first-hand experience from many visits around the country. My focus is on consumers—getting consumers on to buses—but his point about whether the partnerships are widely understood among passengers does not worry me.
Are the partnerships understood among councillors? That is potentially a little disappointing. Perhaps that builds slightly on the pithy phrase from my hon. Friend the Member for Bexhill and Battle. Councillors really should know if their local authority is engaged in a partnership. It would be surprising and disappointing if that were not the case. As a general point, we should all take the opportunity to talk up the bus market.
I have toured many bus conferences and local markets over the past 21 months or so and it has been very good fun. I see an industry that is changing rapidly—we talked about the low emission changes earlier—but I do not think the changes are fully understood and appreciated by customers. Perhaps people have excluded themselves from the bus market in recent years and are unaware of how things have developed to offer them a much better product.
Part of what we have to do is go round and encourage people to use buses and just try it. We have a “catch the bus” week organised by Greener Journeys every year; that has been successful and is growing in momentum. I have participated in that wherever I have been able to do so—and that has been quite a lot—and I support more of that work.
I agree about partnerships being the bedrock of a good marketplace. It is about customers, and if councillors do not know about these matters, they certainly should.
Question put and agreed to.
Clause 3 accordingly ordered to stand part of the Bill.
Clause 4
Franchising schemes
Andrew Jones
I beg to move amendment 5, in clause 4, page 15, line 11, at end insert—
“But each of paragraphs (b) to (f) has effect only if the Secretary of State by regulations so provides.”
This amendment enables the Secretary of State to control the bodies, other than mayoral combined authorities, that may introduce franchising schemes. The Secretary of State must make provision by regulations before county councils and other authorities in England referred to in paragraphs (b) to (f) may be franchising authorities.
The Chair
With this it will be convenient to discuss Government amendments 7, 17 and 18.
Andrew Jones
Government amendments 5 and 7 reinstate the original provisions of the Bill to require authorities that are not mayoral combined authorities to apply to the Secretary of State before they can consider implementing franchising. The amendments will mean that only mayoral combined authorities will be able to access the franchising powers automatically. Amendments were made in the other place to provide automatic access to franchising powers to all authorities, regardless of the seriousness of their intent or their suitability to take franchising forward. The Government’s view is that automatic access to franchising should be available only to combined authorities with directly elected Mayors because combined authorities with Mayors, when established, will provide clear, centralised decision making for transport across a relatively wide local area such as a city region.
Gloria De Piero (Ashfield) (Lab)
Selston is a rural parish in my constituency. People have to turn down jobs in Nottingham because there is no bus service to get them back at night, and an elderly gentleman cannot get back from his beloved Nottingham Forest on a Saturday evening if there is a late afternoon kick-off. Why would my constituents have to apply to the Secretary of State to control their bus services and routes when others would not?
Andrew Jones
The hon. Lady makes a point about the value of local bus services. I agree that many people rely on them. Some communities are connected only via buses in the world of public transport. We are talking about automatic access—franchising is a significant jump for an authority that wishes to go down that route. I am quite relaxed about who franchises. We have a suite of powers and the Government are neutral.
Julian Knight (Solihull) (Con)
I wonder whether the Minister is familiar with the experience of the future mayoralty in the west midlands. The Mayor will give accountability to the process and, effectively, big decisions will be made at that level. Local people can therefore have a better input into what happens across the whole region.
Andrew Jones
I was coming to the point my hon. Friend has made and made very well. Mayors will have access to significant budgets, which they can commit to bus services if they wish, and will be responsible and accountable for a decision to move to a franchising model. This is a question not of some areas having fewer rights than others, but of ensuring that the governance arrangements are in place when making that significant jump.
Bridget Phillipson (Houghton and Sunderland South) (Lab)
The Minister has talked about the accountability that comes with a Mayor. Can he also talk about the guidance that accompanied the Bill and why Cornwall is regarded as an exception? I welcome all areas wanting to take on powers for franchising, but I cannot distinguish a difference between the north-east and Cornwall. I cannot see why Cornwall should be looked on favourably whereas the north-east would not automatically have those powers.
Andrew Jones
I will certainly address that, but first I will finish answering the point made by the hon. Member for Ashfield. When a village requires a service but does not have one, local authorities have the power to tender for services and subsidise them. The point is to get more passengers on to buses to make buses a much more sustainable, financially secure mode of transport. That is at the heart of the Bill.
Franchising is a significant step and attracted much of the attention within the industry as we developed the Bill. My personal view, as I have said, is that partnerships are at the heart of the Bill. I can imagine some areas choosing to go down a franchising route, and they can do so if they wish—it could be appropriate in some areas, and Greater Manchester, for example, has indicated throughout that it wishes to go down that route. Other areas, even combined authorities with Mayors, have indicated to me that they would be unlikely to go down that route, but we are keeping the access to that route open. That is because we have Mayors with significant budgets, and they have the responsibility and accountability.
Other authorities, such as Cornwall, should be able to have access to franchising powers where they are well placed to make franchising a success and where they have a clear plan to benefit passengers. We want to ensure that franchising powers can be made available to authorities that have the ability, the powers and, importantly, the funding to make a success of franchising, and where franchising will benefit passengers. The amendments therefore enable other authorities to access the powers, with the Secretary of State’s consent, on a case-by-case basis.
It will help the Committee if I set out in more detail how we envisage things working in practice—that might address the concerns of the hon. Member for Ashfield. Last October, we published a draft policy statement setting out the sorts of factors that the Government would take into account when determining whether to provide an authority that is not a mayoral combined authority with access to franchising powers. We are clear that the Secretary of State will not take the final decision on whether franchising powers proceed in these areas, nor will he review every last detail of an authority’s plans. Our statement set out the core requirements that we consider are necessary to implement franchising successfully.
Our intention is that authorities that wish to secure the Secretary of State’s consent to pursue franchising will need to demonstrate that they have five things in place. First, they must have clear plans to use franchising to deliver better services and outcomes for passengers—this is about passengers, not process—and explain why those outcomes could not be achieved through other routes. Secondly, they should have sufficient powers to make franchising a success. Those powers could include control over local roads and parking or planning. An authority may have those powers itself, or it could explain how it will work with other authorities that have them. That might include, for example, the creation of a key route network of local roads across different authorities but under one management organisation and decision-making structure.
Thirdly, authorities need to demonstrate that franchising can be put into practice across the geography of the area, explaining why the area that they propose is appropriate—that will obviously be with reference to individual travel patterns. Fourthly, they must be able to demonstrate that they have the capability and resources to deliver franchising effectively. We will be looking for evidence of successful delivery of complex projects, previous commitments to improving public transport, sustainable local investment in transport schemes, and robust plans to resource a financing system.
Gloria De Piero
May I ask about a basic principle? In principle, would the Minister prefer bus routes and times of services to be dictated or set by elected politicians or bus companies?
Andrew Jones
It is not a case of one or the other. There will be different models in different places—I am quite relaxed about that. We cannot say that one is better than the other. I can see areas where there is a route to franchising; Manchester certainly feels that that would work for it. There are other areas where we have partnership working already and the decisions are made by bus companies that are seeing passenger growth. I want to continue to have innovative bus companies seeing markets and opening up routes to take advantage of those markets, marketing their services and developing a product that was not there before. I have seen that in my constituency. It is not one or the other, but a mixture of both. I see quite a complex market with different providers doing different things, but at the heart of that I see collaboration and co-operation, which effectively will be built into the partnership powers.
I was explaining the criteria that we will consider for franchising. The final one of the five is that the authority will need to demonstrate that it has effective decision-making and accountability arrangements for its decisions on franchising. That relates to a point that was made by my hon. friend the Member for Solihull. Those arrangements should be transparent to local people and a named individual should take the decisions—it could be the Mayor or a council leader. That is what is likely to demonstrate accountability most clearly.
Lilian Greenwood
I completely accept what the Minister says about local elected politicians having to take responsibility for their decisions, particularly if they move into franchising. However, will the Minister explain something that I do not understand? If Nottinghamshire County Council, for example, wanted to provide better bus services, why is that not a decision it could take? It is accountable to the electorate through county council elections and can make many decisions about the local authority services for which it is responsible. Why is the provision of bus services through a franchising model different from every other decision that the local authority might take and for which it is accountable in the normal, democratic way?
Andrew Jones
Moving to franchising is a fundamental change that will affect potentially hundreds of thousands of people. It is not something that can be entered into lightly. Any decision to move to franchising can only be reversed in certain circumstances. It is therefore right that people know exactly how the decision to implement franchising was taken and by whom, so that there is clear accountability for such decisions at the ballot box. The policy statement we have put out does not absolutely require a single person to take the decision to implement franchising. Authorities are free to suggest alternative approaches and explain why they believe that they offer sufficiently high levels of transparency to the public. We would, however, be likely to require some persuading that a complex structure would be an appropriate route. I am trying to keep things simple, with a line of accountability, rather than make anything more complex.
I do not want to give the Committee the wrong impression. The hurdles that we are talking about are not designed to be impossible. The Government are not seeking to put barriers in the way of authorities that wish to go down the franchising route. I am quite neutral about the different types of model they will have access to. This debate is about who has automatic access and who has a further set of questions to answer before they get the powers to do so. I have just been detailing the criteria for that.
I can see examples where franchising will work, but I am putting my thoughts into the views of local authorities, which is not exactly in the spirit of what the Bill is trying to do. I can also see areas where it will be inappropriate, which is again putting my views on the matter. That is not what the clause is about. It is about having a suite of powers so that local authorities and bus companies can come together to put more passengers on to buses, so that buses are no longer the Cinderella part of public transport that they have been, as Members have suggested today.
Lilian Greenwood
I thank the Minister for giving way; he is being very generous. What is the balance between a local authority choosing to go down the franchising route and a local authority taking completely the opposite view? I looked at the Campaign for Better Transport report yesterday, which shows the impact of some of the decisions that local authorities have taken. Local authorities can choose to remove all subsidy from all supported services, which seems to me a huge decision, but they can do that without asking the Secretary of State whether it is okay, yet if they want to introduce a system to improve bus services, they have to leap over the Minister’s five hurdles. It seems disproportionate that to improve services they have to leap over five hurdles, but to remove all subsidy from local authority provided bus services, no reference to the Secretary of State is required. How is that a fair balance?
Andrew Jones
The hon. Lady makes an interesting point. We all know that councils are under financial pressures. I was a councillor for eight years, which included financial responsibility during the financial crisis of 2008 and the years to follow, until I came here. The point is that where councils make investments to subsidise services, those will be targeted interventions, usually to meet a particular need. It could be to do with the village that the hon. Member for Ashfield highlighted, for example. We all know that that happens around the country.
However, if an area moves to franchising, it affects the entire market, not an individual route. It is a significant jump of enormous scale that affects hundreds of thousands of people, so we are looking at having greater controls before councils have access to those powers. That is all this is about. It is not about taking the view that they should not go down that route or putting up impossible hurdles. These are sensible measures that give authorities a realistic chance of effective delivery of a franchising model. They are simply sensible tests.
Amendments 17 and 18 will ensure that two cross-references in schedules 3 and 4 are correct. The relevant regulation-making power will be in new section 123A(4) of the Transport Act 2000. The amendments make that minor change and are technical in nature.
We have had a conversation about the principles of franchising and we have made the case very clearly that the Government support franchising as a model and recognise where automatic access is appropriate. We also recognise that such is the scale of the decision that further tests are required before authorities have access to those powers.
Bridget Phillipson
Will the Minister say a bit more about the timescales for bringing forward the regulations?
Andrew Jones
I will check out the timescales. Our intention is bring all this through as quickly as possible, because there are mayoral combined authority elections on 5 May, I think. That is no more than a few weeks away and it will be appropriate to have these things in place. Timescales will obviously be involved in setting up franchising schemes. We have built notice periods into some of the provisions in the Bill. I will be able to get some more information for the hon. Lady in a moment.
Bridget Phillipson
I understand the point the Minister is making about the areas where the powers will be available automatically, but will regulations also be brought forward for areas that do not have a Mayor and that will require the approval of the Secretary of State to commence the process?
Andrew Jones
We expect that the regulations will only be made if they are needed to turn on that type of authority. It would require an authority to apply, rather than the other way round. If an authority applies to the Government and makes it case, we can take that forward. It is not a question of the powers being there automatically; they would be there on an on-demand basis only.
Daniel Zeichner
As the Minister has indicated, the clause takes us to the heart of the Bill. We strongly welcome the opportunity for combined authorities with a Mayor to move to a franchised system. It has been the call of bus campaigners, including myself, for many years for areas to be able to adopt the London model. Finally, there is a real chance to make it happen. I will come on to my objections to limiting that opportunity only to combined authorities with a Mayor, but I will start by making it absolutely clear that, for those areas to which it is being offered by the Government, we want to ensure that it actually happens. As the Minister has indicated, with mayoral elections only a few weeks away, this is a key issue.
Those who have read the guidance closely have been alarmed by phrases such as the need to make “a compelling case”. The worry is that there will be opportunities, once again, to frustrate such schemes before they are brought to fruition. I certainly welcome the assurances given by the Minister on Second Reading when he was pressed on this point. I think he will probably assure us again this morning that he does not wish to put any hurdles in the way. That will be strongly appreciated by those who have done the devolution deals and expect the promise to be honoured.
Moving on to whether franchising should be available to other authorities, it is clear that Members of the other place felt that it should, hence their amendment. The amendments before us would enable the Secretary of State to control the bodies, other than mayoral combined authorities, that may introduce franchising schemes. They require the Secretary of State to give consent for such a franchising authority to take the preliminary step of preparing an assessment.
We have made no secret of the fact that we believe powers to franchise bus services should be available everywhere, partly for the reason raised by my hon. Friend the Member for Ashfield. Across the country people find that bus services are disappearing and that they are left completely isolated. Figures from the Campaign for Better Transport, year on year, show that more and more councils are unable to support services in key areas. People’s hopes are being raised by the possibility that something can change.
I am sure Ministers would say that resources cannot be created out of thin air, but many of us would argue that there are resources in the system and they could be applied more comprehensively. That is what authorities are looking for—to be able to use levers that are not currently available to help people who are not able to get to their local town to watch the football, do the shopping and all the other things that people need to do.
Gloria De Piero
May I make a point about rip-off bus fares from private companies? I have a constituent who travels from Eastwood to West Bridgford, which is a journey of about 11 miles. She works in administration and earns about £15,000 a year. It costs her £9 a day to get to work and back. That sort of rip-off bus fare is why it is important that local politicians have some say over the bus services that companies are providing.
Daniel Zeichner
My hon. Friend is absolutely right. We heard a series of examples on Second Reading from across the country. That might come as a surprise to people who live in London, where we can travel across the city for a flat fare. Even though it went up considerably under the previous Mayor from a decade ago, it is still extraordinary value compared with the rest of the country.
I have to pay far more to go one stop when I am in Cambridge in an unregulated area than I do in London. That is why the London scheme has attracted people for so long. The opportunity to regulate the system has produced a better outcome. It is no wonder that citizens across the country are demanding parity.
Bridget Phillipson
On Second Reading, an unhelpful distinction was made at times between urban and non-urban areas. In an area such as mine, which is largely urban, albeit with some semi-rural areas, the bus service is appalling and holds back jobs. It affects people getting to work, businesses and a range of investment across the region. Government Members appear to think that everything is rosy in all urban areas. In a lot of urban areas, the service remains very poor with high fares. As is the case in the constituency of my hon. Friend the Member for Ashfield, it can be very expensive for people who are often on low wages.
Daniel Zeichner
My hon. Friend is absolutely right. That is why there is so much hope attached to the Bill and to the idea that we can go back to having a comprehensive local public transport system that delivers for people. The truth is that we have had a 30-year experiment with an unregulated market, the end result of which is exactly as my hon. Friends describe. This a chance to move forward. In some areas the Government are responding, but in many other parts of the country, it looks as if the hurdles will be too high.
The Minister talked about local decision making and accountability, saying that the Bill is about enabling new opportunities and giving local authorities new choices on how to improve their services. However, as has been said, taking the decision out of the hands of local communities and putting it squarely in the Secretary of State’s hands does not seem like localism to us. It seems particularly peculiar that a local authority must seek consent before taking even the preliminary step of preparing an assessment of a potential franchising scheme. How on earth can a local authority present a compelling case to the Secretary of State to gain approval if they are prohibited from even assessing a scheme?
We understand the Government’s point that strong governance and accountability are key to making franchising a success, along with a commitment to improving transport and to a coherent economic geography. However, we do not understand—my hon. Friends have made this point well—why the Government believe that those things can only be achieved with an elected Mayor. Why are Mayors seen to be more accountable than other elected local authority leaders?
I turn again to my personal experience, because for some reason Cambridgeshire seems to be at the heart of many of these issues. In my area in a few weeks, we will have elections on the same day for a Mayor of Cambridgeshire, who will have powers to franchise buses, and for a county council for Cambridgeshire, with a leader who does not have powers to franchise buses. A great irony is that the current county council leader put himself up for selection for Mayor and made the final shortlist. Therefore, in a few weeks’ time we could have had the same person being elected on the same day to two roles, one of which one would be deemed sufficiently accountable to franchise whereas the other would not. I am not going to tease the Minister by pressing for a reasonable explanation.
Julian Knight
The hon. Gentleman seems to suggest that all the power rests with the Mayor. In the West Midlands combined authority, the Mayor is effectively first among equals. The leaders of all the councils who make up the authority have a say in decision making.
Daniel Zeichner
Surely that is the case in other places as well. In my area the leader of the county council, who is a Conservative, has been elected and the choice will be made again in a few weeks’ time—however, we shall see what happens in the local elections. I think the local electorate are confused about the situation, based on my experience of what we are seeing on the doorstep, but I think the Minister can see the point. For many people it seems irrational to have so much invested in the mayoral issue.
In reality, we all know what is going on: franchising is being used as a bargaining chip to convince some combined authorities to accept a Mayor that they do not necessarily want as part of their devolution deal. Without going into the chequered history of those negotiations over the past year or two, one could say that they have not always been easy or straightforward. We think that the approach being taken is wrong, which is why we oppose it. Beyond that—this goes back to the points being made by my hon. Friends—the trouble is that what is happening denies bus passengers in many areas the prospect of better services.
Scott Mann (North Cornwall) (Con)
In Cornwall, the proposals are seen as very positive. Our local authority have made positive noises about the opportunities that they could present. The hon. Gentleman talked about some of the mayoral authorities in Manchester but in areas such as Cornwall, the bus network has degraded over a number of years, and this presents us with a real opportunity to provide a proper rural service.
Daniel Zeichner
We do not disagree, but we do wonder. The hon. Gentleman will say that Cornwall is very special, and clearly something very special has happened. Some authorities seem to get different treatment from others. Our point is that everyone should be able to take advantage of the possibilities that such a system brings.
We have seen that it can work in different circumstances. The experience in Jersey, for instance, has shown that franchising can be successful if, to use the terminology, it is applied to a relatively wide local geography. Jersey has seen impressive results from franchising, including a 32% increase in ridership since 2013. Customer satisfaction has also increased, and a partnership has developed between estates and the operator.
I know that some say that franchising destroys competition, but we say no. Far from it: it moves competition from on the road to off the road. As we all know, in too many areas of the country, competition has ceased to be meaningful. Over many years, powerful operators have driven others out. We understand why they do not want that situation to be challenged—it is perfectly rational from their perspective—but on behalf of passengers, we know that it must and should be challenged. This is a key way to make it happen.
Small operators have made strong representations to many of us. They are clearly concerned about the possibility of being squeezed out. I am not sure that there is any reason why a franchise system would not benefit from a range of operators, including small operators. If it is to work over time, it absolutely needs a range of operators, or we are back to where we started.
I understand why smaller operators feel alarmed, but they are vulnerable the whole time to much more powerful bigger operators—I think we know who I am talking about—that could move in on them at any point. We do not want to return to a system in which we have an ossified estate across the country with very little competition or choice, and where the poor person stuck at the bus stop in Nottinghamshire feels not only that there is nothing they can do but that there is nothing anyone else can do on their behalf to change the situation.
Bridget Phillipson
I would like to illustrate the point that my hon. Friend is making about the north-east. The then Competition Commission referred to geographic market segregation in the north-east. The competition that was promised to follow deregulation has never materialised. There used to be lots of small operators, but they have long since vanished, the big operators having pushed them off the road. The competition that we were promised does not exist in the north-east; it certainly does not exist in my community. We need only look at the routes offered by operators to understand the market segregation. Any improvement would be welcome.
Daniel Zeichner
I agree with my hon. Friend. I am sure that the Minister is familiar with many of these arguments.
We reject the Government’s amendment to limit local councils’ powers to improve bus services for passengers. However, despite that—much of the debate on this clause has concentrated on the issue of whether franchising should be available to other parts of the country—I return to the positive point that we want those mayoral combined authorities that were promised franchising powers to have them at the earliest opportunity, just a few weeks from now. We are disappointed that the Government are seeking to overturn our extension of franchising powers to all authorities, but we will not frustrate the process or do anything that could delay the handing of those powers to the mayoral combined authorities that have been promised them.
Bridget Phillipson
It is a pleasure to serve under your chairmanship, Mr Nuttall. Like my hon. Friend the Member for Cambridge, who speaks from the Front Bench, I welcome the Bill and the measures that it introduces. I have spent a lot of time in my seven years here campaigning on bus issues due to the local problems that we face. Any changes to the current system are to be welcomed. I wish areas well with the automatic powers, as they proceed in improving services for local people. Of course I want that for my community, too. Although I understand the Minister’s point that the steps that he described in the process are not intended to be hurdles too difficult to overcome, I hope that the Government will remain committed to delivering that.
Change has been a long time coming, and hopefully we are now getting there, but I hope that the Minister and his colleagues will see the measures through, particularly in areas such as the north-east. We have a combined authority covering seven local authority areas, with an integrated transport authority. We have Nexus, which the Minister will know has other powers, such as the operation of Tyne and Wear metro. We have an extensive network that in many senses works well. What we do not have is the powers we need to make sure that bus routes serve the needs of local people. That is not simply about making it easier for people to get around—although that would be wonderful, because it is not often very easy, frankly, to get around on local buses in my constituency—but if we are to thrive as a region and if we are to create the jobs and support the businesses and the growth that we all want to see, we need a transport network that allows that to happen. In too many parts of my constituency, where buses are the only means of transport, that is incredibly difficult.
To give one example, Doxford international business park in my constituency houses thousands of employees with many big international firms. I frequently visit businesses there, and employees, many of whom are shift workers, often tell me that it is incredibly difficult to get a bus after 8 or 9 o’clock. That holds back investment and makes it difficult to retain staff. Although the transport authority is looking at proposals to extend the Tyne and Wear metro, as I know my hon. Friend the Member for Cambridge is well aware, in the short term we need bus services that will allow people to get to work readily and inexpensively, which is not currently the situation.
On Second Reading, many of us talked widely about the failure of deregulation and the fact that it did not deliver on its promises. I will not dwell on that, other than to say that, in the case of the north-east, on every test that was set out for deregulation back in the 1980s, deregulation has been an unmitigated disaster and has had the reverse effect to the one intended. More than 30 years on from all we were promised about greater efficiency, lower fares and greater passenger numbers, the opposite has happened in the north-east. We have got less competitive services that are less efficient, more expensive and less convenient for the people I represent. Of course, it has given operators the freedom to do exactly what they like, when they like, at a time when we put tens of millions of pounds into local bus services.
Operators receive significant taxpayer subsidy with little accountability, and when things go wrong and operators cut routes arbitrarily with little notice, often affecting the most vulnerable in our community, there is no recourse. We can have dialogue with the operators—I meet them regularly to make the case—but ultimately it is an entirely commercial decision over which local people have no say. It is a source of real frustration that when minor changes to routes can result in local people being cut off from hospital services, GP appointments and the ability to get to local shopping facilities or schools, the operators can say, “We’ve heard what you had to say; unfortunately, we are pressing ahead regardless,” and there is no opportunity for local people to influence that in any meaningful sense.
We are talking not simply about routes that are unprofitable, but usually about the fact that they are not profitable enough. Outside London, big operators such as Stagecoach have made considerable profits, far greater than they make in London. I do not seek to deny operators the right to make a profit. My point is that they make a decent profit in areas such as London under a regulated service; they could do the same in the north-east. The profit margins would perhaps not be quite as high and would not be the double digits that they are used to—no one would seek to stop them running a competitive or profitable service—but if we are going to give them significant taxpayer money, the least we can expect is that they take on board the concerns of local people and use that wisely.
Julian Knight
The hon. Lady is making a very good speech and I sympathise in many respects about the lack of accountability when bus service routes are cut; my constituency has suffered in the same way. Does she agree, though, that this is almost an argument for combined authorities and Mayors, with their buying power, and the idea that they can bring these companies to heel, through their powers and through the threat, for example, of removing the franchises?
Bridget Phillipson
The inconsistency in the Government’s approach is the patchwork way in which they have brought about these different devolution deals. From what the Minister had to say earlier, I am still none the wiser, really, why Cornwall presents an exceptional case when an area such as the north-east does not. We have a combined authority; what we do not have is a Mayor. I believe there should be accountability and that can come in many different forms. In the west Midlands, it will come through the election of a Mayor; in the north-east, it was a widely held view that a Mayor would not offer that same accountability and there was not broad support for a Mayor covering such a big region. However, we do have a combined authority and an integrated transport authority, and we have the structures in place that will make franchising work and give local people the confidence that there will be accountability in the process. That will differ, but I have difficulty in understanding why different models are acceptable in different parts of the country, other than for the obvious political reasons that spring to mind.
Scott Mann
In terms of Cornwall and what is being raised at the moment, I want to be clear. Do you have a devolution deal for your area?
Scott Mann
I just think it might be relevant to know whether you have one. Cornwall does already; that might be the reason for the position that we are in.
Bridget Phillipson
Yes, the north-east has a combined authority. It has gone through the process of further devolution. The sticking point was the Mayor. As I understand it from the Government’s guidance, the difference with Cornwall is that bus franchising was agreed to as part of that devolution deal. Unfortunately, that was not on the table for the north-east. I wish Cornwall well and am glad that it will have those powers. I ask only for a bit of parity, so that we in the north-east get the powers that Cornwall will enjoy. That is symptomatic of the Government’s patchwork approach to devolution, which is borne out not by different local circumstances, but often simply by reaching convenient deals depending on the politics of the situation, rather than ensuring that the best service is delivered for all people.
I ask the Minister to talk a bit more about the difference in approach, because I do not fully grasp why the north-east should not have those powers. Though I take on board his point that unnecessary hurdles should not be put in the way, I am concerned that, to start the process, we will require that approach from the authority. If that case is put forward, I hope that it will not be something that the Department and Ministers seek to frustrate, because the issue is important for the people I represent.
This is a welcome step. Bus services are incredibly important for our country. We mention them too little, although I have tried to play my part in the past few years in talking about them at every given opportunity. The people I represent have only buses to rely upon; they have no access to rail or light rail. Getting this right, and having a system that is fair and works for everybody, is absolutely vital. I hope that Ministers are sincere in their commitment to ensure that areas that seek out these franchising powers will be able to do so, that their case is considered carefully and seriously and that we do not seek to frustrate a process that would lead to real benefits for areas such as the north-east—and not simply in terms of individual routes or services. If the Government are genuine in their commitment to create the so-called northern powerhouse and to see areas such as the north-east thrive and reach our economic potential, we need these powers to deliver real change. We need to link buses to other forms of transport so that we can have tickets and fares that work across all operators, which we do not have at the moment. We need routes where local people can have a say.
The Minister talked about investment in lower-emissions vehicles and has talked previously about investing in smart ticketing. Again, I welcome those steps; but were it not for significant taxpayer investment, that would not have happened in areas such as the north-east. Some of the smart-ticketing schemes that he has come to see in Tyne and Wear came about through taxpayer investment. I welcome that, but bus operators will rarely do these things out of the goodness of their hearts. Where we have significant investment from the taxpayer, it is right that we ensure there is value for money and accountability. I hope that I can work with the Minister and others in the region to get the best possible deal for the north-east, that he looks carefully at what the transport authority may wish to put forward in the months ahead and that we can reach a solution where local people get the service they need and our economy is supported to grow.
Graham Stringer
I agree completely with my two hon. Friends. I will try not to repeat the excellent points they have made. I have a nuanced difference with my hon. Friend the Member for Houghton and Sunderland South when she says that the objectives of the Transport Act 1985, which deregulated buses, were the same as the objectives under discussion today. I have been around long enough to have talked to the people who advised the Government and drafted the Bill that eventually led to deregulation, and there is no doubt that they were ideologically driven. They had no idea what the outcome would be when they proposed the deregulation process. They had a belief, which has turned out not to have come to fruition, that if we had competition on the road, that would lead to a better outcome.
The evidence that I, as a member of the Transport Committee, have seen and individual right hon. and hon. Members will have seen—this is worth bearing in mind during the whole debate—is that over the 31 years that it has been there, the deregulated bus system has been a disaster for many bus users. It will be possible to find small instances up and down the country of bus services having improved, but in the overall scenario there has been a dramatic fall.
It is worth considering how we got to the current hotch-potch of schemes. The Government, in the form of the right hon. Member for Tatton (Mr Osborne), who was then Chancellor of the Exchequer, wanted elected Mayors as part of the drive to get the economic potential out of our major urban regions, which have been neglected since even before bus deregulation took place. By and large, most councillors whom I know do not like the idea of elected Mayors. It is not a fashionable thing to say at the moment, but I agree with the right hon. Member for Tatton that elected Mayors are an improvement in the democratic process, because they provide a focus for accountability. However, should that really be the only criterion that we use to determine whether locally elected people can have the powers to improve their bus services? I think that it is a very odd criterion to use. The six areas that have got the powers have done that deal—they have negotiated with the Government—and we have ended up in the situation we have. In supporting the Bill, I respect that deal, but it does allow us, during this debate, to reflect on what we are losing or not gaining during the process.
We are losing the opportunity genuinely to devolve powers and improve bus services. If only the Minister, who is a completely reasonable man, had been there 31 years ago, we might not have ended up in this situation, in which he has to defend centralism in the name of devolving to authorities.
I listened carefully to the five points that the Minister made which local authorities that want the powers will have to observe. I ask him whether any council or councillors who wanted to re-regulate buses via a franchising system would not have to follow those rules anyway. Would they not have to show that they had the necessary resources and that there was clear accountability? Would they not have to consult? Would they not have to know what area they were dealing with? Would they not have to have an effective decision-making process and to show that the plans were sustainable? If they did not do that, they could be challenged in the courts.
The reality is that it is not just councillors who do not like the idea of elected Mayors. The bus industry does not like the idea of franchising. It is not that we are losing competition—the fact is that the large companies are operating without competition in many areas. The measure introduces competition off-road, probably more efficiently and effectively, and the bus companies do not like it.
If an authority that has been granted the powers to bring in a regulated franchise system does not follow the rules, the bus companies would be straight in front of the courts claiming that councillors had not carried out their proper responsibilities or their fiduciary duties and there would be a judicial review. I have talked to bus companies, which have been looking at the Human Rights Act 1998 and all sorts of ways to try to stop this process. In a sense, the Minister is making bricks without straw.
I do not think that the reasons that have been given are good enough to carry on centralising. Another belief underlying the Bill is that somehow elected politicians and officials at a central level are somehow more competent and effective than elected councillors and officials at local level. Can the Minister give evidence of that?
If we look at the huge mistakes that central Government have made—I could just go through different computer schemes without looking at other areas—it is extraordinarily difficult to make the case that centralism works better than localism. This is not a party political point; it is a point about decentralisation. I have been around local government and central Government long enough to know that there are enormous differences in quality at both levels. Some councillors, to put it politely—I could use offensive words—are not as effective or as good as they could be. I have also met Ministers and civil servants at a national level of whom the same could be said. In principle, it is better for people closer to the ground to be able to make those decisions. We are where we are in the negotiations, but if the Minister is serious about devolution, that is where we should end up.
If this is really a Bill about devolving power, will we end up with more civil servants working on these programmes? There are pages and pages of guidance. If we ask for all sorts of consultations that would happen at a local level anyway, are we not just switching resources in a wasteful way to central government? I know why we are where we are on this. There was a negotiation to get what local authorities in certain areas knew they needed—better bus services—and the objective of the then Chancellor of the Exchequer was, as he saw it, to improve the structure of local government to make it more economically dynamic.
The Bill allows us to shine a light on what has happened in the bus industry, which has lost two-thirds of passengers in urban areas. By allowing decisions to be made locally, we could achieve a more immediate improvement in bus services in all parts of the country. If the electorate’s representatives want it, presumably it would mean that the electorate in those areas want it. There may be some areas that do not want it, but that should be a local matter.
Andrew Jones
There are many points to reply to, but I want to highlight some data about bus usage. This is to challenge the assumption that somehow in the mid-1980s—I am not quite sure when it was but the hon. Member for Blackley and Broughton was very generous: I was either at university or working for B&Q—that precipitated a decline in the bus industry. I just do not think the evidence supports that.
If we go back to the 30 years prior to deregulation in, say, 1985, between 1955 and 1985, the number of passenger journeys fell by 2% per year, from 15.5 billion a year to 5.5 billion. Since deregulation—and I accept that numbers have continued to fall—it has fallen at an average rate of 0.2% per year. On the idea that deregulation was the cause, those responsible for deregulation would probably argue that they stopped a precipitate decline. We should not get too worried about archaeology; we should be more concerned about what we can do for the future.
Gloria De Piero
Does the Minister know the figures for London? I am just interested.
Andrew Jones
No I do not, but I am sure they are available if we go and check. I was only trying to clarify something and provide extra information to help our debates.
Graham Stringer
I can possibly help the Minister on this point. I was referring to a number of Transport Committee reports that pointed out what he said: the bus industry was in decline because we had cheap petrol and for all sorts of other reasons. However, a straight comparison can be made from 1985 to 1999 between London— regulated—and the rest of the country. The lines went in the same way, but when the regulated system, without subsidy most of the time, was left in London, passenger numbers remained the same, whereas passenger numbers in the rest of the country went into sharp decline.
Andrew Jones
I am aware we are seeing different trends in London and in cities, but London has extraordinary and acute transport needs. Planet London is quite different from many other parts of our country.
I will address some of the points that have been made. The hon. Member for Houghton and Sunderland South spoke with great passion about the importance of buses in her area. We agree on this matter. In the north-east, there was a challenged attempt to get a quality contract in place, and a lot of resource went into that. However, the legislation was cumbersome and nobody managed to achieve it, so we will repealing it as part of this process.
The question that arose in a number of places was whether we are approaching this with good faith. I can confirm that we are. We are not seeking to put barriers in place. I have met Nexus on a number of occasions and I support its positive ambitions for the area in the metro and on buses. Our door is open, should it wish to take that up.
We have heard a bit about the very interesting bus market in Cornwall. Apart from living in an important and beautiful part of our country, people have a real passion for their bus market, as my hon. Friend the Member for North Cornwall said. The authority will not have automatic access to franchising powers, but it is a good example of an authority that the Government would consider to be highly likely to demonstrate the factors we discussed. It is a unitary authority that covers a wide geography, with the necessary wider powers to improve bus services. It has a good track record of delivering projects, and it would be free to apply to the Secretary of State, just like any other authority. Is there parity between the north-east and Cornwall? Yes—both are free to request that the Government introduce regulations for that category of authority, if such regulations are not available at the time, then go further to seek the Secretary of State’s consent to proceed with franchising powers.
Bridget Phillipson
I am grateful for and appreciate the Minister’s earlier comments, but may I refer him to the guidance that accompanies the Bill, of which he is no doubt aware? It guidance makes it clear that during negotiations with the Government, Cornwall made a strong case for franchising powers and, as such, the Secretary of State is minded to grant them. Although Cornwall can go through that process should it wish to do so—I wish it well if that is its approach—the north-east does not have that same commitment, so although what the Minister says is right, there is a subtle distinction between the two areas. I welcome what the Minister has said and I look forward to the north-east being granted similar consideration.
Andrew Jones
The door will most certainly be open. We do not seek to put barriers in the way. The whole point about the Bill is that it is an enabling one. My last conversation with Cornwall suggested that it probably would not go down the route of franchising, so it may not seek to make an application to the Secretary of State. However, it has done something interesting with its bus market, which is why Cornwall gets a lot of attention. A partnership has been established with the primary local provider in Cornwall—FirstGroup, I think—which has changed networks and routes and co-ordinated services. We are seeing the company invest in a new fleet, and patronage on the bus network has grown and the market has become profitable. Cornwall is an interesting example of what can be achieved by working together, which is why the authority is often discussed and held up as a poster area for the marketplace. Interestingly, it is using some of the powers in the Bill before we have got to the Bill, but not necessarily in the franchising area.
Lilian Greenwood
Does the Minister not believe that the fact that Cornwall would potentially have the use of franchising powers may have assisted it in the partnership negotiations? The very fact of having access to powers can be enormously important in assisting an authority, perhaps in getting a bus company to listen in ways it would not otherwise do.
Andrew Jones
That is a possibility, and it would, of course, be a possibility that would exist absolutely everywhere.
Andrew Jones
Cornwall does not have automatic franchising powers, but it could apply for them in the same way as all other authorities. That goes a bit towards the national versus local capability that the hon. Member for Blackley and Broughton mentioned.
My general view is that we should support localism. We stand a better chance of a good delivery of a service to solve a local problem if the decision is made as near as possible to the point at which the service is delivered. The service would be tailored to the local need. That should be a basic principle, but does it lead us to question the criteria? No, because the criteria for the introduction of franchising are significant—this is a significant step. They are safeguards; it is not about putting barriers in the way but about ensuring that everything is fit for purpose in order to proceed. The key point is that we do not want to stifle investment by the bus industry, and that could well happen if an authority attempted to pursue franchising under automatic powers without delivering it. Once a category of authority has the powers, there is a permanent risk of its deciding to use them, whatever a court may ultimately decide. It is a question of getting the balance right and getting the safeguards in place without making them onerous hurdles.
The hon. Member for Cambridge said that there is hope attached to the Bill. Yes, in some ways there is. People want buses. It is a good thing. I have to say that I have been pleased to see how the industry has received more retention, not just among the big operators but from some of the smaller ones—
Bus Services Bill [ Lords ] (Second sitting)
Tuesday 14th March 2017
(7 years, 9 months ago)
Public Bill CommitteesRead Full debate Bus Services Act 2017 View all Bus Services Act 2017 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 14 March 2017 - (14 Mar 2017)
The Committee divided: - Ayes: 10 / Noes: 6 - Question accordingly agreed to.
The Committee divided: - Ayes: 6 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 10 - Question accordingly negatived.
The Chair
I remind the Committee that with this we are discussing Government amendments 7, 17 and 18. I call the Minister to pick up where he left off in his reply to this morning’s debate.
The Parliamentary Under-Secretary of State for Transport (Andrew Jones)
If we had been paying more attention, at 24 minutes past 11 I would have said that we were done, that we had had a good debate on the issue and should now proceed to a vote. I think I have said all I need or wish to say on the issue. I hope I have answered colleagues’ questions about the principles of franchising and access to franchising, which will be a feature of our bus market. We have built in to the Bill safeguards of accountability and preparedness of local authorities, as well as protection for small and medium-sized companies.
Lilian Greenwood
The Minister is characteristically generous. During the break, I reflected on the points made by my hon. Friend the Member for Houghton and Sunderland South. The Minister has been clear that franchising should be one of the options available, particularly to mayoral authorities, in trying to deliver for passengers. He put passengers at the heart of the matter. Will he take this opportunity to condemn the language used by one of the major operators, who described local authority leaders who were trying to improve passenger services as “a bunch of unreconstructed Stalinists”? Does the Minister agree that that is unhelpful language when referring to local authorities that are seeking to do the best for their constituents?
Andrew Jones
I do not know who said it, the context or to whom they said it. As a general principle, I suggest that constructive engagement and partnership is part of the way forward. People need to find their appropriate personal language that will help that to be achieved.
Nic Dakin (Scunthorpe) (Lab)
The Minister has been most generous in taking interventions. It is great to serve under your chairmanship, Mr Owen. Before he took the intervention from my hon. Friend, the Minister said that there is protection for small and medium-sized companies in the Bill. Will that cover companies such as Hornsby Travel, which has celebrated 100 years as a small family business doing excellent work in my constituency and the north Lincolnshire area, and is concerned about the impact of franchising on its capital, stock and drivers?
Andrew Jones
That protection would certainly encompass companies such as the hon. Gentleman describes. In many parts of the country there are excellent family-owned businesses that have been serving their communities for a long time with high-quality product and are much liked by their customers. I see them as having a significant role in the bus industry, whichever regulatory model is chosen by local authorities on a local basis. I most certainly do see that as part of the picture. That concludes everything I have to say on Government amendment 5.
Question put, That the amendment be made.
Daniel Zeichner (Cambridge) (Lab)
I beg to move amendment 19, in clause 4, page 15, line 24, at end insert—
“(6A) The terms as to standard of service that may be specified include terms about bus punctuality and bus journey speeds.”
This amendment specifies that a local service contract may require bus operators to meet standards of service including terms about bus punctuality and bus journey speeds.
The Chair
With this it will be convenient to discuss amendment 20, in clause 4, page 15, line 45, at end insert—
“(12) A local service contract may require that new vehicles delivering local services are equipped with Wi-Fi if the vehicle comes into service after 1st April 2019 and that existing vehicles are equipped by 1st April 2022.”
This amendment specifies that a local service contract may require new vehicles delivering local bus services to be equipped with Wi-Fi after a specified period.
Daniel Zeichner
It is a pleasure to serve under your chairmanship, Mr Owen. I have already referred to the fact that although the Bill is welcome, there are many issues that affect our bus services that it does not address. Our amendment 19 specifies that the standards of service that a local service contract may require bus operators to meet should include certain levels of punctuality and journey speeds.
As we all know, the resources available to traffic commissioners, who are currently responsible for enforcing punctuality, are woefully inadequate. Despite their honest endeavours, it would be hard to argue that the current system works. One of the highlights of my relatively short time as a Member of Parliament was visiting my local traffic commissioner. I am not sure whether other hon. Members have made the same journey, but meeting a traffic commissioner is an extraordinary thing, because they are relatively invisible to the wider public. They do a difficult job with very limited resources. Although, obviously, my traffic commissioner believes the system works perfectly, I think many independent observers would say that it does not do all that it is expected to do. It is not just those observers who think that; the industry clearly believes that congestion is a major problem and a key challenge.
There is compelling evidence, some of it compiled by Professor David Begg and Greener Journeys, that congestion is actually getting worse and journey times are increasing. That of course leads to greater cost, because more buses are needed on the road to maintain service frequency. What is worse, because journey times are longer, passengers quite rightly get increasingly frustrated—we even see that in London, I am afraid—and as frustration rises, people vote with their feet and turn to other modes of transport. All that of course leads to higher costs, which in turn lead to higher fares, which potentially lead to a spiral of decline.
There is absolutely no doubt that journey times and punctuality are really important. We believe that the Government should address that serious issue, but we are not convinced that the Bill does so effectively. Greener Journeys suggests that the Bill should set guidance encouraging local authorities and bus operators to set targets for average bus speeds by making them a requirement of schemes. Reducing journey times would have the twin benefits of reducing congestion on our roads and improving bus reliability, with positive knock-on effects for both our environment and bus patronage. If buses run more quickly and are more punctual, more people want to use them. It is a virtuous circle—the opposite of the spiral of decline that I just alluded to. It is that simple. We believe it is important that that goal is specified in the Bill.
Although the draft regulations recommend that authorities consider trends in journey speeds when assessing their business case for a franchising scheme, there is no mention in the Bill of journey speeds or punctuality. The Bill does specify that
“a reduction or limitation of traffic congestion”
should be a likely outcome of both advanced quality partnership schemes and enhanced partnership schemes, but strangely that aspiration is not included in clause 4 for franchising schemes. We assume that is an oversight.
We are pleased that the Government amended the Bill to specify that the standards of service that may be specified in all schemes—advanced quality partnership schemes, franchising schemes and enhanced partnership schemes—include requirements about emissions or types of fuel or power, but we do not believe that that goes far enough to tackle declining bus journey speeds in this country.
Amendment 20 deals with free wi-fi access. The Department for Culture, Media and Sport recently—in fact, on the very day that the Bill received its Second Reading—released its digital strategy. Regrettably, that document is rather short on ambition for our digital infrastructure, and it is revealing about the lack of a connected approach across Government that the strategy lacks creativity about how that infrastructure can be delivered and how we can drive change. That lack of a connected vision was criticised as recently as December by Lord Adonis, who chairs the National Infrastructure Commission. That is why we have tabled the amendment, which I hope will improve passenger experiences and provide a step change in public access to free wi-fi. The benefits of public internet access are abundantly clear—indeed, they have been clearly stated by the Government in their digital strategy, which said:
“The UK’s digital infrastructure must be able to support this rapid increase in traffic, providing coverage with sufficient capacity to ensure data can flow at the volume, speed and reliability required to meet the demands of modern life.”
Pioneering cities such as Newcastle and Sheffield are offering free public wi-fi, the uptake of which is proving the old maxim that, if you build it, they will come. We need not look far to see other examples of success on our bus network. Award-winning Nottingham City Transport buses already offer free wi-fi, helping people to stay connected and definitively proving that, with a vision and a strategy, it can be done. It is not only the provision of free wi-fi that is so encouraging to see but the capacity that has been provided for users. It makes available 50 to 100 megabytes per device, which is far above the Department for Transport’s stipulated requirements for the rail network.
Those forward-looking councils have realised that ubiquitous connectivity will become an essential requirement of modern infrastructure in years to come, and are helping to build that infrastructure in creative ways and provide it free of charge to citizens, recognising that the net benefits outweigh the initial outlay.
Lilian Greenwood
My hon. Friend mentioned the free wi-fi on Nottingham City Transport buses. It may be useful to say, if he did not already know, that free wi-fi is installed on 100% of its fleet. Does he agree that, as the Government have made it a condition of rail franchises that wi-fi should be provided on future franchises, it would be even-handed were a similar requirement to be placed on bus operators? Rather than it just being something enjoyed by rail passengers, it should also be something that bus passengers have the opportunity to use.
Daniel Zeichner
As ever, my hon. Friend is both wise and prescient, because that was just about the next point I was going to make. She is absolutely right. In fact, we do not need only to look at councils to see arguments in support of the amendment; the arguments have effectively been inadvertently made by the Government themselves. They argued in the digital strategy that commuters expect good connectivity; of course, they were referring to the rail network, but the same surely applies to buses. We know that more journeys are taken by bus each day than by train. It seems odd to exclude those commuters who travel by bus from the roll-out of free wi-fi that is taking place as rail franchises come up for renewal. The roll-out is slow and has been rightly criticised for not matching the data requirements that all rail commuters need, but it is welcome that it is taking place at all.
Buses reach a different demographic from trains—particularly the young and those in education, who happen to be the demographics that use data most of all. Recent Ofcom research found that young people spend 24 hours a week online—it may seem like 24 hours a day, but it is per week. They consume data and take on information at a phenomenal rate, so there can be little doubt that the amendment will serve a purpose. In an answer to a question from my hon. Friend the Member for Sheffield, Heeley (Louise Haigh), the Government admitted that they do not yet collect data on free wi-fi available on buses. However, it is clear that provision is patchy at best, in spite of the clear public benefits.
I anticipate a number of the arguments the Minister may make in defence of the status quo. The first may be that the increasing speed and access to 4G is rendering the need for public wi-fi less important. However, that argument falls down on two key fronts. First, ubiquitous access to 4G is far from a reality for many millions of consumers in urban and rural areas alike. Secondly, patterns of data usage prove that consumers overwhelmingly prefer to use fixed wi-fi to access and consume their data requirements. Yes, mobile data has seen a 600% increase since 4G technology came into public use, but interestingly, the “Connected Future” report by the independent National Infrastructure Commission found that 80% of data usage is still consumed over wi-fi.
On the go, we access data for our emails, to conduct video conferencing via emergent apps and to stream TV, radio and Netflix—in short, to go about our daily business on what has become the fourth utility: internet connectivity. That means that by the end of the month many of us have to top up our data and spend yet more money on what should be considered an essential. However, in many areas even that ready access to data remains a luxury, as 4G coverage in Britain remains in the international slow lane, behind countries such as Albania and Latvia. Lord Adonis said that coverage needs to be meaningful, and by coverage he meant access in the home, at work and on the go. The current binding commitments will not deliver that ubiquitous level of data coverage for quite some time.
Graham Stringer (Blackley and Broughton) (Lab)
It is a pleasure to serve under your chairmanship, Mr Owen, for what I think is the first time.
I will speak briefly to amendment 19. Punctuality and reliability are extremely important, as my hon. Friend said, in persuading people to continue to use buses and attracting people back on to them. The problem is that on many occasions it is difficult to know why the bus does not turn up or is late. Bus companies blame congestion—which is, no doubt, part of the problem—for affecting their reliability and punctuality, and they ask for more privileged use of public sector road space via bus lanes. I do not completely accept that, because the last time I looked at hard statistics—I would be interested if the Minister had up-to-date statistics—I found that about a third of reliability problems were to do with bus companies not maintaining their vehicles properly, resulting in mechanical breakdowns, and another third were due to drivers not turning up and there being no reserve pool to deal with that. It is obviously in the commercial interests of bus companies, and perhaps, on many occasions, of bus passengers, to have bus lanes, and each case should be considered separately against agreed criteria, but we really need to know why things are going wrong.
This is a slightly historical case, but some years ago the FirstGroup buses in Rochdale were in such poor condition that the wheels fell off while they were going along. The traffic commissioner wrote a report about it and the company was fined. FirstGroup does not therefore have a great record. It is also the case, not just anecdotally —there is some evidence, and even more anecdotal evidence—that when buses are delayed for whichever of those three major reasons, they do not complete the route. They take shortcuts. It would be in the interests of public service if each bus had to carry a GPS, so that under the deregulated system, and more so under a franchised or an enhanced quality partnership, the taxpayers and the local transport authority could know where the buses were at any particular time. I would interested in hearing whether the Minister thinks that all buses being required to carry GPS, and have its information made public, would help our understanding of what is happening to bus services.
Andrew Jones
Amendments 19 and 20, tabled by the hon. Members for Cambridge, for Nottingham South and for Scunthorpe, propose that the Bill explicitly state that bus punctuality, journey speeds and the provision of w-fi are standards that an authority could specify as part of a franchise contract. Any authority that chooses to implement franchising will be free to determine which services run in an area and the standards of services, including those important matters. Authorities will have to consider as part of their assessment of the proposed franchising scheme whether the proposals represent value for money and are affordable, taking into account the costs of requiring those standards.
I think we all agree that the provision of wi-fi on buses is an extremely attractive prospect for customers. I entirely agree that where an authority wants to require the provision of wi-fi on services, it should be able to do so, and the Bill allows for that. In terms of bus punctuality and journey speeds, there is nothing in the Bill to prevent an authority from specifying the standards it expects from operators running services under franchise contracts.
I was asked about journey time guidance. We said to the Transport Committee that we would produce guidance on setting journey time targets. We intend to do that, though I recognise, as the hon. Member for Cambridge rightly said, that the guidance is not yet drafted.
The provision of customer information was at the heart of the contribution from the hon. Member for Blackley and Broughton. He is right; customers do not always have access to the level of information that is desirable to let them plan their journeys or be communicated with should there be a problem. The Bill includes clauses on open data, and making information available will hopefully create fantastic new products through which customers can receive that information. The open data powers in clause 18 are sufficiently broad to require real-time information for all buses to be provided. That requires GPS on the buses.
I would like customers outside London to have access to the information that is available to bus customers within London, but the amendments would make provision for something that is already provided for. This is about local decision making, rather than making things mandatory. I assure the hon. Member for Cambridge that the Bill already gives franchising authorities powers to set the standards he seeks, and I hope he will therefore withdraw the amendment.
Daniel Zeichner
I suspect we will rehearse some of our previous arguments about whether decisions should be made at the centre or locally. Earlier, we heard about the incredibly prescriptive approach that the Government are taking to allowing local authorities to franchise; now we are told that on this issue, the Government are quite happy to leave it to local authorities to make up their own minds. I suggest there are some inconsistencies here, exactly as we discussed in relation to driving up environmental standards.
The amendment is about ensuring we get the kind of connectivity, and particularly wi-fi connectivity, that we all agree the country needs. That is not just something we would like to have. Sadly, in the modern world, although we are enjoying ourselves as well, we are often working while we travel around. For Britain to prosper in the 21st century, we need connectivity. If we leave it down to local negotiations, the operators will almost inevitably say, “This is going to raise the cost by a little bit,” which will make it harder for the franchising authority to insist upon it. We can stop that happening by specifying the key things we believe are needed. Wi-fi is an essential part of people’s daily lives. The answer is not to leave this down to local negotiations but to insist upon it in the Bill. We will pursue this, not just because it is important for bus infrastructure but because it is part of creating the kind of digital Britain that we will need if we are to prosper in the years to come.
On the points made by my hon. Friend the Member for Blackley and Broughton, I am sure that he has been involved over many years in discussions with bus operators about where the burden of responsibility lies for punctuality. Of course, if we could solve that, we would probably have solved the entire problem with the Bill. It will always be a complex debate. The partnership arrangements are partly about trying to ensure that bus operators can run their services on time. I am in no doubt that bus operators want to do so. Whenever I meet the manager of my local bus company, he is absolutely clear that that is what he wants to do. The arguments, particularly in many of our precious historic cities such as my own, are about dedicated road space. Obviously, operators would love to have that, but there are other competing interests.
We think that punctuality and journey times are key. We think that they are so important to the future of the bus industry that specifying them, not just as an accidental by-product or consequence of schemes but as part of the agreement, is far more likely to concentrate minds locally on ensuring that they are achieved. Punctuality and reliability are key qualities that bus passengers look for. We all know from our own experience that if people cannot rely on the bus to get them somewhere, they will always turn back to their cars. The only way to have modern local transport systems that people use is if they are sure that the transport is reliable enough to get them there and that they will make their connection, so they are not late for work, school or college. Punctuality and journey times are not an added extra; they must be central to the process, which is why I will not withdraw my amendments.
Question put, That the amendment be made.
Graham Stringer
I beg to move amendment 34, in clause 4, page 16, line 9, at end insert “, reflecting local conditions.”
This amendment would clarify the scope of comparing a scheme during the assessment of a proposed franchising scheme.
The Chair
With this it will be convenient to discuss the following: amendment 35, in clause 4, page 16, leave out lines 32 to 36.
This amendment would remove the requirement on the Secretary of State to issue guidance on the preparation of an assessment of a proposed scheme.
Amendment 36, in clause 4, page 16, line 35, at end insert—
‘(5A) In preparing guidance, the Secretary of State must ensure that it is not over-burdensome on the authority.
(5B) The guidance shall specify that the authority may decline to assess a potential scheme if the bus operators have previously proved unwilling or unable to implement similar schemes.
(5C) The guidance shall specify that the ultimate decision to go ahead with any scheme will rest with the authority.”
This amendment would prescribe some of the content of the guidance on preparation of an assessment of a proposed scheme.
Graham Stringer
The amendments cover two general areas. One is the principle that has reared its head in nearly every debate: centralism versus localism, devolution versus keeping things at the centre. The second is what controls and criteria are at the centre. To put it another way, it is about whether the hurdle in the Transport Act 2000—it said that franchising could be introduced only if it was
“the only practical way of delivering better bus services”—
was an impossibly high hurdle to pass. The hurdle is not quite as high as that in some of the guidance, but I am concerned that high hurdles are being introduced that will make it more difficult to set up a franchising scheme.
I will speak first to amendment 35 and then to amendments 34 and 36—it is easier to take them that way. At the end of the debate, I should like to press amendment 36 to a vote, unless the Minister, having heard such persuasive arguments, is willing to accept it. That would be a pleasant surprise, but in the absence of that happening, I will press it to a vote.
Amendment 35 would remove the Secretary of State’s right to issue guidance on the preparation of an assessment of a proposed scheme. Local authorities have to act within the law. They have to act in a reasonable way. They cannot act in a unreasonable way, otherwise council tax payers and interested companies can judicially review them. There is a lot of history where local authorities have been unreasonable in their behaviour and have lost.
Why do we need a centralised set of rules from the Secretary of State? I do not want to repeat the debate that we had earlier, but I mentioned that there are good officials at a local level and good officials at a central level; and good elected councillors at a local level and good Ministers and Members of Parliament at a national level. There are also poor ones. The question why this should be centralised was not answered.
The Department for Transport and its officials will draw up the guidance. In another franchising area—railways—the Department completely messed up the west coast main line. The Minister is looking puzzled, but I will take him back to the summer of 2012, from memory, when the whole of the franchising operation had to be abandoned because the Department got it wrong.
The Bill says that the same Department should have precedence over local officials and be able to set guidelines. Not only is the competence of the centre not proved, there is also duplication. If I stray back into railways, with your indulgence, Mr Owen, Transport for the North was meant to be devolved. What happens in the Department? A whole team of people is set up to mark and check on what is happening in the devolved authorities. The cost of officials doubled. In the previous debate when I asked the Minister whether there would be more or fewer officials at the centre at the end of this, there was no reply.
The Minister has not made the case that, in allowing franchising in those areas, there should be all those rules, regulations and guidelines. I know I am not allowed to use props, but I have before me the consultation on draft regulations and guidance, which is a mere 150 pages long. That is just the consultation. One hesitates to think how big the eventual document will be when all the i’s have been dotted and the t’s crossed.
We are bedevilled in this country with centralisation, and with people in the Department for Transport who set criteria for pelican or puffin crossings and all sorts of detailed strategies, all of which would be better left to local decision making. I would like the Bill to be about devolution and not to say, “Well, you can take the decisions as long as we agree with them.” I did not take an exact quote when the Minister was answering questions about local control, but he said that was, “All right as long as there was some control from the centre.” That is not devolution. Mistakes will be made locally, as they are nationally. Why would one set up the inefficient system of a national scheme marking local schemes to make it doubly expensive and probably more likely that mistakes happen?
I guess the Minister will not accept the logic of leaving local authorities on the spot to take decisions in the way in which they normally do. Some of those local authorities are huge in terms of resources. Why does the Secretary of State know better? I have no idea whether Kent County Council wants to franchise buses because it is the other side of the country from where I represent, but it is a huge authority that has had good leadership over the years—not from the Labour party—and it might want to take those powers. Why should it or its districts, or Lancashire or its districts, not take the powers? Those are well run councils that take decisions in a legal way.
Amendments 34 and 35 assume that the Minister will not accept amendment 36. Amendment 34 would change proposed new section 123B(2)(b), which says:
“The assessment must…compare making the proposed scheme to one or more other courses of action”,
by adding “reflecting local conditions” at the end. Why would an assessment not be about reflecting local conditions? I was teasing when I said that he would accept amendment 35, but I cannot see how amendment 34 would not improve the Bill by making it clear that any scheme drawn up should reflect local conditions. The purpose behind that is to ensure that any guidance and regulations are not over-burdensome on a local authority.
Assuming that guidance, regulations and process is to be determined from the centre, amendment 36 says three specific things, which would limit that guidance so that it is not over-burdensome. The first subsection of this amendment, says:
“(5A) In preparing guidance, the Secretary of State must ensure that it is not over-burdensome on the authority”.
What could be wrong with that? There is always a tendency, under any political party, for the centre to put bureaucratic costs on to local government. Actually stating explicitly in the Bill that this is a bad thing should be accepted. The Minister surely cannot think that any regulations should be over-burdensome, to use the opposite argument. I hope, even if he does not accept it now that he will consider it when the guidance is being drafted. I quote the draft consultation in support of this—I realise that this is a draft consultation. If I quote paragraphs 19 and 20 of “Annex N: Franchising Guidance – Assessment of proposed franchising scheme (“Business Case” guidance)”, you will see, Mr Owen, that it is already beginning to get burdensome:
“Identifying realistic options should not be a desk exercise however, and authorities should engage with bus operators in the area and explore whether, for example, there is a realistic partnership proposition or ticketing solution that should be considered and assessed alongside the franchising proposition”.
I could go on forever. I have tried to ameliorate that and I hope that the Minister, when he is looking at this guidance, will take that into account.
The amendment goes on:
“(5B) The guidance shall specify that the authority may decline to assess a potential scheme if the bus operators have previously proved unwilling or unable to implement similar schemes”.
Again, what could be wrong with that? My hon. Friend the Member for Nottingham South quoted Brian Souter, who I think is typical of some in bus companies who, because they have been in a non-competitive, almost monopoly situation on many of the routes, hate this. They have resisted ticketing schemes, in some cases, and other schemes that would have improved bus services, so why should a local authority which has had reluctant and recalcitrant bus companies that have resisted it, have to consider something that has already failed when it has a franchising scheme to improve bus services for residents?
Finally, we come back to our old friend, the question of who takes decisions, the Secretary of State or local people, having gone through whichever process it is—the guidance or whatever. I think it should be stated in the Bill that the ultimate decision to go ahead with a scheme should lie with the franchising authority. I hope that the Minister will accept Amendment 34 because it is relatively straightforward and common-sensical. I hope that on Amendment 36, when the Minister is looking at the guidance and the process for franchising, he will take my comments into account, even if he is not prepared to accept it before. Amendment 35 just rehearses the substantial argument about having real decentralisation and devolution.
Daniel Zeichner
We are consistently arguing the same points here about the relationship between the centre and the localities. My hon. Friend the Member for Blackley and Broughton makes a very strong point about the lengthy nature of the guidance. You need to be a pretty dedicated person to work your way through it—of course, some of those present have done exactly that, I commend them for it and I can say that it is good reading if you can get through it. However, the level of detail that will be required is such that it makes it very hard to imagine, in some cases, that local authorities will want to take on the opportunities that the Minister earlier extolled as being the way forward. That seems to be a curiosity to me.
Despite what I said earlier about the need to centrally lay out some key points, that seems to be the nub of the argument here: set out what it is that the Government want centrally—in our case, it was things like wi-fi, low-emission zones and punctuality—but do not get into these lengthy, endless, detailed, tortuous discussions that try to second-guess every single issue at a local level. I have considerable sympathy with my hon. Friend’s attempt to improve the legislation at this point. Even if the Government are not amenable to agreeing to the amendment today, I rather hope that, as they go away and work on the guidance, they realise that many more volumes of that kind will only make the process slower.
I also reiterate my hon. Friend’s query about the number of officials who will end up administering this process from the centre at the end of it. What does the Minister actually envisage?
Andrew Jones
We are discussing a group of amendments that relate to the assessment or the business case that authorities must prepare before they can implement franchising. The Government’s aim is to ensure that authorities fully consider the benefits, impacts and potential risks of franchising before taking the decision on whether to go forward and implement it in practice.
The Bill requires authorities to conduct an assessment of their proposed franchising scheme, which should include comparing it with one or more other courses of action. Amendment 34 aims to ensure that the different courses of action that should be considered as part of that assessment should reflect local conditions. I entirely agree that authorities should compare their franchising proposal against other realistic courses of action—that just seems good practice—and that those realistic courses of action will be different in each case. The Bill does not set out what other courses of action franchising should be compared against; it will be for local authorities to decide what is appropriate. The draft guidance that we are currently consulting on highlights that further by explaining that the authority should consider which courses of action are likely to meet their objectives. I hope, and I assure the hon. Member for Blackley and Broughton, that amendment 34 is not necessary; he may consider withdrawing it.
Amendment 35 proposes removing the requirement of the Secretary of State to issue guidance for authorities to assist with the preparation of their assessments, while amendment 36 proposes adding new requirements to the contents of such guidance. Our intention has always been to assist authorities in preparing robust assessments by providing guidance. The draft business case guidance is 10 pages long, which is much shorter than that for many other schemes or projects. It has actually been developed in discussion with authorities that may use it in future. It is about seeking to help authorities, particularly by reducing their risk of being challenged for not considering other realistic options, which could save time later on—particularly in any kind of legal matters.
I recognise the point about rail franchising, but I think that actually highlights the scale of the decision to go down a franchising route and how these things have to be considered and planned for carefully. On whether local government or national Government are infallible, the hon. Gentleman and I both know that neither is and can throw up a litany of records to demonstrate that. However, this is about having safeguards in place for decision-making criteria; it is not about national control. He highlighted Rail North, but Rail North is a partnership between the Department for Transport and Transport for the North to manage the north’s two rail franchises—Northern and TransPennine. Rail North was involved in designing the programmes and judging the tenders, and is now involved in managing the franchises; it is actually the first time we have moved to a more devolved management of our railways. The team, which is a joint team of the DFT and Rail North, is based in Leeds and will ultimately become part of Transport for the North. That is quite the opposite of the national control that the hon. Member for Blackley and Broughton highlighted—it is about devolution in rail for the first time. When we look at what has happened with rail in the north—the franchises will offer quite a transformation to services and be much more tuned in to their customers—we see the progress that is made by having more local decision making.
The guidance is intended to help authorities through the process and give them some national guidelines with criteria for consideration; we have no intention of making it onerous. This is more about sharing best practice and stopping reinvention when it comes to routes that are new to authorities. Our intention is to assist authorities in making robust assessments, and we are keen to receive views through the consultation about how the guidance can be further improved. I am pleased to be able to reassure hon. Members that our draft guidance recognises that it is for the Mayor or the authority to decide whether to proceed with franchising—it is not a national decision, and central Government should have no further involvement. I can also confirm that it is not our intention to place any unnecessary burdens on a franchising authority through the guidance.
Our approach is based on the standard approach to decision making in government set out in the Treasury’s Green Book. We actually drew the phrase “compelling case for change” from the Green Book. The assessment that a franchising authority is required to develop is based on the principles of the “five case” model for public sector business cases. The draft guidance on the development of that assessment therefore draws on the associated Treasury guidance material on using the five case model, which states:
“The business case in support of a new policy, new strategy, new programme or new project must evidence: That the intervention is supported by a compelling case for change”.
This is not a question of the Government seeking to impose burdens; we are seeking to assist and streamline decision making while keeping it local. That model is an established mechanism that any authority that has ever brought forward plans for a significant transport project should be well used to, and it seems entirely appropriate to follow a similar proven approach for fundamental change to the delivery of bus services, which of course will affect many thousands of passengers every day.
The hon. Member for Blackley and Broughton asked about the number of officials. I can tell him that there are absolutely no plans to increase the number of officials currently working on this area, except in one section: there will be a small increase in the open data team, because significant work is needed to deliver that project. To put that in context, the headcount of the Department overall has fallen by 17% since the 2010 spending review. I hope that, in the light of my comments, the hon. Gentleman feels able to withdraw his amendments, although I recognise that he may wish to press one of them to a vote.
Graham Stringer
I thank the Minister for his reply. I will withdraw amendments 34 and 35. I take what he says about amendment 34, although I think it really would enhance the Bill.
I will press amendment 36 to a vote. It would not add to the guidance but prescribe that “the Secretary of State should not go here”. The context of this debate is that bus companies are hostile to these proposals. It is likely that bus companies will end up in court—Nexus has recent experience of that under existing legislation—and it would be helpful to say that the guidance should not be over-burdensome. It would also be helpful—the Minister did not really reply to this point—to say that where schemes have been tried and failed, or bus companies have refused to try them, they will not be reconsidered in some future scheme. I take the Minister’s reassurance that the final decision will be made by the Mayor or the authority. In the light of that, I will press amendment 36, but I beg to ask leave to withdraw amendment 34.
Amendment, by leave, withdrawn.
Daniel Zeichner
I beg to move amendment 21, in clause 4, page 16, line 30, at end insert—
‘(3A) An award of any new franchise or contract shall not be made on the basis of labour costs estimated by the potential franchisee or contractor assuming labour costs for new employees at less than the labour cost of workers who are covered by TUPE protections in accordance with section 123X transferring to the new franchisee or contractor.”
This amendment would ensure that any new franchise or contract will not be awarded on the basis of estimated labour costs being lower for new employees than the labour cost of workers covered by TUPE protections.
The Chair
With this it will be convenient to discuss the following:
Amendment 25, in clause 4, page 32, line 47, at end insert—
“123Y Employees not covered by TUPE protections
Employees of local bus service providers who are not covered by TUPE protections may not be employed on terms and conditions less favourable than those provided by TUPE.”
This amendment would ensure that employees working under local service contracts not covered by TUPE protections may not be employed on terms and conditions less favourable than those provided by TUPE.
Amendment 26, in clause 4, page 32, line 47, at end insert—
“123Z Effect on employees of introduction of local service contract
(1) Where, either before or after the introduction of a local service contract following an assessment under section 123B, any employee of an operator in the area to which the scheme relates is dismissed, that employee is to be treated for the purposes of Part 10 of the Employment Rights Act 1996 as unfairly dismissed if the sole or principal reason for the dismissal is the introduction of the relevant local service contract.
(2) Subsection (1) applies whether or not the employee in question was part of an organised grouping of employees principally connected with the provision of local services, under section 123X(4).
(3) Where section 123X(4) applies, a new operator may not engage employees or workers on terms and conditions less favourable than those of the employees whose employment transferred from the former operator.”
This amendment would make dismissal of an employee for the sole or principal reason of the introduction of a franchising scheme automatically unfair dismissal.
Amendment 29, in clause 9, page 60, line 16, at end insert—
“138T Employees not covered by TUPE protections
Employees of local bus service providers who are not covered by TUPE protections may not be employed on terms and conditions less favourable than those provided by TUPE.”
This amendment would ensure that employees working under enhanced partnership schemes not covered by TUPE protections may not be employed on terms and conditions less favourable than those provided by TUPE.
Daniel Zeichner
The amendments all relate to employment protection, the first three to franchising and the fourth to enhanced partnerships. We believe this group of amendments would strengthen the employment protections in the Bill.
We are pleased to see that the parts that apply TUPE to franchising largely reflect the concessions that were won in the Local Transport Act 2008 in respect of quality contracts schemes, and are broadly similar regulations to those set out in the Quality Contracts Schemes (Application of TUPE) Regulations 2009. However, we believe changes could be made to ensure that those parts are stronger still. It should be noted that no TUPE transfer ever took place under the terms of the 2008 Act because no quality contracts were ever successfully formed; so this approach is untested and could be subject to further examination.
It has been suggested that operators under the regulated system in London have in the past won contracts by reducing their employees’ terms and conditions. The trade union Unite believes there needs to be a commitment to a minimum rate for bus workers across a franchise and enhanced partnership if members’ pay is to be protected.
That development of what is called a two-tier workforce is something that I hope the Government will consider and address. I believe my amendment will stop the development of that two-tier workforce, as well as the related management and industrial relations problems that that can bring.
The amendment would mandate that the award of a franchise should not be made to a company on the grounds that it intends to pay its future workforce less than the current workforce. We believe it is important to set that out clearly on a statutory basis. By the Department’s own admission, the application of TUPE to either a franchising or enhanced partnership scenario is likely to be complex but I believe these amendments can be simply understood.
The amendments apply to after a franchise contract has been awarded to a bus operator by a local authority. They would ensure that new employees of local bus service providers, who were not covered by TUPE protections, may not be employed on terms and conditions less favourable than those provided by TUPE. That aims to avoid the development of a two-tier workforce: the situation where workers doing identical jobs for the same employer are on different terms and conditions, solely as a consequence of when they started employment.
The amendments would also ensure that any employee dismissed for the sole or principal reason being the introduction of the relevant local service contract will be treated as unfairly dismissed.
I note that recently the Mayor of London, Sadiq Khan, introduced a minimum pay rate for London’s 25,000 bus drivers, with a £23,000 per annum minimum salary. I would welcome the Minister’s comments on the potential of a similar policy being rolled out nationally. At the very least, a minimum salary rate should be a condition of a franchise and enhanced partnership to prevent the undercutting of wages and the risk of a race to the bottom.
I was slightly concerned by the Government’s arguments against similar amendments that were introduced in the other place. They argued that the Bill is devolutionary and gives
“considerable flexibility regarding the nature of the contracts to be awarded by those authorities taking forward franchising and, potentially, enhanced partnership schemes”.
The Minister also said:
“Any authority contracting for services will need to consider a number of factors when assessing bids for contracts, and the Bill will require it to consult and engage with employee representatives at an early stage.”—[Official Report, House of Lords, 24 October 2016; Vol. 776, c. 16.]
Considering a number of factors will not be enough to prevent the race to the bottom that could occur following the initial application of TUPE when employees are transferring. It would not necessarily prevent the two-tier workforce we are warning against but the amendments would, which is why we have brought them forward today.
Andrew Jones
Amendments 21, 25 and 29, tabled by the hon. Members for Cambridge, for Nottingham South and for Scunthorpe, propose to specify the terms and conditions for employees that an authority should include as part of the franchise contracts it enters into with bus operators. It would not be consistent with the rest of the Bill to mandate the basis upon which contracts are procured by local transport authorities or the content of those contracts, as the amendments propose.
The amendments would require local authorities to set out in their contracts that employees hired by the bus operator outside of the TUPE transfer of staff would receive terms and conditions no less favourable than those provided to staff transferred under TUPE. I fully understand the intent behind the amendments. The power to achieve the outcome sought already rests, however, with the franchising authority letting the contracts
The amendments also pose some real practical difficulties. First, employees transferring under TUPE will not all have the same terms and conditions. Some may have been in post for a short period, and others may have been in post longer. There may be different terms and conditions for newer staff. It is not entirely clear which set of terms and conditions the amendments refer to, and I therefore see some difficulties in implementation. In addition, the amendments could place a financial burden on operators and, through them, the local transport authority by requiring them to employ people at something other than the market rate. That could prevent authorities from pursuing franchising schemes.
It is worth noting that the employee protection rights in the Bill replicate those in the Transport Act 2000 for quality contract schemes, introduced by the Labour party. There has been no intention at any point to water down TUPE arrangements. In fact, those were one of the first things we considered when preparing the Bill, and we were committed to ensuring that they were in place right away. I am committed to ensuring that staff affected by franchising are protected. However, I am not sure that it is the job of the Bill to set out the terms and conditions of employment offered to new staff who may join the industry at some point in the future.
On amendment 26, which relates to potential dismissals, I have sympathy with the intention behind the first two subsections concerning redundancies that may be made before or after the introduction of a local service contract. However, employment law already deals with the issue of unfair dismissal of employees. It is simply not appropriate for the Bill to be a vehicle to address such issues, and the Labour party did not include that provision when drafting the existing quality contract scheme legislation. The scenario that the amendment addresses is an unlikely one. I find it hard to imagine that an employer will choose to bear the redundancy costs associated with dismissing an employee if it is able to transfer them to a new operator under TUPE instead.
The hon. Member for Cambridge asked for my opinion on a minimum national salary for bus drivers. That is an interesting idea, but it would very intrusive for a Government to intervene and say that a company has to pay its employees a particular rate. We have done that through the national living wage, to protect some of the more vulnerable workers in our society, but it gets very intrusive indeed into the relationship between a company and its employees if the Government start to direct national minimum wages. It is not the Government’s belief that we should go down that route. I suggest caution would be required in doing so.
I hope that everything I have said confirms the Government’s position and that the hon. Member for Cambridge will feel able to withdraw the amendments.
Daniel Zeichner
I appreciate the Minister’s comments about not seeking to water down the previous arrangements, which we accept. Our worry is that these things have never been tested, and we all now expect this situation to occur very quickly in the near future.
Lilian Greenwood
While we have never tested the TUPE protections in the current Transport Acts, we have experience in the provision of other public services where a two-tier workforce ensues. One group of employees protected by TUPE is working alongside another which has probably been employed on lower terms and conditions to derive more profit from the contracting out.
My concern is twofold and I wonder whether my hon. Friend shares it. First, it is bad news for the employees who are being exploited in that way, but more important is the ability to continue to provide a service. When people are employed on lower terms and conditions, the operator is often unable to fulfil the contract or to recruit and retain people and the quality of provision goes down. I have seen that on many occasions in local authorities and the health service. That is why I share the same concerns about this scenario in relation to buses.
Daniel Zeichner
Once again, my hon. Friend is prescient —I was about to make a similar point. The Minister suggested that it might be difficult to do, because people might well be on different terms and conditions. At the time of the transfer, there will be a going rate for that employer and we would want to establish that as the benchmark. The worry throughout, exactly as my hon. Friend has said, is that, in this situation in other public services, we have seen a race to the bottom.
The Government have rightly identified this as one of the key social challenges that we face, hence their long-overdue conversion to the idea of intervening in the labour market, and hence their support for a national living wage—the Opposition would not call it that, but they have rebadged their proposal as a national living wage—and recognition that workers in the market are vulnerable. We are offering an opportunity to strengthen the current position of this workforce, who are relatively low-paid in much of the country. Some areas, of course, have recruitment issues—in some cases, market forces ought to be working to drive wages up, but clearly that is not always everybody’s experience. We want to ensure that the workers in those situations are properly protected, and we think there is an opportunity. We will not be pressing the amendments to a vote, but we hope the Minister hears what we are saying, engages with those who represent this vulnerable workforce, and ensures that people are not made more vulnerable by the changes.
We have not talked much about the people who are employed in the industry, but there is concern in parts of the country where there is the prospect of franchising. It creates an element of the unknown. People do not know what might happen in the future. While we are very positively explaining the possible benefits of a franchising system, that is not always the way it will necessarily feel to a workforce that are suddenly confronted with change. We want to take those people with us because we think it can produce better outcomes for passengers, but it must also produce secure outcomes for those employed. I can see that the Minister is listening attentively. I suspect we are not that far apart on this and we may be able to explore it further in future. On that basis, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment proposed: 36, in clause 4, page 16, line 35, at end insert—
‘(5A) In preparing guidance, the Secretary of State must ensure that it is not over-burdensome on the authority.
(5B) The guidance shall specify that the authority may decline to assess a potential scheme if the bus operators have previously proved unwilling or unable to implement similar schemes.
(5C) The guidance shall specify that the ultimate decision to go ahead with any scheme will rest with the authority.”—(Graham Stringer.)
This amendment would prescribe some of the content of the guidance on preparation of an assessment of a proposed scheme.
Question put, That the amendment be made.
Daniel Zeichner
I beg to move amendment 23, in clause 4, page 20, line 11, leave out “six months” and insert “112 days.”
This amendment states that a scheme may not specify a period of less than 112 days for its start date following the notice that the local service contract has been awarded by the franchising authority.
You will be pleased to hear that this is a briefer introductory speech, Mr Owen. Proposed new section 123H(4) of the Transport Act 2000 states that
“A scheme may not specify…a period of less than six months”
for its start date following a notice that the local service contract has been awarded by the franchising authority.
The draft regulations—pages 77 and 78 relate to the deregistration of local services by operators—state that franchising authorities will have the ability to set a notice period of up to 112 days for operators wishing to deregister their services following the publication of a franchising scheme. Our concern is about the gap between the two periods. For 68 days of a six-month period, there is the potential for services to be deregistered, which we believe will cause unnecessary disruption and uncertainty for passengers. It is more of a point of clarification for the Minister. Will he consider revising the period as per our amendment, and if not why not? What advice and guidance would he be able to offer to passengers, franchising authorities and operators?
Andrew Jones
Amendment 23 proposes to reduce the time that must elapse between a franchise contract being awarded and it coming into force. This part of the Bill was designed with transition in mind to ensure that operators—those that are incumbent and those that would be incoming, having won the franchise contract—have sufficient time to put any necessary plans into place to deal with either of the two circumstances. Our overall aim is to ensure that all parties are ready to respond in the interests of passengers. I am concerned that reducing the time period to a minimum of 112 days —less than four months—could lead to a hurried transition, which would not necessarily benefit passengers. I recognise that there may be concerns about the behaviour of operators during that transitional period.
The Bill and any associated secondary legislation on which we are currently consulting sets out a number of ways in which authorities can help protect passengers during transition, and measures in the Bill directly address that, including enabling the authority to vary the deregistration and variation notice period that operators must observe before cancelling or changing services, and allowing services to be registered at short notice when they are replacing a service that has ceased to operate. This is about ensuring continuity of provision of service for customers. I recognise the point made by many colleagues in the Committee that people rely on services. This is about ensuring continuity during a transitional period. The Bill strikes the right balance in achieving that, and I therefore hope that the hon. Member for Cambridge feels able to withdraw his amendment.
Daniel Zeichner
I thank the Minister for his explanation. I am not sure I am wholly reassured. In some ways, we are moving into unchartered territory, which is why it is important we get this right.
If everybody was working with good intentions—it is almost like I am discussing other things—there would be no problem, but these transitions may not always be entirely as amicable as one might wish. Our concern is that in those circumstances, passengers could be the innocent bystanders stuck at the bus stop and be put at risk, because authorities may not always be able to make this possible if they do not have the resources and access to vehicles, depots and all the rest of it in the meantime.
I hope the Minister and his Department will talk to those who face this very real prospect and ensure that we make it work successfully for everyone involved. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Andrew Jones
I beg to move amendment 10, in clause 4, page 24, line 41, leave out “21” and insert—
“(Bus companies: limitation of powers of authorities in England)”.
This amendment is consequential on amendment NC1.
The Chair
With this it will be convenient to discuss Government new clause 1—Bus companies: limitation of powers of authorities in England—
‘(1) A relevant authority may not, in exercise of any of its powers, form a company for the purpose of providing a local service.
(2) Subsection (1) applies whether the relevant authority is acting alone or with any other person.
(3) In this section—
“company” has the same meaning as in the Companies Acts (see sections 1(1) and 2(1) of the Companies Act 2006);
“form a company” is to be construed in accordance with section 7 of the Companies Act 2006;
“local service” has the same meaning as in the Transport Act 1985 (see section 2 of that Act);
“Passenger Transport Executive”, in relation to an integrated transport area in England or a combined authority area, means the body which is the Executive in relation to that area for the purposes of Part 2 of the Transport Act 1968;
“relevant authority” means—
(a) a county council in England;
(b) a district council in England;
(c) a combined authority established under section 103 of the Local Democracy, Economic Development and Construction Act 2009;
(d) an Integrated Transport Authority for an integrated transport area in England;
(e) a Passenger Transport Executive for—
(i) an integrated transport area in England, or
(ii) a combined authority area.’
This amendment prohibits county and district councils in England, combined and integrated authorities in England and passenger transport executives in England from setting up companies to provide local services.
Andrew Jones
New clause 1, which was tabled by the Government, reinstates the original provision of the Bill, which prohibited authorities from establishing companies for the purposes of operating local bus services. Amendments were made in the other place to remove that provision, which forms a key part of our proposals, from the Bill.
The Bill provides a number of new tools for local authorities to improve their local bus services, and it is important that operators and authorities work together to improve services for the benefit of passengers. We want to ensure that passengers benefit from the strengths of both local authority influence over services and the private sector. We have seen great improvements in services across the country due to private sector innovation and investment. It is also true to say that authorities have a lot to offer, with many around the country working collaboratively with their local operators to ensure that communities are well served and that services and ticketing offers are joined up.
The franchising and enhanced partnership tools in the Bill will provide authorities with more influence over bus services than they currently have. Striking the right balance between local authority influence and the role that private sector bus operators can play is important. Our view is that passengers will see the most benefit where the commissioning and provision of bus services are kept separate. That purchaser-provider split is a frequent feature of our public services, and as such we do not think authorities should be able to set up new bus companies.
Graham Stringer
I understand the Minister’s argument, but does he not see the case for transport authorities having the power to set up a bus company as a last resort, where private sector companies withdraw from the area?
Andrew Jones
The franchising provisions in the Bill detail what powers an authority has should a franchise service fail, as a stopgap measure, to ensure the continuity of service provision for passengers. I recognise the hon. Gentleman’s point about continuity of service, but we are addressing that in the Bill.
Graham Stringer
To press the Minister on that, I take the point about continuity of service where, for instance, a bus company goes bankrupt and can no longer provide a service. However, that was not the question I asked. In circumstances where bus companies withdraw from an area as a point of policy because they are completely hostile to the idea of franchising, should transport authorities not be allowed to set up bus companies?
Andrew Jones
I suggest that the answer is no. If an area has a service withdrawn simply because of some kind of principled objection by a bus company to a regulatory model, those would be very unusual circumstances, with the company turning down business. In that case, others would, I suggest, snap it up.
Lilian Greenwood
If only the situation were as unlikely as the Minister suggests. I invited him earlier to express a view on the remarks made by the chairman of Stagecoach. I will continue his remarks about “unreconstructed Stalinists”. He went on to say:
“The first contract that they put out on my business I’m out of Tyne & Wear completely, and they can buy 500 buses and find four bus depots.”
Is the Minister not saying precisely that Tyne and Wear could not do that? Therefore, it would be subject to the whim of a large private sector operator that knows that it has local authorities over a barrel when it is the large incoming operator.
Andrew Jones
The hon. Lady has been drawing on a very interesting set of quotes. The chairman of Stagecoach was obviously having a very lively day and making some lavish comments. If he wished to withdraw from the marketplace, I am sure there would be plenty of competitors saying, “Thanks very much, Brian, we will snap up that little operation.” I still do not think that changes the position. If people withdraw from a marketplace, I would expect others to pile in. That is what the nature of competition should be about.
Bridget Phillipson (Houghton and Sunderland South) (Lab)
I am grateful to my hon. Friend the Member for Nottingham South for raising the outrageous behaviour of Stagecoach over the years in the north-east. Is it not the case in the rail industry that the Government have sometimes had to step in? It has been necessary to ensure that that safeguard is in place. Were an operator to follow through on such threats—who knows whether it was a mere threat or had any intent behind it?—there should be safeguards and protection for the travelling public.
Andrew Jones
That is a very interesting point from the hon. Lady. Yes, we do have the opportunity in the rail sector for directly operated railways but that is for a short, interim period. That is what happened with the East Coast franchise, which serves both of our constituencies. We have such a provision in proposed new section 123O in clause 4, which allows for an interim stopgap measure.
Stagecoach obviously has a lot of experience in the world of franchises. It is engaged in the rail sector and operates in London. If the opportunity arises in the north-east—it may or may not choose to go down that route—let us see what the company says. Stagecoach has plenty of experience of franchising, should it wish to bring it to bear.
We have had some talk about the merits of the innovation and investment from private sector operators. I highlight the fact that many existing municipal bus companies, such as Reading Buses and Nottingham City Transport, deliver a high standard of service, and I would expect them to continue doing so. Their ability to do that is not affected by this provision. I remind the Committee that those operators have prospered in a competitive market in which many other municipal bus companies have struggled. Only last month, Thamesdown Transport in Swindon was sold to the private sector after what I understand was a prolonged period of losses.
I have seen the good work done by municipal bus companies. They regularly do extremely well in customer feedback. Our intention is to leave them well alone, doing the very good job that they do, but to make the balance right between public and private, which I think the Bill achieves.
Huw Merriman (Bexhill and Battle) (Con)
I recognise that my point is slightly off kilter with the thrust of the Bill. Brighton & Hove bus company is a superb private operator that has taken over the Swindon municipal service the Minister mentioned, and it intends to invest. In my desire to see private as the first option, would there be scope in the Bill to start with a partnership approach but, if that did not work, to cascade down to franchising? I believe the Cornish model shows that the sword of Damocles makes bus companies see sense. If there is to be an absolute fall-back, municipals could well be that fall-back.
Andrew Jones
I have no doubt that municipal bus companies have been delivering for their customers. If they had not been doing so, they would have gone out of business. We can also see the customer response to them in various surveys and the national bus awards.
My hon. Friend’s proposal is interesting, but we have provided for cover in the Bill. We have anticipated the situation in the read-across from the rail sector, where interim services—replacement services—are required. It would be within the powers of the franchising authority to commission services.
Huw Merriman
To clarify, am I correct in saying that the Government or state takeover scenarios are just for franchising and not for partnerships? If so, there is still a gap. If franchising is not applicable because of the type of authority, only partnerships are available, and it cannot go to municipal because there is a prohibition.
Andrew Jones
We have no intention of having authorities setting up bus companies and awarding themselves contracts. The purchaser-provider split is important. Authorities would have the capacity to intervene and directly commission services, but it would be for a short period of time only. They have the capacity to do that already. Our intention is not to have a municipal bus company do that. It would be for a short period of time and authorities would commission from the private sector.
Chris Green (Bolton West) (Con)
With people interested in franchising in Greater Manchester, there is an expectation that there will be a number of different providers of bus services. If any one provider failed, other providers could step in, whether they were already in Manchester or were other ones coming in. There would not be the need for Greater Manchester as an authority to be running the bus services.
Andrew Jones
My hon. Friend makes an interesting point. I anticipate from my conversations with Transport for Greater Manchester that it will be keen to pursue a franchising model. This will be its call, but I would anticipate not a one-size-fits-all model, but different operators providing services in different parts of his area. If one failed, others could come in. I have certainly been contacted by bus companies that see franchising tenders as a way to enter the UK marketplace. It could prove to be a spur to competition. We have powers in the Bill should there be failure, but those should involve private companies under commission, rather than municipal companies.
Amendment 10 relates to new clause 1. It concerns a cross-reference in the Bill and nothing more.
Lilian Greenwood
It is a pleasure to serve under your chairmanship, Mr Owen. I oppose new clause 1, as I am sure the Minister anticipated. I thank him for his recognition of the success of some of the existing municipal operators. Mr Owen, I hope you will indulge me if I explain why this is so important. I represent a constituency with a very successful municipal operator. I do not think the Committee will mind if I remind it that Nottingham City Transport, which is one of the most successful municipal operators in the country, is the only operator to win the UK bus operator of the year title four times. It also won the Route One large operator of the year award in 2016 and the award for customer focus at the European Business Awards in 2015; it had the top national bus driver in 2014 and won the Guide Dogs Award for breaking down barriers in 2014. I could go on, Mr Owen—there are many ways in which it is an exemplary bus operator. As I said on Second Reading, these things are not just being stated by me because I am the local MP—they are backed up by evidence.
When we look at the most recent national bus passenger survey, for 2015, we find that Nottingham City Transport is No. 1 one out of 50 operators for overall satisfaction, with 97% satisfaction. When we look at value for money, it is not No. 1, but it is No. 4 out of 50 operators, with 74% satisfied with its value for money, which is pretty good. On satisfaction with punctuality, again it is No. 1 with 85%, and it is joint second on satisfaction with bus journey times. There is no doubt that it is a really good example of what a good operator should be doing, and not just on those issues that are covered in the passenger survey.
I know we are going to discuss accessibility during the passage of the Bill. The percentage of accessible buses run by Nottingham City Transport’s 330 buses—it is quite a large operation—is 100%. In the other place the provision of audio-visual announcements on buses was raised. Many operators have suggested that it is too costly, but 80% of Nottingham City Transport’s buses already have audio announcement. As has been acknowledged, 100% have free wi-fi. On many levels, that shows what a bus company can do. I found it quite difficult to understand the Minister’s submission, as he acknowledged the value of municipals such as Nottingham City Transport and others—Reading Buses has also been a recent winner of bus operator of the year—which is okay, but why not allow that possibility in other areas?
Graham Stringer
I will be brief, as my hon. Friend the Member for Nottingham South has covered most of the points I wish to make. A reading of proposed sub-sections (1) and (2) shows that new clause 1 is not only disproportionate but authoritarian and ideological. The provision states:
“A relevant authority may not, in exercise of any of its powers, form a company for the purpose of providing a local service.”
That is extraordinary. It goes on to state:
“Subsection (1) applies whether the relevant authority is acting alone or with any other person.”
The assumption behind the proposal is that, in some way, the private sector market is working perfectly and competition is leading to a provision of services everywhere. That is simply not the case. The measure is tying the hands of local authorities that think that they can make a business case to provide a municipal bus company, either on their own or with a private sector partner. That is simply an ideological act. I can see the case that the Minister made, and I would concede that a franchising authority should not be able to award a contract to a bus company that it owns. However transparent the process, that would look strange to anybody outside. I accept that, but there are parts of the country—the shires, for example, and Hartlepool is often mentioned—where bus services are poor and many remote communities do not get a service. Why should the local authorities not get together and provide a municipal bus company where the private sector is failing?
An argument is often used in these cases. If the system we had in this country—and we hope this is the first step in moving away from it—worked so well and provided services efficiently, effectively and economically to people who needed them, why has nobody copied it? Can the Minister show us anywhere in Europe that has said, “Wow! What a wonderful deregulated system you have. We will immediately copy it and we will get rid of all our publicly owned bus companies and invite the private sector in to have a free-for-all. We think that will be a better way to do it.”? I cannot think of anywhere in Europe but perhaps the Minister knows better than I do; that is possible.
There are other arguments in favour, not of telling local authorities they must do it, but of allowing them to do it where there is a need. It would do one other thing: it would provide a benchmark for how bus companies should and could operate, as Directly Operated Railways provided a useful benchmark for the rest of the rail system.
The Minister has praised municipal bus companies. Can he explain why, if something is working so well, we should not replicate it? We probably invent too many different ways of delivering service in this country. When things work, why do we not simply replicate them where there is a need? In debates over the years on franchising, I have argued the case for quality contracts or franchising, and Government Members have said there are excellent bus services in Brighton, Oxford and Norwich, and round the country there are. There are places where the bus service works. There seem to be two factors that make those bus services good while those of us who live in Manchester, Newcastle, Hartlepool and South Yorkshire have seen a dramatic decline in bus services. Those areas are usually historic cities where there has been a restriction on cars, often, but not always, allied with a municipal bus company, so that there has been control and a very good service provided. Will the Government, like any sensible one, allow things that work to happen again?
Daniel Zeichner
It is a pleasure to follow both my hon. Friends, who have made their points very well. The new clause proposal has become the cause célèbre of the Bill, doubtless dropped in to wind up people across the country. To that extent it has been successful. We have had thousands of emails from people who are concerned about it. We have seen many representations from councils. We have had exciting photo opportunities outside the Department for Transport. I am sorry Ministers did not feel about able to join them—they would have been very welcome.
The proposal is a sop to those who cannot abide success in the public sector, to those who cannot get over the fact that, year after year, the municipals demonstrate that they can combine efficiency, good value and top-quality service and regularly walk away with all of the awards. As has been said, the proposal flies in the face of the evidence. It is a mean-spirited proposal that prohibits county and district councils in England, combined and integrated authorities in England, and passenger transport executives in England, from setting up companies to provide local services. In short, it is a ban on new municipal bus companies.
We have made it absolutely clear that we completely disagree with this punitive measure, which also contradicts the Government’s supposed commitment to localism. We have already heard from my hon. Friend the Member for Nottingham South about the fantastic reputation and performance of one of those municipals. We could speak about others, but the point has been well made. Sadly, the Government now plan to take this option for local authorities off the table, despite the fact that in a number of areas they have proved that they are successful.
Lilian Greenwood
My hon. Friend has made the point very clearly in relation to Nottingham City Council and the tram consortium. There is an even more obvious example that I set out on Second Reading. The tendered bus services in Nottingham that provide the Medilink service, the park and ride services and the local link services to some of the district centres are also operated under contract, not with Nottingham City Transport, which was unsuccessful, but with Nottingham Community Transport, which won the contract. That makes it very clear that the council is capable of operating its municipal bus company as an arm’s length contract, and that there is real competition in the market to provide those services.
Further, does my hon. Friend agree that, in many instances in public services, we see in-house bids alongside private sector bids? It is possible to ensure that they are considered alongside each other. Sometimes the in-house bids are successful and sometimes they are not.
Daniel Zeichner
My hon. Friend makes the point very powerfully, and I absolutely agree with her last point. I expect the Minister and I were both local councillors a number of years ago. My hon. Friend the Member for Blackley and Broughton made the point that having an in-house competitor keeps the market honest, as was explained to me early on in my council career in housing. That is the role that municipals can play in this case.
The Government should be a little more confident about the ability of local government, exactly as my hon. Friend the Member for Nottingham South has explained, to get the best for their citizens, as anyone rationally would. If a private bus operator offers a local authority a better service, and if the bid from a private bus operator meets passengers’ needs better, why would a local authority not award it the contract?
It is fair to say that municipals do not always have to please shareholders and are not driven by profits and shares, and that local authorities are far more likely to pick the operator that can genuinely best serve the needs of the passengers. If a local authority considers bids for a contract and finds that its own arm’s length company is the best one to do the job, why should not it award that company the contract?
Contrary to the Conservatives’ belief, we are speaking up for municipal companies not for ideological reasons but for the practical reason that it would make things better. We want local authorities to continue to have the choice to form municipal companies should they want to do so. As we have heard, there is no evidence of a massive rush to form municipals, so to some extent a straw bus company has been set up to be knocked down. There is not a great rush, but why make it impossible for such companies to be set up in future? We want local authorities to continue to have the choice to form municipal companies, partly because there are so many good examples of their being successful.
The Conservative party is supposed to be in favour of the free market and to dislike regulation and impediments to fair competition. That is their long-held proud view, so why are they attempting to impose arbitrary barriers on the market to contrive to stop municipal bus companies competing fair and square? In our view, local authorities should be able to form their own bus companies and have them compete with private bus operators in areas introducing franchising schemes as well as areas without them. The attempt to ban local authorities from forming municipal bus companies suggests that Conservative Members are afraid that the municipals might just do better than the private bus companies they so venerate. Surely they are not afraid of a little competition.
Lilian Greenwood
I am reminded of the example given earlier about Directly Operated Railways. My hon. Friend will remember that, when the contract for the east coast line was awarded, the Opposition argued that the incumbent operator, East Coast, should be allowed to bid. It was prevented from doing so. It is interesting that, since that service has been operated in the private sector, passenger satisfaction scores have gone down. Surely there was an argument for allowing it to compete to show that sometimes the public sector can do better.
Daniel Zeichner
Once again my hon. Friend makes the point strongly. It seems that the evidence is entirely stacked up on our side, and I hope the Minister and his colleagues reflect on it. The question should be about the best interests of passengers and the public, not an ideological obsession with stopping good public services being provided directly, when that can be shown to happen successfully.
The Competition Commission has been mentioned obliquely once or twice in the debate. Its report noted that the fact that municipal operators are not required to deliver commercial rates of return might lead them to take actions that non-municipal operators might not, such as providing services that a non-municipal operator would consider uneconomic. The commission did not see evidence to suggest that that would have any significant distorting effects on competition. In other words, things can be done for the wider public benefit, which of course is also part of the franchising approach.
I suggest that we are moving in a slightly different direction from the ideological experiment with the free market of the past 30 years, and should perhaps move with the times. As my hon. Friends have suggested, perhaps international examples will show us that others have not chosen to follow that experimental path, for good reason.
Bridget Phillipson
To continue with the discussion of differences in approach, in Tyne and Wear the Metro was, until recently, operated by DB Regio. That contract ended—the decision was taken not to extend it. It has now come back under the control of Nexus, which directly operates it. It is working well. It is an option that was available because the contract was not working as well as it could with DB Regio. It seems strange to me that, in the case of the Metro, Nexus can take action to take control where a service is failing, but there is not that backstop with bus franchising.
Daniel Zeichner
Indeed, that point is well made. It has been possible to take back control in that case, and it is working to the benefit of passengers in that area. It seems extraordinary that we should want to close down the options when all the evidence points to the fact that, when transport systems are integrated, it is possible to get a better outcome for everybody.
I am not sure I am allowed to mention European law anymore, but it may be worth noting that, in EU regulation 1370/2007—I am sure Members know it off by heart— article 5.2 allows that:
“any competent local authority, whether or not it is an individual authority or a group of authorities providing integrated public passenger transport services, may decide to provide public passenger transport services itself or to award public service contracts directly to a legally distinct entity over which the competent local authority, or in the case of a group of authorities at least one competent local authority, exercises control similar to that exercised over its own departments.”
In Europe, local authorities are able to award contracts directly to their own company. We simply want new municipals to be able to compete in the process.
As I come to my conclusion I shall quote a further authority. Regarding municipal bus companies, the Institute of Public Policy Research said that
“authorities need to encourage and support the many innovative transport solutions–—such as social enterprises and municipal companies—that have emerged over the years.”
It added that:
“the continued strength of some municipally owned transport schemes…demonstrate that conventional commercial operations are not the only option…Choosing to operate a business without the pressure to deliver profit to shareholders can allow social values to be put at the heart of that business’s activities and deliver considerable benefits for communities.”
Our final problem with the proposal, as touched on by my hon. Friends, is that it seems as if the Department is working without any evidence. I have asked a number of written questions about the plans, and it has been revealed that
“no analysis has been undertaken by the Department for Transport to understand the potential benefits”
of the municipal model for passengers. I was later told that there are no plans to undertake any analysis of those benefits. I asked what evidential basis there is that the commissioning and provision of bus services should be kept separate, and was told:
“Supporting evidence of direct relevance is not available”.
Furthermore, I was told that a ban on municipals was not included in the bus reform workshop discussions because the provisions
“had not yet been drafted when the workshops took place.”
I simply do not understand why the Government persist with this divisive and mean measure when they have absolutely no evidence to back it up. In our view, this is a piece of symbolic, ideological dogma that has no place in an otherwise positive, enabling Bill that is broadly underpinned by consensus. We have every intention of revisiting this issue on Report.
Andrew Jones
I covered much of the ground in my earlier comments. I do not view this matter as the cause célèbre of the Bill, because frankly not a single local authority has contacted me to say that it wishes to start a municipal bus company. I do not think that this is at the heart of the Bill at all. Why do we have it? We have it simply because of the points I mentioned earlier—that commissioning and provision separation could easily deter investment from the private sector should this be reversed. What we have sought to do in the Bill is find the right balance and retain the strengths of private bus companies and the involvement from the public sector to find that proper partnership where we most effectively see the industry making progress for customers.
Lilian Greenwood
I am mindful of the point my hon. Friend the Member for Cambridge made about evidence. When the Minister says that the existence of municipal bus services or an intention to set up a municipal bus service would prevent investment from the private sector, what evidence is he drawing on? My city has a very successful municipal operator, but that does not prevent investment in the private sector. In fact, we have an extremely effective local private operator and, if anything, the competition with the high-quality municipal has driven up its investment in its services. I therefore ask the Minister to set out what evidence he is drawing on in making those remarks.
Andrew Jones
What I said was that it could deter investment. We are talking about projections into the future, and as the future has not yet happened, of course we do not have any evidence for it. I am just looking at what the risks may be.
What we seek to do in the Bill as a whole is to enable bus companies and authorities to work more constructively together on behalf of passengers to deliver better services. I think we have struck the right balance. There is no doubt at all that the municipal companies are, indeed, successful, but we have chosen to highlight a couple that have perhaps been at the high end of success—the Nottingham and Reading companies have quite reasonably had a lot of mentions today. The last company that I visited was the bus company in Reading, and I thought it a very successful and impressive operation, but within a few days of that visit we saw the Thamesdown service sold after many years of making a loss. The idea that it is only municipals that are successful and innovative is not true. Success has come from having the right balance, and that is exactly what we are achieving in the Bill.
On international comparators, I am not an expert on the bus markets of different countries, but I am aware that the successful transformation of our rail services, which was mentioned earlier, has led to ours being the fastest-growing railway in Europe.
Amendment 10 agreed to.
Daniel Zeichner
I beg to move amendment 24, in clause 4, page 32, line 47, at end insert—
“123Y Compensation liability
Where a bus operator brings a successful legal challenge for compensation against a relevant franchising authority, central government shall be liable for any financial penalty imposed by the court on the franchising authority.”
This amendment specifies that central Government shall bear the financial risk of legal challenges brought against franchising authorities by bus operators.
The amendment would ensure that central Government bear the risk for financial penalties where a bus operator brings a successful legal challenge for compensation against a relevant franchising authority. We want to protect local franchising authorities from legal action by operators and ensure that they are not prevented from bringing forward good schemes for fear of potential risk.
We heard reference in earlier debates to the attempt in the north-east—many of us would say the heroic attempt—to achieve a quality contract and how difficult that proved to be. When Nexus, the North East combined authority’s transport arm, attempted to introduce a quality contract scheme for Tyne and Wear under existing legislation, the legal decision made by the quality contract scheme board suggested that local authorities could be liable to compensate bus operators for financial losses they might incur as a result of bus re-regulation. The board concluded:
“Legislation enabling franchising should specifically address the issue of proportionality of financial loss of bus operators. It may be that some form of compensation is considered appropriate.”
It went on to suggest that local authorities could have been liable for payments of between £85 million and £226 million if the scheme had gone ahead. At that time, many of us were astonished by that conclusion, but despite the absurdity of it, that was what the board said. It causes real concern for people who may be thinking of bringing forward what I think we all agree could be the kind of schemes that will really improve bus services in our country.
I asked the Minister what assessment his Department had made of the reference in the quality contract scheme board’s report to bus operators being compensated by the Government for future losses that might be incurred as a result of franchising. The Minister responded that the decision related to existing legislation and was unrelated to the Bill. I do not think that that is good enough. It is important that we protect local authorities from that risk. It is not the case that this situation has not been rehearsed—it is out there.
If we believe that franchising will produce better services for passengers, we cannot have a situation in which authorities are worried about bringing schemes forward because they are intimidated by the financial risk. The Government might feel that that is not relevant, in which case they can demonstrate their confidence in the new system by making it clear that the risk does not lie with the local authority.
Some share the view that was expressed by the board in the Nexus case. The Confederation of Passenger Transport has, indeed, said that bus franchising
“would unquestionably amount to indirect expropriation”,
and that the Bill is “anti-enterprise” and
“silent on the issue of compensation.”
I and many others obviously do not agree. As I have said, franchising moves competition from on the road to off the road, with the system of bidding for service contracts.
More than that, any industry that receives almost 50% of its revenue from the public purse cannot be surprised that the public seek a say in how the services they fund are run. The Transport Committee found:
“We accept that the question of whether incumbent operators would suffer a loss from franchising is a complex one. However, franchising does not mean operators already providing bus services in the market cannot compete; it simply means that they must compete for the market rather than for passengers as they do at present. There is no case for compensation for operators in areas where the local transport authority decides to introduce franchising.”
The Opposition need clarity on this issue, because we fear that if the Government do not provide it, good schemes might not be introduced.
Andrew Jones
Amendment 24, which was tabled by the hon. Members for Cambridge, for Nottingham South and for Scunthorpe, proposes that central Government assume liability for compensation payable as a result of a successful claim against an authority that has implemented franchising. The Bill is about devolution. It gives authorities the ability to decide which model of bus service provision works best for local passengers. It makes it clear that the decision to implement franchising lies with the Mayor or the authority in question and not with central Government
Local accountability is at the very heart of the Bill. Any Mayor or authority that is not able to stand by and take responsibility for their decision should not implement franchising in the first place. Looking to central Government to solve local problems would undermine the accountability required to make a success of franchising in the longer term. Frankly, it would be out of step with the rest of the Bill for central Government to step in and assume responsibility for a local decision in which they have played absolutely no part. The proposal is very strange, and would mean a complete break between accountability and responsibility.
Bridget Phillipson
The Minister will recall that during the process that led to the quality contract scheme decision in Tyne and Wear, the issue was, in part, where responsibility would lie were there to be a legal challenge, not on the grounds of the scheme itself or in respect of whether any compensation would be owed, but concerning where responsibility for the legislation itself would lie. This is Government legislation, so would it not be for the Government to defend, if challenged, its principle and to take on any liabilities that arose from that?
Andrew Jones
In developing the legislation, we have taken into account the views in the quality contract board’s comment on compensation. We are confident that the processes in the Bill are fair and give operators sufficient notice to enable them to plan accordingly. I therefore do not think that what the hon. Lady says will apply, but we have clearly been learning from the problems that the north-east, more than any other area, experienced in the quality contract scheme.
Huw Merriman
The Transport Committee spoke to authorities that might consider franchising about the risks they would have to bear. Surely this is one. If they decide that it is not a risk worth taking, they will not utilise the power. It is not just a question of asking for a central Government bail-out, but a question of asking for a bail-out from my local taxpayers, who will not have the benefits of franchising. I find the proposal outrageous.
Andrew Jones
It is a strange idea to put forward that central Government should be liable for decisions taken in a local council or by an elected Mayor. That break between accountability and responsibility could only lead to bad practice. Any legal challenge by operators against an authority is likely to be based on the way in which the authority has approached the decision-making process. Central Government are not seeking to control that, and we should not be responsible for it. I therefore ask the hon. Member for Cambridge to withdraw the amendment.
Daniel Zeichner
I note that the hon. Member for Bexhill and Battle is outraged by the suggestion, but the crux of the point was made by my hon. Friend the Member for Houghton and Sunderland South and it is an important point. It is clear that some in the industry see the concept as an act of expropriation—that is what the industry body has said. The Government are proposing the legislation and we support them, but the danger, as I have said, is that if local authorities fear that they will be subject to the full force of legal challenge, people might be unable to use this good legislation. We will be back to a situation of spending many years talking about doing absolutely nothing, as the hon. Member for Bexhill and Battle said.
Huw Merriman
Surely the concept of devolving power involves devolving responsibility. It would be an incredibly curious situation to devolve the power and, at the same time, have the local authorities ask for a guarantee all the way back not just from central Government, but from all taxpayers who live in local authorities that do not have the same power.
Daniel Zeichner
Much of the discussion today has been about the balance of responsibility between the centre and the locality. Much has been said about the very prescriptive nature of the rules set out by the Government for allowing franchising authorities to make proposals, particularly those that do not come through the combined authority and mayoral route. The question in the end is where the risk should lie. Our view is that the risk is a consequence of the legislation. That is why the Government should bear it.
Bridget Phillipson
Further to my hon. Friend’s point, there was much talk about what would happen in Tyne and Wear. My hon. Friend the Member for Blackley and Broughton asked whether an infringement of human rights could lead to a challenge under European law if the quality contract board allowed the scheme to proceed. My understanding is that that would have been a matter for the Government to defend, and not a matter for individual local authorities pursuing franchising schemes. There is an important principle here. This is not simply about devolution; it is about the legislation and the Government defending the principles that underpin this important scheme.
Daniel Zeichner
My hon. Friend is absolutely right. That point goes to the crux of whether the legislation will work in practice. We will not press the amendment to a Division, but I hope the Minister takes careful note of what has been said and ensures that, as authorities consider introducing schemes, they feel reassured that they will be able to do so and not face the risks we have described. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 4, as amended, ordered to stand part of the Bill.
Clause 5
Power to obtain information about local services
Graham Stringer
I beg to move amendment 33, in clause 5, page 33, line 8, at end insert—
‘(1A) The franchising authority may require the operator to provide information about services run by the operator under existing franchises or in non-franchised markets outside the franchising authority’s area.”
This amendment would ensure that all operator data about operational performance in markets outside the franchising authority’s area is available to them for the purpose of developing a franchising scheme.
The Chair
With this it will be convenient to discuss the following:
Amendment 37, in clause 5, page 33, line 31, at end insert—
“(ea) information about the operator’s pension scheme(s) and information about the number of persons employed by the operator in any individual pension scheme;”
This amendment would require operators to share information and particulars about their staff’s pension scheme with the authority.
Amendment 38, in clause 5, page 33, line 34, at end insert—
“(fa) information about journey speed and reliability for those local bus services;”
This amendment reflects the draft regulations and guidance and includes journey speeds and reliability for authorities to consider when developing a case to franchise services.
Amendment 39, in clause 5, page 34, line 2, at end insert “, which shall be no longer than 56 days.”
This amendment defines reasonable period for the purpose of this subsection as no longer than 56 days.
Graham Stringer
The purpose of the amendment is to allow the transport authority and franchising authority to ask for and get information from operators about how they operate in adjacent areas, and not just the authority area. The clause amends section 143 of the Transport Act 2000, enabling a franchising authority to request certain information from bus operators of local services in its region in order to inform its business case assessment.
If I may return to annexe N of the Department for Transport’s public consultation, from which I read out section 19 previously, paragraphs 29 to 32 state that there is an obligation on local authorities to
“clearly explain the impacts of the options on different groups in society. This should include passengers, the authority, wider society and bus operators, with both the potential impacts on incumbent operators and the potential benefits to new entrants considered.”
What concerns me about is that authorities are being asked to make assumptions about the future private market behaviour of bus operators, exposing those authorities to unnecessary risk. It implies that authorities must make those assumptions as part of their assessments, meaning that the validity of those assessments is in danger of being compromised by an onerous duty to make assumptions on areas lying outside an authority’s direct knowledge. In addition, it is unclear how those assumptions will assist or inform a proposition.
In addition, proposed new section 143A(3) of the Transport Act 2000 does not currently give authorities the ability to require information about bus services in neighbouring areas. As the business case guidance specifically requires franchising authorities to consider the impacts of franchising on neighbouring authorities and services and transport in their areas, the omission is material and should be rectified by adding provision for information about local bus services in neighbouring areas, as the amendment suggests.
It is recommended that the new obligations be deleted in the first instance. However, if they are to remain in the statutory guidance, a corresponding amendment to proposed new section 143A(3) of the Transport Act 2000 could be made to enable a franchising authority to request from bus operators information about their services outside the authority’s area, including franchising services and non-franchising services elsewhere.
Time and again, we find the Government laying down in a Bill guidance and rules that are burdensome on authorities. I followed the Minister’s previous point, and I can see the case that he made: if local authorities take decisions, they should take responsibility and liability for them. But the other side of that coin must be that they are in charge of the rules and regulations within the law as it stands. We will return to this point on Report, but we keep coming back to it: the rules are onerous and burdensome, and will leave any franchising or transport authority open to legal challenge, because they are complicated and derive from elsewhere.
I hope the Minister accepts the amendment, but there is a deeper issue: the guidelines do not protect transport and franchising authorities as well as they could from potential challenge by hostile bus companies that do not want to lose their monopolies.
Daniel Zeichner
I shall speak to amendments 37 to 39. Amendment 37 would allow the franchising authority at an early stage to obtain pensions information from operators so that it can begin to understand the potential scale and impact in relation to historic and future pension liabilities. Currently, proposed new section 143A(3)(e) says:
“Information about persons employed by the operator in the provision of those local services”.
As such, it is not clear whether pensions information would be included. Will the Minister clarify whether the Bill will enable franchising authorities at an early stage to obtain information about pensions and the pension schemes of individuals employed by the operator? Does he agree that the amendment enhances the provisions by ensuring that franchising authorities have access to this relevant information in preparing their assessments?
Amendment 38 would enhance the Bill, better reflecting draft regulations and guidance. The statutory guidance includes a new obligation for authorities to consider journey speeds and reliability when developing an assessment. In order for authorities to be able to satisfy this additional obligation, an amendment to the Bill will be required so that authorities can request the data from incumbent bus operators. A large amount of the information is held only by operators and is not currently available to authorities. Currently, journey speeds and reliability are not provided for in the list of information that authorities may request from bus operators, meaning that authorities are unable to satisfy this additional consideration. Does the Minister agree that including the measure in the Bill will ensure that the Bill and the accompanying guidance are better aligned?
Amendment 39 reflects the fact that “a reasonable period” is not currently defined. Obtaining the information from operators set out at proposed new section 143A is vital to inform the franchising authority’s assessment. Any delay in providing that information will have a significant impact on the timetable for audit, public consultation and the Mayor’s decision. Does the Minister agree that 56 days is a reasonable period? If not, how does he define “a reasonable period” and will he make that definition clear in the accompanying guidance?
Andrew Jones
This group of amendments relates to the information authorities can request from bus operators in connection with their franchising functions. Amendment 33 would require bus operators to provide information to authorities about the services they operate under existing franchises and outside the franchised area. The purpose of clause 5 is to ensure that authorities have the information they need about the services in their area so that they can make an informed decision. I therefore struggle to see the rationale behind requiring them to provide information about services that are unconnected to the scheme they are developing or their area.
Graham Stringer
Business case guidance, as I said, specifically requires the franchising authority to consider the impacts of franchising on neighbouring authorities and services and transport in their areas. Surely that is a reason why the bus companies should hand over information about what they are doing in those areas.
Andrew Jones
The hon. Gentleman is talking about considering developing schemes and the impact on bus provision in neighbouring areas. It does not necessarily suggest that entirely unconnected areas need to have information about franchises beyond the area directly under consideration. I understand where he is coming from, but the information described in the amendment would not be material to an authority’s assessment. I am not convinced that there is any need for the authority to have access to it. I hope he considers withdrawing the amendment.
Amendments 37 and 37, tabled by the hon. Member for Stalybridge and Hyde (Jonathan Reynolds), propose to add new categories to the list of information that can be requested by an authority—in particular information about an operator’s pension schemes, and about journey speeds and reliability. Clause 5 already allows authorities to request information about people employed by operators. That will include information about their pension arrangements. That is clearly a material consideration and will be included. I am not convinced therefore that amendment 37 is necessary.
I agree that an authority may want to consider information about journey speeds and reliability when conducting its assessment, particularly to understand where there are congestion hotspots. Having said that, I would like to think that any authority with the skills and abilities necessary to implement a franchising model already has a clear view of where congestion problems are in its network. There are other ways that the authority could access that sort of data without placing burdens on operators, such as through existing punctuality and timetable information and roadside monitoring equipment.
We are currently consulting on draft regulations under the clause that set out further categories of information that can be requested by authorities. If a clear case is made through our consultation that journey speed information would be a valuable addition to that secondary legislation, we will certainly be happy to consider it, but I am not convinced today that we should place it on the face of the Bill. I hope I have provided the hon. Member for Cambridge with reassurance that the issue will be addressed and that he will therefore not press amendments 37 and 38 to a vote.
Amendment 39 would require operators to provide the requested information within 56 days rather than at the end of a reasonable period that the authority may specify. We want to ensure that we leave as much flexibility as possible to allow authorities to work with operators on a local level. In some cases, the information requested will be very limited and could be provided in a shorter timescale. We also have to consider the full range of possibilities and give due consideration to smaller operators, which may have more difficulty collating and sharing information when their limited resources are focused on doing the day job and running their existing services.
The Bill will allow authorities to take local circumstances into account and set realistic and appropriate timescales for delivery, without an arbitrary cap. If an operator fails to take all reasonable steps to respond to a request, the Bill requires the franchising authority to report it to the traffic commissioner, who then has the ability to impose sanctions on operators that contravene that requirement, provided that the commissioner agrees with the authority that the operator has not taken all reasonable steps to respond. Given that flexible approach, which I believe will work well in practice, I ask the hon. Member for Cambridge to withdraw amendment 39.
Graham Stringer
I may return to amendment 33 on Report, along with a number of other items. I beg to ask leave to withdraw the amendment.
Daniel Zeichner
I am reassured by the Minister’s comments on amendment 37, about pensions. That is helpful and clarifies the situation.
I am less reassured on the other two amendments. It is not my experience that authorities have this information. A lot of this information is held by the operators. They are running their businesses and quite clearly need it to run their day-to-day operations. Potential franchising authorities do not necessarily have that information. As I suggested earlier, my visit to my local traffic commissioner confirmed what I already rather suspected—that the responsibilities of traffic commissioners are not matched by the resources at their disposal. I am certainly led to understand that the old system whereby people used to be sent out to check on reliability and so on are long gone. I will not press the amendments any further, but I am not convinced on that point.
Finally, I think the Minister is being a touch naive to think that all the major operators will necessarily want to co-operate in that way. Having a fixed timeframe is absolutely right, possibly with an exemption for smaller operators. We should not be under any illusions: some of these processes will not be as smooth and amicable as we would all wish.
Amendment, by leave, withdrawn.
Clause 5 ordered to stand part of the Bill.
Clause 6 ordered to stand part of the Bill.
Schedule 2
Further amendments: franchising schemes
Andrew Jones
The clause introduces new provisions for advanced ticketing schemes in England, which improve the existing ticketing powers in the Transport Act 2000 in a number of ways. First, the clause future-proofs the legislation by ensuring that new or future developments in technology can be accommodated within its framework. Secondly, the clause contains new duties for local authorities to consider linkages and compatibility with other multi-operator ticketing schemes. I must emphasise, however, that this is not about price. There is no ability for ticket schemes to set ticket pricing. An advanced ticketing scheme may only be made by local transport authorities in England. The existing ticketing scheme provisions will continue to apply in Wales and to schemes made by an English authority in conjunction with a Welsh one. This part of the Bill has been widely welcomed in our discussions and has not proved at all controversial.
Question put and agreed to.
Clause 7 accordingly ordered to stand part of the Bill.
Clause 8 ordered to stand part of the Bill.
Schedule 3 agreed to.
Clause 9
Enhanced partnership plans and schemes
Amendment made: 11, in clause 9, page 42, leave out lines 15 to 20.—(Andrew Jones.)
This amendment removes a requirement that, under an enhanced partnership scheme, new buses providing local services must meet eligibility requirements contained in the “Low Emission Bus Scheme” (a programme of grants to support the use of low and ultra-low emission vehicles), where the vehicle comes into service after 1 April 2019.
Question proposed, That the clause, as amended, stand part of the Bill.
Andrew Jones
The clause will introduce enhanced partnerships in England. They go further than the advanced quality partnership schemes provided for in clause 1, which we discussed this morning. In particular, enhanced partnerships may include a broader range of requirements. They are designed to be easier to apply to a wider geographical area, and provide for the involvement of operators from the outset. They do not require every single objection from operators to be resolved.
The clause provides for enhanced partnership plans and enhanced partnership schemes. The plan provides the context for the partnership and sets out the bus improvement objectives, which are relevant to all parties. Detailed actions to be taken by the authority and bus operators on the ground locally are set out in the associated scheme or schemes. Both the plan and schemes are made by the local transport authority but are developed in partnership with any relevant operators that wish to participate. To ensure that operators remain involved and supportive, the authority can proceed at certain key points only if it has sufficient support for its plans from the relevant operators. The mechanism by which that will be judged will be set out in secondary legislation, on which we are currently consulting.
Under an enhanced partnership, competition remains generally on the road, and services continue to be provided on a commercial basis. All operators in the scheme area, whether a new entrant or an incumbent, must comply with any of the requirements set out by the scheme. Those requirements fall into two broad categories. Operational requirements can include vehicle standards—including emissions standards, as we discussed this morning—branding, payment methods, ticketing structures, the price of multi-operator tickets and information to be provided to passengers. Route requirements address the frequency and timing of particular services.
There is a menu of options so that authorities can work with operators and passenger representatives, among others, to find the best solutions for their area. That is the essence of an enhanced partnership. It is a flexible set of powers that can be adapted to local circumstances. The provisions have been welcomed by passenger groups, bus operators and local transport authorities. I think that these provisions are at the heart of the Bill.
Question put and agreed to.
Clause 9, as amended, accordingly ordered to stand part of the Bill.
Clauses 10 to 13 ordered to stand part of the Bill.
Clause 14
Traffic commissioner functions
Daniel Zeichner (Cambridge) (Lab)
I beg to move amendment 30, in clause 14, page 69, line 22, at end insert—
“(5) After section 6I insert—
‘6J Community bus routes
(1) Traffic Commissioners must keep a list of bus routes in their area which are of community value.
(2) For the purpose of this section, a bus route of community value is one that has been designated by the traffic commissioner as furthering the social well-being or social interests of the local community.
(3) Bus routes may only be designated by a traffic commissioner as being of community value in response to a community nomination.
(4) A community nomination must be made by a community group which is based in, or has a strong connection with, an area through which the bus route passes, and on which community the bus route has a direct social impact.
(5) A community group may be, for example—
(a) a local or parish council;
(b) a voluntary or community body with a local connection;
(c) a bus user group;
(d) a group formed for the specific purpose of maintaining the bus route;
(e) a church or other religious group, or
(f) a parent teacher group associated with a particular school or schools.
(6) The traffic commissioner must consider the community nomination, and if—
(a) the nomination is successful, the commissioner must notify the relevant parties of this decision in writing; or
(b) the nomination is unsuccessful, the commissioner must notify the relevant parties of this decision in writing and give reasons why the decision was made.
(7) An operator of a bus route which is designated as being of community value must give a minimum of six months’ notice of an intention to terminate the service, in order for the community to—
(a) work with relevant authorities to find an alternative operator;
(b) set up a community transport group in order to run the service; or
(c) partner with an existing not-for-profit operator to run the route.
(8) The community may apply to the Secretary of State for financial assistance, training or advice during the notice period in order to achieve any of the aims set out in subsection (7).’”
This amendment would give Traffic Commissioners the power to designate bus routes assets of community value.
I apologise, Mr Owen, but this bus is moving rather more quickly than I had anticipated. We are doing very well.
The notion of defining a bus route or a bus service as a community asset may come as something of a surprise to people, as it did when it was first raised with me. However, the more I have thought about it, the more significant it seems it could be. Although much of the discussion today, with our comments about Nottingham, and on Second Reading has been about urban areas, the problems facing buses in rural areas are dear to many people’s hearts. Many of us would agree that the local bus service is a key aspect of everyday life in many parts of the country.
Without rehearsing the figures, which I suspect are familiar to all of us, bus services are disappearing from many parts of the country for a whole range of reasons. As was explained by my hon. Friend the Member for Ashfield, there is quite often a feeling of powerlessness when there is a sudden change to what may be a lifeline—sometimes that is for relatively few people, but it is crucial to them none the less. Whether from urban or rural areas, I suspect all of us, as Members of Parliament, have found ourselves in the difficult situation of responding to local people who come to us and say, “The bus service is going or changing; what can you do to help?” That has been a part of the discussions we have had throughout the day.
I suspect that a discussion about advanced quality partnerships, franchising, net costs, gross costs, contracts and all the rest of it will not greatly reassure many people. They want to know what can be done about their bus service; that is what matters to them. What we suggest is that those means of communication—those routes—are seen as a community asset and put on the same legislative footing as community assets such as pubs, community buildings and land. That is not to say that something can be preserved forever—that is impossible—but the measure would slow down the process, just as we do with a potential pub closure, to give the community the chance to build the capacity and support to put something else in place. I am not sure that the big society is still with us—
Daniel Zeichner
In which case, this is the big society revisited. I am sure the Minister will be commended for defending it.
The community asset legislation sits comfortably within the Conservative Government’s Localism Act 2011. It rightly recognises that community assets should be protected and given elevated status so that communities can come together and help to save or run things that they judge they cannot do without. The proposition is to establish a new class of assets of community value—bus route assets of community value—based on the route of the bus, as designated and held by the relevant traffic commissioners. It is notable that currently, bus stops can be an asset of community value. Indeed, some have been designated as such, which shows the importance that local communities place on such services.
The amendment would allow communities to come together to apply to the relevant traffic commissioner to designate the service they hold dear as a bus route of community value. The route would then be subject to a six-month moratorium should there be a threat of its being cut, which would allow precious time for the community, as defined by the Localism Act, to work with the relevant authorities to find an alternative operator, set up a community transport group to run the service, or partner with an existing not-for-profit operator. The powers mirror those in the Localism Act, and would change rural passengers’ influence over how bus services are delivered to them.
The nomination would be made by a community based in, or with a strong connection to, an area through which the bus route passes and on which the route has a direct social impact. Community groups could include a local or parish council, a voluntary or community body with a local connection, a bus user group, a group formed for the specific purpose of maintaining the bus route, a church or other religious group, or a parent-teacher group associated with a particular school or schools.
Huw Merriman
Having been involved with pubs in this way, I found the proposal, on the face of it, quite attractive. However, given that the Bill provides more data and therefore a greater ability to see whether it would be worthwhile to take a route on, and the fact that anyone can apply to run a bus service, does the hon. Gentleman not agree that, on balance, the amendment would put operators off starting a route in the first place and could, therefore, be counterproductive?
Daniel Zeichner
There is a risk of that, of course. Equally, if we ask ourselves, “What are we going to do to help protect local communities?”, we have to make a judgment on the balance of the risk. In most areas, our biggest problem is not lots of new services being suppressed by the threat of their being declared an asset of community value. Generally, the threat is the other way around, with services gradually being eroded.
I certainly do not suggest that the proposal is a panacea or an answer. My concern is that, all too often, by the time people have got together and responded to the possibility of a change, it is too late, and once the service has gone people basically give up—we are often dealing with relatively small numbers—and do what people have always had to do, which is turn to an alternative, whether that be buying a motorbike or forking out for a car, even though that might be difficult. That is what, in the spirit of this discussion, we are trying to prevent. The scale is obviously different from that of the problems in our major conurbations, which have rightly occupied much of our discussion today, but the amendment would be a positive contribution that would help people in other parts of the country.
Lilian Greenwood
I listened to the concern voiced by the hon. Member for Bexhill and Battle, but surely, where a new route had been set up, the traffic commissioner would not be minded to allow it to be designated as an asset of community value, because it would not be sufficiently long standing for that to be appropriate. Much as I understand his concerns, I do not think that they are well placed in this context.
Daniel Zeichner
Yet again, my hon. Friend is absolutely right. This is about trying to find ways of tackling the relentless erosion of services that have been a key part of the fabric of many communities.
Happily, I have been provided with a particularly good example from the constituency of Witney, which I am sure a number of us have had cause to visit in the last year—well, we should have, anyway. I did. I am not sure why, in retrospect—[Laughter.] It was because I was a good friend of the unsuccessful Labour candidate. Anyway, in the face of vital service withdrawals, the local Labour and Co-operative councillors in Witney—I think it was the Labour candidate, in fact—have helped to save local bus services for the community.
The West Oxfordshire Community Transport benefit society was formed, and its people’s bus service has begun to carry passengers. It has managed to maintain timetables, fares and the routes that people in the area rely on, but one thing is different about that new service—it belongs to the community itself and will be run not for profit. As it is a community benefit society, anyone is able to join, which has an additional effect in terms of community development and bringing people together. That is a good example of the types of organisations and communities that would benefit from the amendment.
The amendment would go one step further than the existing Localism Act powers and place a duty on the Secretary of State to provide financial assistance, training and advice to communities working to save routes through the new moratorium period. We think it is an innovative proposal that could be built on by a Government that wished to join the hundreds of communities around the country that will meet today or this week to discuss ways in which they can maintain their area’s bus service.
Andrew Jones
Amendment 30 would reinforce the local importance of certain bus services by enabling them to be designated as routes of community value. I am fully aware of the issues that many people experience with bus services that are under threat or have been reduced, and there is no doubt that many local authorities face funding issues and therefore difficult decisions about the services that they wish to subsidise. However, in several areas of the country we are seeing innovative solutions, from the community transport sector stepping in to the provision of more integrated services and the Total Transport pilot schemes that my Department is supporting. It is encouraging to hear the story from Witney. Interestingly, that is not an area that I have been to for quite a long time. I hope that my hon. Friend the Member for Sherwood is not listening. [Laughter.] Well, it was never in doubt, was it?
The amendment would resolve issues relating to the continued provision of services on routes that are deemed to be of community value. I agree that where services are to be cut or their frequency is to be significantly reduced, commercial operators—or, in the case of subsidised services, local authorities—must do all they can to keep people informed, consult them and seek to pass on a service in some form. That is part of the thinking behind clause 19, which provides for greater information to be provided to local authorities when a service is reduced or cancelled.
However, I do not think that it is reasonable or sensible to force operators to continue to operate a service, potentially at significant financial detriment, for six months rather than the 56 days currently required. Doing so could act as a disincentive for operators to trial new services, step in to see whether they can make a service viable or operate services commercially where local authority funding is precarious and can be kept going for only a short time. The unintended consequences could easily outweigh the benefits that the Opposition wish to see. I hope that, in the light of those considerations, the hon. Member for Cambridge feels able to withdraw his amendment.
Daniel Zeichner
I will withdraw the amendment, but I will make one observation. I am not entirely sure why this is different from declaring the last pub in a village an asset of community value. As far as I can see, exactly the same considerations apply. If it is good enough for the pub, why is it not good enough for the bus service?
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 14 ordered to stand part of the Bill.
Clause 15 ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned.— (Mark Spencer.)
Vehicle Technology and Aviation Bill (First sitting)
(7 years, 9 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chair
Before we start the formal business, I welcome you all to the first sitting of the Vehicle Technology and Aviation Bill Committee. I want to establish a few ground rules. First, I tend towards the more traditional form of chairing, so anyone seen drinking coffee or speaking into the telephone will be ticked off roundly. I do not really mean it; I sound more ferocious than I really am, but none the less I will be ferocious about it all and take such things incredibly seriously.
We have two or three formal matters to consider, and then we will go into the business of allocating questions before we bring the public in. Technically speaking, we have to bring the public in and throw them out again, but that seems to me to be a bit back to front, so we will try to avoid that. Let us crack on with the formal motions.
Ordered,
That—
(1) the Committee shall (in addition to its first meeting at 9.25 am on Tuesday 14 March) meet—
(a) at 2.00 pm on Tuesday 14 March;
(b) at 11.30 am and 2.00 pm on Thursday 16 March;
(c) at 9.25 am and 2.00 pm on Tuesday 21 March;
(d) at 11.30 am and 2.00 pm on Thursday 23 March;
(2) the Committee shall hear oral evidence on Tuesday 14 March in accordance with the following Table:
Time | Witness |
|---|---|
Until no later than 10.25 am | Automated Driving Insurers Group; Society of Motor Manufacturers and Traders; RAC Foundation; TRL |
Until no later than 11.25 am | National Grid; UK Electric Vehicle Supply Equipment Association; Quentin Willson, motoring journalist |
Until no later than 3.00 pm | The Institute of the Motor Industry; Downstream Fuel Association; Association of Convenience Stores |
Until no later than 3.45 pm | Association of British Insurers; Centre for Connected and Autonomous Vehicles |
Until no later than 4.30 pm | Civil Aviation Authority; Association of British Travel Agents |
Until no later than 5.30 pm | British Airlines Pilots Association; Metropolitan Police; National Police Air Services; UK Flight Safety Committee |
(3) proceedings on consideration of the Bill in Committee shall be taken in the following order: Clauses 1 to 16; Schedules 1 and 2; Clause 17; Schedules 3 and 4; Clauses 18 to 24; Schedule 5; Clauses 25 to 27; new Clauses; new Schedules; remaining proceedings on the Bill;
(4) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 5.00 pm on Thursday 23 March.— (Mr John Hayes.)
The Chair
The deadline for amendments to be considered for the first sitting where the Bill will be scrutinised line by line was rise of the House yesterday. The next deadline will be rise of the House on Thursday for amendments to be considered in the Committee’s sittings next Tuesday.
Resolved,
That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.—(Mr John Hayes.)
The Chair
Copies of written evidence that the Committee has received are available in the room.
Resolved,
That, at this and any subsequent meeting at which oral evidence is to be heard, the Committee shall sit in private until the witnesses are admitted.—(Mr John Hayes.)
The Chair
Q Let me welcome and thank our four witnesses for the first panel. I will let you know that the first panel must end at precisely 10.25 of the clock, and if you are in the middle of a sentence you will stop talking at precisely 10.25, because those are the rules of engagement.
I remind members of the Committee that they may ask questions on any subject, so long as they are within the context of the Bill; they will not be allowed to ask any questions outside that context.
First, I ask our four witnesses to introduce themselves briefly for the record, starting with Mr Wong.
David Wong: I am David Wong. I run the technology and innovation portfolio at the Society of Motor Manufacturers and Traders, the UK automotive industry trade body. I cover areas such as connecting autonomous vehicles, ultra low emission vehicles, and digital innovation and mobility innovation in design engineering.
Denis Naberezhnykh: I am Denis Naberezhnykh. I am head of ultra low emission vehicles and energy at Transport Research Laboratory, and I oversee all our work on electric vehicles, low-emission vehicles, charging infrastructure and related topics.
Steve Gooding: I am Steve Gooding. I am the director of the Royal Automobile Club Foundation for Motoring, which is a small think-tank devoted to research into motoring and motoring issues, as well as into roads and road use. Some Committee members will have come across me in my guise two years ago as a member of the board of the Department for Transport.
David Williams: I am David Williams. I am technical director for Axa Insurance. We are involved in three of the Government-backed consortia looking into driverless cars: Venturer, Flourish and UK Autodrive. I am also chair of the Association of British Insurers autonomous driving insurance group.
The Chair
Many thanks to all of you. We have quite a lot of business to get through, so may I ask that both questions and answers be relatively brief and coherent? Perhaps “coherent” is going too far, but they should be brief and to the point.
Richard Burden (Birmingham, Northfield) (Lab)
Q Welcome. The Bill was originally being talked about colloquially as the modern transport Bill—a Bill to look at the challenges facing particularly, but not exclusively, road transport in the decades to come. Parts 1 and 2— those dealing with road transport—focus on two main issues: the insurance liability of automated vehicles and the provision of electric charging infrastructure by big retailers. Do you think those are the right things for the Bill to cover, and are there things that should be in the Bill that are not included?
The Chair
Who wants to go first? Not everyone has to answer each question, so please do not feel that the whole panel has to answer.
Steve Gooding: We are pleased to see the inclusion of the provisions relating to autonomous driving insurance, an issue that needs to be gripped. We are also pleased to see that the Government are taking steps to do something about the rather confusing world of recharging electric vehicles—no doubt we will talk about that later. The RAC Foundation would have liked to have seen provisions relating to the creation of the roads fund—a Government commitment that the Chancellor mentioned and that was included in the Budget papers but that is not currently coming into statute. We also support the direction of travel on speed awareness courses and bringing more scrutiny to an area where some of us suspect a bit of an industry has grown up around a bright idea in a way that might have gone slightly too far.
David Williams: From an insurance perspective, we are very pleased to see the Bill. It is essential to have clarity, at this early stage, about the compensation process and about who is going to be responsible in the first instance, so that insurers and motor manufacturers can design their systems, business models and processes ready for it; so we are very pleased. Without that clarity, there is a danger that the public will lack confidence with regards to compensation being available when an autonomous vehicle is involved in an accident. Also, with road transport being a truly global element of our lives, it is good that the UK Government have come up with something at an early stage that hopefully will influence certainly Europe and maybe the US as well.
Denis Naberezhnykh: From TRL’s perspective, we are very supportive of the Bill as it stands, in particular the focus on electric vehicle consumers and users—that is very welcome. Taking steps towards introducing smart charging and managed charging is also very appropriate and timely. Given the forward-looking nature of the Bill, we would like to have seen more consideration for future technologies with regards to charging and vehicles themselves.
David Wong: The SMMT supports the principles underpinning the Bill, and we welcome its provisions. In particular, we think this is the right time for the Government to further encourage the take-up of ultra low emissions vehicles and pave the way towards the deployment of autonomous vehicles. This relates to the insurance framework that is set out in the Bill.
What we would like to see more of in the Bill is greater clarity—perhaps going forward in secondary legislation—particularly on smart charging of electric vehicles. In the area of connected and autonomous vehicles, certainly something on infrastructure and connectivity would have been marvellous, particularly with regards to deployment of connected vehicles.
Richard Burden
Q Thank you. That is very useful.
The Government’s target is that all new vehicles on the road should be ultra low emission vehicles—zero-emissions, in fact—by 2050. How far do you think this Bill will contribute to that target? On current trends, we are a long way off that target at the moment. What do you think are the other barriers to the take-up of ultra low emission vehicles, or we could also say—more broadly—connected vehicles? There is quite a crossover between those two agendas. How do you think these other barriers can be best overcome?
David Wong: Let me first deal with ultra low emission vehicles and electric vehicles. The Bill is a step in the right direction. Whether or not the targets are achieved depends on the extent to which we can solve what we call the three As. The first A is range anxiety; the second A is infrastructure accessibility; and the third A is vehicle affordability. Insofar as what the Bill is trying to do, it is crucial to address infrastructure issues, to support research and development and to provide continuing support for consumer incentives to create an enabling environment that will see a greater take-up of electric vehicles. If you look at range anxiety, a lot of it is due to the fact that technology has not evolved today to a point at which the electric vehicle can travel as far on a single charge as can a petrol or diesel vehicle. With greater research and development and Government support—not least in terms of, for example, battery technology—that may be an area that should be addressed for the future.
As for consumer incentives, this is particularly crucial in helping to address some of the issues regarding affordability, which is the second A. The technology itself is still very much in its infancy relative to other technologies, so we need to see continued support from the Government, as well as Government and industry working together closely on this.
The third A relates to infrastructure accessibility. From what we can see, this is a pivotal part of this Bill, and this, again, is a step in the right direction. Accessibility to infrastructure has been a key issue. It is the perception of most motorists that it is already not as convenient for people to charge an electric vehicle, which would take at least 30 minutes using a 43 to 50 kW rapid charger unit, compared to filling up a petrol or diesel vehicle at a petrol forecourt. We need to make it far easier for motorists to charge the vehicles. One of the things we need to do is to address the issue of interoperability of charge points. We are pleased to see that there is a provision for this in the Bill. When we consider the infrastructure from the perspective of the standardisation of multiple connectors and sockets that are available out there, it makes it confusing for motorists. We must not assume that every electric vehicle owner is a tech geek. We want to make electric vehicles as appealing as possible to the mass public. Standardisation is therefore important in making it easy for the average motorist to understand the plethora of technologies available.
The Chair
Thank you, Mr Wong. Could I appeal to all witnesses to do two things? The first thing is to be as brief as possible, as we have a lot of business to get through in an hour. Secondly, Mr Williams led the way in demonstrating how one can speak loudly and clearly. It may be my age and decrepitude, but please could you speak as loudly and clearly as you can?
Andrew Selous (South West Bedfordshire) (Con)
Q I want to recognise the progress that we have made in this country, but could I press you on the 2050 date, which is 33 years away? A quarter of all of Norway’s vehicles are either electric or hybrid. China has, I think, 517,000 new energy vehicles, as they call them, on the road, and last year there were 800,000 charging points, notwithstanding the fact that it is a larger country. Thirty-three years is quite a long way off. I would like to press both Mr Wong and Mr Naberezhnykh on how we might turbo-charge this, perhaps adding a bit more to the three As that Mr Wong has told us about.
Denis Naberezhnykh: It is important to consider vehicles more broadly in the separate categories of vehicle types and vehicle users. When we think about the 2050 target for almost decarbonising the transport sector, we have to not treat private car owners in the same way as fleet and commercial vehicles. That is missing a little from the Bill at the moment. It focuses on overcoming short-term barriers—the problems and challenges that private car owners experience when attempting to use electric vehicles, such as clarity of data available on charging points, accessibility and the availability across the motorway network. However, what needs to happen to achieve the 2050 target is consideration of a broader picture, and recognition that there are other vehicle types—not just cars, but vans, trucks and buses—so what do we need to do to encourage those? They could create a growing proportion of the vehicle population as vehicle trends change over time anyway.
There is also a danger in comparing the UK situation to that of Norway and China, because the two have taken very different approaches in reaching their success. In Norway they have employed subsidy schemes and taxation schemes that I do not think we would find appropriate in the UK. In China they have taken the approach of simply saying, “You must buy these vehicles under any conditions,” and “You must install these charging points.” Unless we are willing to take steps like that, we have to be much more aware of what the market needs, or what the users need, and then tailor the products to suit those needs. That is where the transport sector needs to pay more attention: to focusing this Bill and future activities not only on targeting the near-term shortcomings, but on what we think might be the challenges in 10, 15 or 20 years from now, and preparing for those.
Tom Tugendhat (Tonbridge and Malling) (Con)
Q I will move on to the mixed use of roadways in the intervening period. Clearly one of the challenges is the new technology coming on to the roadways while the old technology is still using them. Has anybody done any thinking about the regulatory implications of that?
David Williams: We think it is less complicated than it first appears. The Bill means that somebody involved in a road accident does not need to establish which insurance regime is in place; we are going to have the Road Traffic Act, and insurers are going to be dealing with claims in the first instance. Regardless of the fact that it will take a long time for manual vehicles to be replaced with safer vehicles, we also think, from looking at the modelling we are doing, that statistically the roads will become safer. Some people have expressed concerns that manual vehicle insurance might become incredibly expensive as the prices for autonomous vehicles plummet, but the reality is that if, say, 50% of the vehicles on the road are autonomous and much better at avoiding accidents, that makes driving in a manual vehicle safer. We are confident that the way the Bill sets things out means that establishing the claims process will be relatively straightforward, and that roads will become safer.
The Minister of State, Department for Transport (Mr John Hayes)
Q A couple of things have arisen from what witnesses have said. If I can call you David 1 and David 2, on insurance, David 1 helpfully used the word “compensation”. Presumably the key is to make sure that any injured party enjoys the same circumstances as they do now, and then anything else that happens does so invisibly to them. The injured party in any circumstance essentially gets what they get now; is that right?
David Williams: Absolutely. We are very pleased with the way that discussions developed and the Bill came out, because initially the conversations were that liability would move from RTA motor to products liability. You can imagine a situation where an individual was involved in a little accident—a small dent or something like that—and then, because people are talking about products liability, you get a motor manufacturer’s high-powered lawyers arguing for two years about a little dent, just because they are concerned about creating a precedent. What will now happen is that an insurer will deal with the claim in the first instance, as is the current state of affairs. Yes, there will be circumstances where the motor manufacturers are held responsible, but that can take three or four years; it does not matter.
The other advantage we have is that it will be based on existing legislation, case law and precedent. The rules of negligence and defences available to motor manufacturers are still there unless the Government choose to amend them at a later stage. I really welcome the Bill, because it focuses on continuing to protect road users.
Mr Hayes
Q Quite. So, the delayed dispute disadvantage that you described, which might affect the ordinary motorist, pedestrian or whoever is involved in the incident, will effectively be invisible. My next question is to the other David. We have been talking about charging infrastructure. Should we have included powers for refuelling points for other low-carbon infrastructure? That came up in earlier consideration of the Bill. The technology is still developing and emerging. There are several competing low-emission technologies. What do you think about that?
David Wong: Certainly, there should be a positive mix of technologies taken into consideration, particularly if we are looking at co-location within certain infrastructure environments. For example, last month there was the launch of the first co-location of a petrol forecourt and hydrogen refuelling station in Cobham, on the Shell site. That was very much welcomed by industry. Looking at the provisions in the Bill, we could do the same for electric vehicles, with charging points being installed—or co-located, to use the industry parlance—at large petrol forecourts or motorway service stations. One must not forget, in terms of the wider energy mix, that hydrogen may also come into the picture.
Kit Malthouse (North West Hampshire) (Con)
Q I want to ask about that specific point. There are obviously at the moment two competing power vectors for electric vehicles—hydrogen and batteries—and the Government are rightly saying that they are agnostic. Much of the Bill is agnostic, with much of the emphasis on battery-charging points. Is there a danger that industry could be compelled to spend a lot of money plastering the country with battery-charging points only to realise that battery vehicles are the equivalent of the fax machine—a temporary technology—and that fuel cells will overtake them within a fairly short period and the infrastructure will become redundant?
David Wong: I think it is fair for the Bill to take into account the reality, which is basically what is proportionate to the number of fuel-cell electric vehicles on the road. The number of fuel-cell electric vehicles on the road is very small but growing. We certainly need consideration of how the two can be factored in, because hydrogen not only is a fuel for transport but could be a medium of energy storage, particularly for the sort of energy that is being generated during off-peak hours and not used. Rather than wasting energy that is being generated and not used, it could be stored in the form of hydrogen and used for various purposes, including transport.
Kit Malthouse
Q As the owner and driver of a semi-autonomous plug-in hybrid, I get incredibly frustrated at the lack of a battery-charging network. It strikes me that the hydrogen fuel cell requires the minimum of behavioural change from the consumer. I would fill up my fuel-cell car the same as I would fill up my current car. A hydrogen nozzle would just be another nozzle on the fuel dispenser. Is the development of that technology accelerating? Some countries are way ahead of us, right? On that basis, is your view that the slow uptake of fuel cell vehicles in this country is because of the lack of technology or because of the lack of fuel? If there was a fuelling infrastructure across the UK, would it be the natural uptake for the consumer, given the lack of behavioural change required?
David Wong: As with most technologies, it is a chicken and egg issue. In economic parlance, you would call it a network effect. Should you have hydrogen refuelling stations or vehicles first? Obviously, the gas companies that are building hydrogen refuelling stations will need to be confident that there are cars on the road, but vehicle manufacturers will want to be confident that there are hydrogen refuelling stations so customers can refuel. We are seeing a collaboration between industry and the Government in that regard. The Society of Motor Manufacturers and Traders, our vehicle manufacturer members, the British Compressed Gases Association and its gas company members are working hand in hand with the Office for Low Emission Vehicles through the UK H2Mobility consortium to chart a road map. We need to accelerate that collaboration, and the Government need to provide continued support for the building of more hydrogen refuelling stations.
Kit Malthouse
Q I get that chicken and egg point. For the Committee’s information, I used to be the chairman of the London Hydrogen Partnership, preparing the capital for this economy in the future. The same assumption does not seem to apply to battery electric vehicles. The Government are willing to put in the recharging network for battery electric vehicles, but not, seemingly, for hydrogen.
Denis Naberezhnykh: We should not think of them as competing technologies, because they are not. They are both technologies that electrify decarbonised transport. I do not think it helps to think about the solution from a technology point of view. We should think about what we are trying to achieve, which is reducing CO2 emissions, and then look at the facts. The fact is that, right now, battery electric vehicle technology is far more market-ready than fuel cell technology, in terms of cost, availability and production capacity. If we are trying to identify measures for accelerating our progress to the 2050 target, we need to pick technologies that we are already confident can achieve the result.
The other point is about infrastructure and fuel. From a fuel and energy perspective, a fuel cell vehicle is far less energy efficient than an electric vehicle because you have to take it through more conversion steps from generating hydrogen to converting the hydrogen to electricity. Very few pathways exist in the world right now for producing a low-emission fuel cell electric vehicle that is anywhere near comparable, in energy efficiency terms, to an electric vehicle.
Kit Malthouse
Q I understand that viewpoint. There are obviously large original equipment manufacturers that have made a decision about batteries and are therefore lobbying heavily on that, but some large ones—Toyota and Hyundai—have made a decision to go down the route of fuel cells. Given that the Government should be agnostic on these issues, should they also be agnostic about the regulations in the Bill for taking the power to compel providers of charging points, for instance at motorway service stations? In other words, when they compel someone to provide a fast charging point for a battery, should they at the same time compel them to provide hydrogen refuelling? If they just compel a battery recharging network, it will be a VHS or Betamax situation.
Denis Naberezhnykh: That goes back to my earlier point. We need to take the end use into consideration, and we need to think about which types of vehicles and users are likely to be using electric vehicles and where the infrastructure is required to support them.
Kit Malthouse
Q So you think the Government should predict and provide, rather than be agnostic about technology.
Denis Naberezhnykh: Yes. I do not think being agnostic, in the sense of saying, “We don’t care which technology it is. We just need to invest in putting all of it up” is particularly helpful to the industry and the users. We need to recognise that some technology can achieve things that other bits of technology cannot. Some have strengths and weaknesses, and we need to pick out those strengths and weaknesses and emphasise them for implementation in infrastructure appropriately.
Rob Marris (Wolverhampton South West) (Lab)
Q I cannot see anything in the Bill that would change who is licenced to drive a vehicle. In terms of future-proofing, one can envisage that people under the age of 17 or people with significant visual impairment could be, to use the current verb, “driving” automated vehicles. Should that future-proofing be provided for in the Bill, Mr Williams, and if so, what insurance issues would there be, say, for a seven-year-old alone in an automated vehicle?
David Williams: A major benefit of autonomous vehicles will be bringing mobility to people who currently do not have that benefit. We are very much looking forward to that. In Flourish—one of the Government-backed consortiums—we have Age UK as one of the critical partners to make sure that we understand the implications. I am not sure whether it needs to be in the Bill, because that establishes the insurance regime among other things. It will be complex for some vehicles. With the pods that UK Autodrive is going to put in Milton Keynes, there will be no way that you can intervene, so I see no reason why somebody in one of those vehicles would need to comply with any test or have any form of licence.
The majority of vehicles in the early stages of market development will probably be ones—for example, a level 4 vehicle—that you can switch from manual to automatic. You then get to the situation where people think, “An autonomous vehicle can bring me home when I’m drunk from a party, so I won’t need a taxi.” My thought is that you will not be able to do that if you have a vehicle that you can switch between the two modes, because you would still be in charge of a vehicle that could be driven manually.
At some point work needs to be done on licensing and testing, but for fully autonomous level 5 vehicles, the insurance aspects are covered in the Bill and we have no concerns there. We want to see the adoption of these vehicles because we think that they will make the roads generally safer and we therefore want them to be available appropriately, as widely as possible.
Rob Marris
Q The insurance provisions in the Bill would be sufficient to cover what I think you call a level 5 vehicle, which could be carrying a seven-year-old on their own.
David Williams: Absolutely.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
Q I want to explore some issues of public confidence in the potential uptake of autonomous vehicles and get your views on whether the Bill goes far enough to set the scene. Given that the technology is available, what measures are required to make the public accept it and want to take it up? We have heard about the confusion and resistance, perhaps, because of the different approach to electric vehicles, but what do you think is required for the future in the Bill?
Steve Gooding: First, the Government are right to focus on the insurance angle, because that strikes me and the foundation as the first thing that needs sorting for all the reasons that the Committee is thinking about. Following that, what will affect the public’s willingness to accept the technology is their sense that it is genuinely safe. It is understandable that the Bill is silent on such things as construction and use standards, because they will need to be negotiated in an international forum. That is definitely something—the Minister knows we have flagged this up—to get on with thinking about. How you move away from a construction and use safety regulation system that is very much based on traditional mechanical engineering to one that is based far more closely on one that we apply to human drivers, because we are dealing with artificial intelligence, needs a bit of a boost.
David Williams: I think that we need to be vocal about the capability of the technology. We often quote statistics: for instance, automated emergency braking systems reduce accidents by 15% and injuries by 18%, so even if they do not avoid the accident completely, they slow the vehicle faster than a human would and reduce injuries. That is one small component of what will be the driverless cars of the future.
We need to show people the testing regime that these vehicles will undergo before they are let loose on the road, but it is natural to expect some nervousness and resistance. I do not know if any of you have seen the trailer for the new “Fast and Furious” movie, “The Fate of the Furious”, where robot cars get taken over. That will not help and, therefore, we need to be particularly vocal about the positive benefits. I fundamentally believe that we will see fewer deaths on the roads and much safer roads and, therefore, we need to do whatever we can to encourage adoption.
There is also a massively positive business case in the haulage industry for the adoption of connected and autonomous vehicles. I think we may see more rapid adoption in the commercial vehicle space. People will then get used to being around autonomous vehicles, even if they are commercial vehicles and that will make the adoption at a personal level easier.
Denis Naberezhnykh: I would add that some excellent work is happening in the UK now. A project called MOVE-UK compares and contrasts the different styles of vehicle automation and how an autonomous vehicle would perform in the same situation that a human driver performs in. That kind of comparison and learning will enable those automated vehicles and semi-autonomous functionalities to be as palatable to users as possible, so that there is the least amount of discomfort or worrying about the functionality when they try those vehicles out for the first time. It will be the first early adopters—early users—who will form an opinion and then spread the word about whether it works or whether they feel comfortable or not. Getting that right is important and some great work is already happening in the UK to try to do that.
David Wong: I have four brief points on increasing acceptance. One is on messaging. In addition to what Steve has just mentioned about showing the public that the technology is genuinely safe, we have to be very careful, particularly with regard to the Bill, with public messaging in relation to insurance, to assure the public that this will not result in a hike in insurance. The public will rightly expect that the lowering of risks and fewer accidents will mean that insurance premiums should come down.
The second point is about convincing the public through public demonstration projects. We are pleased that the Government are backing a number of these collaborative R and D and demonstration in live trial projects. We would like to see some of the learning coming out of these projects on how the public might interact with autonomous vehicles.
Thirdly, on public demonstration projects, going forward, perhaps the consumer can pay, not unlike the very successful Go Ultra Low campaign for ultra low emission vehicles. It may be useful for connected autonomous vehicles at the right point in time, and particularly at the point when vehicle manufacturers are ready to deploy these vehicles on UK roads.
Lastly, we think as an industry that the gradual escalation of the levels of automation can perhaps help Joe Public to be more comfortable with the technology, as opposed to asking Joe Public to jump straight into a vehicle with no steering wheel from day one.
Drew Hendry
Q Very briefly, in terms of public confidence and liability issues, you mentioned safety. Do you feel the Bill should address public confidence in the maintenance of vehicles? How will that be conducted across the different standards?
Steve Gooding: We need the construction of new standards for whether a vehicle is judged road-worthy in the first place, to the subsequent—as we call it—MOT system, which continues to verify over time that that road-worthiness is being maintained. We need both systems to cope with the new technology.
Mr Steve Baker (Wycombe) (Con)
Q I am conscious that cars can be converted to use LPG if they are petrol. It seems to me that potentially they could be converted to use hydrogen, as well. Mr Wong, is that something that the industry has considered?
David Wong: It is certainly in the mix. Cars today are being retrofitted as dual fuel vehicles, so, hydrogen in an internal combustion engine. For example, a company in the north-west called ULEMCo is doing that with a good degree of success. It is important to look at the outcome from such a conversion. Will it help to achieve the targets? Will it be below 75 grams of carbon dioxide per kilometre? The jury is still out on that, to be honest. We need to see whether technologies can help over a period of time to decarbonise road transport, not simply the conversion of any sort of technologies or even the hybridisation of any of these fuels.
Mr Baker
Q To be clear, can you explain why we cannot get carbon below 75 grams when we are burning hydrogen? If we burn hydrogen, we get water. Where does the carbon come in?
David Wong: For a fuel cell electric vehicle, you get zero tail pipe emission, but for a dual fuel vehicle, it depends on the dual fuel.
Mr Baker
Q I did not mean fuel cell, but an internal combustion engine running exclusively on hydrogen. Why could you not do that?
David Wong: You can probably use the fuel cell as a range extender for electric vehicles, but to have an internal combustion engine that basically burns fossil fuels and then you have hydrogen—
Mr Baker
Q The point I am making is that a car with an internal combustion engine could be converted to run on hydrogen as an internal combustion engine, could it not?
David Wong: In principle, yes, but I hesitate to give a straightforward answer because we do not describe a hydrogen vehicle as an internal combustion engine. That is the parlance we use for combustion, which, at the moment, is petrol or diesel. We like to frame hydrogen in the context of clean energy.
Mr Baker
Q Okay. I’ll move on from hydrogen in the interests of time. My other point is security. I am a former software engineer. I have got two points about software. First, have you considered cybersecurity and the risks of cars being hacked and people finding themselves driving to destinations they did not intend to go to?
David Williams: Absolutely. In the Flourish consortium there is a specific focus on cyber. Also, in the Venturer consortium, BAE Systems is involved and does military-grade cybersecurity. We should be worried about cyber risks, but we should be worried about those generally, not just with regard to vehicles. There are ways to make things safer. It will be a key element of the communication programme and the technological development of these vehicles in making sure that they are as safe as they can be.
Mr Baker
Q So is there a provision missing from the Bill in relation to cybersecurity?
David Williams: The only area that we think needs further debate is whether insurers will pay for claims in the first instance where there is an incident, but what if there was a massive terrorist incident that caused a problem with a huge number of vehicles globally? That may need separate consideration. The problem is, even in saying that, it is almost scaremongering about that risk. Clearly, we would rather focus on protecting vehicles. You are used to virus protection and those sorts of things. We are talking about new technology. We need to get to the same state where people have confidence.
Steve Gooding: The Bill recognises the risk of tampering, which is a version of cyber-hacking. The construction and use regime, which says a vehicle is roadworthy, must take into account that it is roadworthy and protected from the risk of cybercrime.
Mr Baker
Q Finally, on tampering, the point I made on Second Reading was that that section of the Bill that can exclude or limit an insurance liability after alterations to the vehicle’s operating system, or a failure to install software updates to the vehicle’s operating system, is a drafting point. The provision should simply state “software” rather than “operating system”, because there is firmware and there will be application software. You are nodding, Mr Naberezhnykh. Can I ask you to put on the record whether that is correct and the Bill should be drafted in terms of software and not only the operating system?
Denis Naberezhnykh: My concern is that, were it to be tested in court, the Bill would not achieve its intended aim if, for example, application software had been tampered with or firmware had not been updated. I appreciate it is a technical point.
Steve Gooding: I think you need to ensure that the breadth that you are describing is covered. I suspect that is a question you need to put to the drafting counsel rather than us.
Andy McDonald (Middlesbrough) (Lab)
Q I will be very brief. The Bill introduces the new concept we are moving to—the exposure to manufacturers’ liability. Has the Bill got it right in terms of the balance between insurers’ and manufacturers’ liability? Secondly, Mr Wong talked about accessibility cost. The cost of insurance will be key. Is the insurance industry ready for this? Clearly, premiums should be cheaper if we are getting errorless driving, but is the insurance industry sophisticated enough and ready enough to make that offer to consumers in the first instance? Lastly, on the issue of updates, does that present fresh exposures to manufacturers for the duration of the life of that vehicle on every software update iteration? Have you given any thought to how that plays in the context of current consumer protection legislation and issues of limitation? Does that now cause us to revolutionise the way we look at people purchasing vehicles? Are they going to be out there forever with software with little or no control? Any thoughts or comments?
David Williams: I think the Bill does have the balance right. It focuses on the road user. That is why we have got the Road Traffic Act 1988. Therefore the Bill has to focus on the safety of road users rather than insurers and manufacturers. As an insurer, we can price for anything. You have a balance with regard to how much liability finally rests with the motor manufacturer. That can develop over time, and they have definitely got some skin in the game. If they are negligent they will be called to account and will need to indemnify the insurer; so I think the balance is right.
With regard to whether the insurance industry is ready, in the past I do not think we have been, for things like this, but the fact that we already have the Autonomous Driving Insurance Group, which meets regularly and is very well attended, that the Thatcham motor vehicle research institute is all over it, and that AXA alone is involved with three of the Government-backed consortia means we are ready—we will be ready.
David Wong: On software updates, we believe that the “state of the art” defence principle applies here, which means at the point when the vehicle, together with the systems, including software and firmware, are being developed, the manufacturer has done its utmost to ensure that it is completely secure and, based on the scientific knowledge and the technology at that point in time, has done its very best. Of course, software updates are always, basically, a moving target; it changes every hour—but the “state of the art” defence applies in this case.
Steve Gooding: I think the motor industry will have to answer for this, because if you think of your home computer, every now and then you get a message saying “Your software is going out of support”. I think we need a bit of reassurance from the auto sector that we are not going to find that a vehicle we buy next year, and then in seven or eight years’ time is in the second-hand market, gets the message that “this vehicle is going out of support” and is therefore judged in some sense to be no longer roadworthy.
David Wong: It is reasonable to expect that vehicle manufacturers will continue updating, upgrading and patching the software, as do computer manufacturers and software manufacturers. However, even as Microsoft has decided, after a while, to discontinue the support for Windows XP and Windows Vista, one must not expect vehicle manufacturers to continue supporting particular software 20 years’ down the road, even if the vehicle is still roadworthy.
Richard Fuller (Bedford) (Con)
Q Within its scope, does this Bill do enough to position the UK as a global leader in vehicle technology? If not, what is missing? If you do not have the time to answer, maybe you can email me.
The Chair
Two minutes to cover that favourable topic.
David Williams: From an insurance perspective, yes.
Denis Naberezhnykh: From a research angle on this, no, not entirely, but that is because, as I said at the beginning, we think it could be further-looking, as with what some countries are doing; but it is adequate at addressing the near-term goals.
David Wong: From the vehicle manufacturers’ perspective, I think more can be done, particularly with regard to connected autonomous vehicles. The particular area of connectivity and infrastructure is clearly missing in this Bill.
Drew Hendry
Q I wanted to cover the issues of liability a little bit further, but I suspect we are going to run out of time before I can get an answer to those—in particular situations where there might be, for example, someone who is incapacitated in the vehicle. If they are incapacitated because of ill health, or for other reasons such as alcohol consumption, where would the liability sit, with such issues? Does the legislation need to go into more detail about some of those other causes? You mentioned the maintenance regime earlier.
The Chair
Order. Drew, those remarks will form part of the record and part of your contribution to the discussion of the Bill, but we are now at 10.25 am and the rules stipulate that we must stop at precisely 10.25 am. I thank our four witnesses very much for their useful contributions. We got through most of what we wanted to ask you and you have certainly given us some very good thinking points for our further discussions on the Bill. Thank you very much indeed.
Examination of Witnesses
Marcus Stewart, Robert Evans and Quentin Willson gave evidence.
The Chair
Q We are now going to hear witness evidence from the National Grid, the UK Electric Vehicle Supply Equipment Association and Quentin Willson, who is a motoring journalist. We have until precisely 11.25 am—one hour from now—for this session. Perhaps the witnesses would kindly introduce themselves for the record.
Quentin Willson: I am Quentin Willson, a motoring journalist and broadcaster and an electric vehicle advocate. I have been ploughing a lonely furrow, driving EVs and supporting them for the last five years.
Robert Evans: I am Robert Evans. I am chief executive officer of Cenex, which is a specialist research and technology organisation that has been active for ten years in developing supply chain and markets for low-carbon vehicle technologies, including hybrid, electric, hydrogen and gas. Today, I am also representing the UK Electric Vehicle Supply Equipment Association, which is the association of suppliers of charge points and charge point network operators for the UK.
Marcus Stewart: I am Marcus Stewart. I am head of energy insights at National Grid, the system operator. My role is looking out into the future to determine what the energy future will look like in terms of electricity and gas, how people will use their energy and what capacity on the system is needed to support that energy. Electric vehicles are a big part of the future from where we can see it.
The Chair
As we discovered in the last session, time disappears very quickly. I ask my colleagues on the Committee, and yourselves, the witnesses, to be brief, to the point, sharp and all those things, to try to get through the quite large number of questions we want to ask you in the hour. I apologise: whoever is speaking at 11.25 am will be told to shut up mid-sentence, if necessary, because we have to stop at 11.25 am sharp. [Interruption.] It is unlikely to be me because I can’t tell myself to shut up.
Kit Malthouse
Q Good morning. Do you think there is too much emphasis in the Bill on the battery as a vector for powering electric cars, as opposed to the hydrogen fuel cell? Should there be equivalence in the Bill from the Government, so that every time they compel, for instance, a motorway service station provider to provide a plug-in charge point, they should also compel them to provide hydrogen?
Quentin Willson: I believe hydrogen is too far away yet to get consumers interested in or excited about it. The costs are always going to be higher as a fuel—it would probably have parity with petrol. I believe for consumers to be interested and to take up wider EV adoption, there has to be a fiscal advantage for them. At the moment, you are asking them for too much concentration. If you put hydrogen as a parallel technology now, I think we might disrupt the really good emphasis we have got on EVs at the moment.
Robert Evans: Our view is that the UK has not been very successful in introducing alternative fuels into the transport sector; we need to be extremely successful with electricity and that will pave the way for the introduction of hydrogen. We need to make this transition phase work successfully. My own organisation is involved in hydrogen fuel cell trial activities. It is a pre-commercial phase. It is a strategic insurance option for the motor industry and the energy sector, where we are looking at the decarbonisation pathway. We need to have hydrogen, but it is going to proceed through strategic niche markets, and that is going to take a short while yet. The Bill does at least outline the same basis for the treatment of hydrogen as it does for electricity in terms of reserving the right to take powers, should that be necessary.
Marcus Stewart: Where technology is today, electric vehicles are progressing rapidly, and the focus should be on electric vehicles at this time, including the impact they have on the system and how people get access. We can take advantage of that. The technology in some respects is leading the legislation, so we should tackle it from that point of view. As an organisation, we are fuel-agnostic, so hydrogen, compressed natural gas and other sources of renewable fuels should be part of the long-term mix, but electric vehicles are happening now and there is more choice for consumers in that area, so we should be dealing with that at this point.
Kit Malthouse
Q So all three of you believe that the Government should pick a winner at this stage and put their muscle behind that. Does that not run the risk that in time—as you say, this is a pathway to a fuel cell—we will end up with tonnes of useless copper in the ground within a relatively short space of time as people switch to hydrogen refuelling?
Quentin Willson: I think you can have parallel technologies. The developments that the OEMs—the car manufacturers—are doing on hydrogen and fuel cells, particularly Mercedes, are good, but everyone in the industry concurs that it is possibly 10 years before we get anything like mass production. The speed of electricity is so fast now. The Government should be aware of developments and track them, and they need to understand that there is a parallel technology, but if I was asked to bet on the two horses, I would say that electric is likely to be the mainstream propulsion force over the next 20 years.
Kit Malthouse
Q Hydrogen cars are of course electric—it is about the storage of the electricity.
Quentin Willson: Yes.
Robert Evans: That is a very good point. Hydrogen fuel cell vehicles are electric vehicles—they just have a different, alternative powertrain as part of the configuration—so progress with electric vehicles is an aid to progress with hydrogen fuel cell vehicles. I do not believe that the Government are picking winners per se. I think that the industry is taking a view that electric vehicles are the future. You see that in all of their announcements. They are bringing these vehicles to market, so the job of the Government is to help facilitate the introduction of that technology for the benefit of motorists.
Kit Malthouse
Q It is not the entire industry. Toyota are not doing that.
Robert Evans: Toyota are involved in electric vehicles such as hybrid electric vehicles. They are just not necessarily bringing pure battery electric to the market at the moment.
Kit Malthouse
Q The Mirai is a fuel cell car.
Marcus Stewart: Hydrogen has its place. From our point of view, when we look at hydrogen, we see that as a very long-term play. We are talking about it being 20 years, 30 years and beyond when hydrogen can have any impact on the whole energy mix. Also, you have got to get your hydrogen from somewhere.
Kit Malthouse
Q This is my final question. There are some countries who disagree with that. The Dutch are spending a lot of money on a hydrogen fuel network across their whole country, as are the Germans.
Robert Evans: The Dutch are not spending as much on hydrogen as they are on electric vehicle infrastructure.
The Chair
Can I ask you to speak up just a shade? I am having trouble hearing you.
Robert Evans: The Dutch are spending considerably more on battery electric vehicles than they are on hydrogen fuel cell vehicles. Governments are spending money on hydrogen fuel cells, but they view it really as a strategic option play. In order to have it available for you in the system, you cannot just start from a standing start. You have to have a level of activity, a level of supply chain development and a level of familiarisation, but that is not to be confused with it being something that will make a significant impact within the next five years, for example. We should track international trends and watch what is going on in projects. We should be supportive, but right now there are some bigger issues to be addressed with electric vehicles. I think we are in good health with hydrogen.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
Q Thank you, Chair. If the Government were to pick a winner at this stage, do we not run the risk of skewing future research and development investment by saying to developers, “The traditional battery is the route we are going down”? If hydrogen is 10 years away, we run the risk of it becoming further away because we are not putting the investment into it now to ensure that technology is comparable in the future.
Quentin Willson: That is a hard question to answer. If you look at the price of the Toyota Mirai, which is a hydrogen car, it is £60,000. Volume and economies of scale make it an enormously difficult task to get that to a consumer level of £15,000. I think the OEMs will find it very tough to find this fuel technology at a cheap enough price point to make it viable. In terms of commercial vehicles and buses, I think it has a greater resonance, but in terms of consumers, if I were sitting at the board table of BMW, Mercedes, Audi or VW, I would be looking at electrification rather than putting all my eggs on hydrogen.
Mr Baker
Q I think that you just hit on the nub of the matter. A board director has major capital investments to protect, which means that they are inclined to stay within trammels once a technology is established. That is very much the point that my hon. Friend the Member for North West Hampshire has been making: there is a danger that we could end up choosing the wrong technology because a whole system of incentives sets up people to stick with electric.
Quentin Willson: The brutal fact of the matter is that getting hydrogen from point A to point B requires pipework. You can have static hydrogen stations that manufacture it, but they will be the size of shipping containers. If you look down the road, creating infrastructure and points, keeping it cheap and making it not a by-product of refining chlorine are all barriers to entry that are much greater than for electrification, which is simple and understandable; it is a currency that we are familiar with now, and we have the electric network. These are the major barriers to hydrogen uptake.
Robert Evans: To follow up on that point, Innovate UK and the Advanced Propulsion Centre are funding research and development projects involving hydrogen fuel cells, and they have done so throughout the period of the low-carbon vehicle innovation platform. The Office for Low Emission Vehicles recently put forward funding for both hydrogen stations and vehicles in deployment.
I think the challenge at the moment is that you could put a very large amount of money on the table and say, “Here’s the money; will you bring the vehicles?”, but the supply of vehicles is very limited. Quantities are still small, as has been explained, and they are very expensive, so the car industry is not looking to flood the market with these vehicles. What we are doing in the UK is being ready for the time when the vehicles will come in larger volumes. We will have a receptive market, and we have infrastructure here in London. What London has done is really positive progress that is viewed as a beacon for how the rest of the UK could be ready to deploy hydrogen fuel cell vehicles when they are ready and cost-effective, and when the supply comes to the UK.
Alan Brown (Kilmarnock and Loudoun) (SNP)
Q I have a few questions from a pre-selected list. It is probably best to ask about electric charging, to follow on from the discussion. The Government say that electric charging infrastructure makes more sense just now, and that hydrogen is still a wee way off. Can the panel advise what has been learnt today about the required structure of the charging network needed? Will the Bill and the current regime ensure that there will be adequate numbers of charging points in each part of the country?
On Second Reading we heard about the gathering of statistics on the current variance in the number of charging points. Orkney, for example, has many more charging points than some big towns in England. Also, is there a need for a uniform way to access charging points? Is the legislation as proposed sufficient for that? I rolled quite a few questions into one.
The Chair
I am sure that our panel will handle it. You do not all have to answer everything.
Robert Evans: I am happy to make a start. The first thing to say is that the UK Electric Vehicle Supply Equipment Association and the industry support the progress of the Bill and believe that it is an appropriate set of powers for the Government to seek. As the industry views it, the Bill effectively says that the deployment of electric vehicle infrastructure into the market is progressing. The market is working, and it is likely to deliver the solutions for motorists to access those charge points easily, and for those charge points to become a sustainable asset on which businesses can be built. What the Bill recognises is that there is a stage by which the Government will step away from some of the seeding activities that they have done, in terms of creating different schemes such as Plugged-in Places, national infrastructure programmes and funding that it has put in, and let the market progress.
The Bill gives the Government an insurance policy, which is that they can act if the market does not deliver in any particular important aspect that starts to stall the uptake of electric vehicles. The view is that the market is progressing well, and these are reserve powers that the Government might wish to take later. Therein will lie the detail about what the particular nub of a problem might be on which the Government will need to intervene. At the moment we have 11,000 charge points in the UK; we have a lot of private sector finance investment interested in investing in the commercial operation of charge point networks and the further deployment of charge points. That is to be commended. At this stage the Government just need to have this insurance policy in the Bill so that they can act should they need to, but they should expect that the market will deliver.
Quentin Willson: The critical thing is the availability of rapid chargers. Rapid chargers are the game changer. You can charge your car within 30 minutes to 80% of its battery life. Therefore, you can do multiple charges in a day, bringing the feasible range from this notional 130 miles for a Nissan LEAF to as much as 300 miles. I did a journey from Birmingham to Milton Keynes and back, charged twice at a rapid charger and arrived at Milton Keynes with 90 miles still on my battery range. So the Bill must make sure that these rapid chargers are rolled out much more and we see many more at motorway service stations and at key points within cities, because they will enable people to believe that their range is much wider than they are led to believe.
Drew Hendry
Q I have a follow-up question on the infrastructure for charging points. Does more consideration need to be given in the Bill to connecting with different modes of transport—an intermodal approach? Or is it sufficient just to say, “There shall be charging points”?
Quentin Willson: What do you mean by “different modes of transport”?
Drew Hendry
For example, electric vehicles being able to connect with hubs at airports, railways, ports and so forth. Is enough thought being given to how the network will develop?
Quentin Willson: We need some intelligence on where these peak points are likely to be. It needs to be spread as widely as possible. Ultimately, the superordinate goal is wireless charging in the roads and as you park. The Bill needs to be aware of that as well. That is a technology that would revolutionise the whole EV market, but it is still some time away. There needs to be a charger in as many places as possible where there is public access—supermarkets, schools, businesses—especially in rural areas.
Marcus Stewart: The evidence we submitted focused on the impact on the electricity system, in terms of capacity and the role of smart charging, and rapid chargers help in that because they help people charge away from peak times. If you have rapid chargers at motorway service stations or supermarkets, where people can charge during the day, rather than charging in the evening at home, that smooths out the impact of the demand for energy. It makes for much more efficient usage of the energy system that we already have and allows us to accommodate more electrical vehicles.
Robert Evans: Charging at train stations is a very good idea, because the vehicle is parked there and they can start to be used for managed charging applications—vehicle to grid and the like. That is a very positive trend. There has been national infrastructure funding for railway stations, and that is an appropriate use. With airports, it depends. For long duration, if you are parked for two weeks while away on holiday, it is less of an issue. The rapid charger becomes a more useful item when you pick up your car, quickly fill with electricity and then move on. So more charge points in motorway service areas is definitely a good thing, and more dwell points that aid intermodal transport, so you take your electric vehicle and get on the train, for example, rather than adding to congestion in a city centre.
Mr Hayes
Q I want to ask about the effect of demand on the grid. You dealt with it after I signalled my intention to ask the question, but further to that, does the industry need to think a bit about how it could incentivise people charging at different points? There is a history of this, with Economy 7 and all kinds of other things. Are there ways in which the industry could respond by encouraging people to charge in the way you describe? On the point about the distribution of infrastructure, what about rural areas? The Bill provides powers for the Government to do more. Have we done enough or could we do more to ensure the spread of infrastructure? It is fine to have these things in supermarkets and at motorway service stations, but that does not really help my constituents in Surfleet Seas End or Gedney Drove End, who are a very long way from either. What do you think?
Quentin Willson: Rural charging is an issue that we should look at very hard, because otherwise we will have a disconnected electric community and there will be the connected and the unconnected. Scotland has been extremely good at this—Scottish Enterprise has financed quite a bit of it. We need to look at these rural areas, decide what the best place is and give a concerted route through rural areas where you have rapid chargers so that those communities can run electric cars with the same benefits as people in conurbations.
Marcus Stewart: Going back to the point about how the energy industry can respond, the industry has experience. I am a system operator, but the supply side can offer different tariffs for charging at different times. That is quite a popular approach. You mentioned Economy 7. I know people who have electric vehicles who use the Economy 7 meter to get a cheaper charge by charging their vehicle at a time when the system is under less stress. There are options like that.
Looking further into the future, when you have many more people using electric vehicles, there will be an opportunity for electric vehicles themselves, through some sort of consolidation, to provide services back to the system to enable balancing—“vehicle to grid” is a term that is used. There could be opportunities for suppliers to offer different tariffs to allow people to participate. There are lots of options there. We would say that the technology in the chargers needs to be smart enough to be able to do that. That allows you to optimise the value of the charging system and the car to the consumer, and also the overall cost to the total energy system. If you can optimise that, the total cost will be lower than it would be if you had effectively unabated charging.
Robert Evans: You raised two points. The first was about rural areas. At this stage, infrastructure follows the deployment of vehicles. The more vehicles there are, the more there is a case to deploy electric vehicle infrastructure to support them. In rural areas, we have a situation where you often have to travel a long distance to get to a petrol station, because there are fewer and fewer in those areas. That is an example of how charging your electric vehicle at home and occasionally using public charging makes an electric vehicle quite a virtuous vehicle to drive.
On your point about incentivisation on the grid management side—smart charging—we have a progression: the benefit of smart and managed charging is that it mitigates investments that the distribution network operator has to make in copper in the ground, for example. We need to work out how the incentives travel from the beneficiary—the reduced investment on the part of the DNO—through tariffs to the EV driver so that the EV driver is effectively part of the smart charging proposition and we do not have a situation where the smart charging proposition occurs without them being involved in the loop.
Mr Hayes
Q The essence of your point is that the Bill and the debate that it stimulates will encourage innovation and catalyse the demand management tools that you describe.
Robert Evans: The Bill gives the Office for Low Emission Vehicles and other parts of the Government the ability to keep pushing forward discussion and dialogue between the motor industry and the energy sector to ensure that smart charging is part of our future, because it explicitly expresses a desire to regulate should smart charging not proceed. There is a desire to explore this, but the Bill gives the Government powers to help set an agenda that brings the groups together and moves forward the smart charging agenda.
Quentin Willson: Work is being done in America, notably by Tesla, where consumers charge their cars at smart times and then, when the grid is out of balance, that electricity is sold back to the power companies. These millions of electric cars become energy storage devices. This is another very important cycle of change that we need to look at. Any imbalance would be negated. Also, a lot of electricity is produced by renewables—wind and solar. In the UK, 41% of the electricity dragged from the grid on Christmas day was from renewables.
Rob Marris
Q If, over the next five years, 10% of new vehicles were electric and each of them, on average, did 10,000 km a year, 10,000,000 km per year would be driven in electric vehicles. This is a question for Mr Stewart. What is that as a percentage of UK electricity generation at the moment? You may not be able to reply today, but perhaps you will tell us. I am a bit worried that you will encourage all these electric vehicles and then the grid falls over, so I need to get some idea of proportionality.
Marcus Stewart: I will give you an example. If you have 1 million electric vehicles—you don’t need to worry too much about how many miles they are doing; when they are charging is what is really important, because that is what impacts on the supply and demand balance—and you charge them on a 7 kW charger, in theory that could give you 7 GW of demand, and 7 GW is two and a bit very large nuclear power stations.
Rob Marris
Q What percentage is that of total UK demand?
Marcus Stewart: Total UK demand today is about 50 or 55 GW.
Rob Marris
Q That is 12% or 13% of total electricity generation.
Marcus Stewart: If everyone charged at exactly the same time. Studies have shown that behaviours are such that around about 20% charge at the same time. You immediately, without incentivising people, just with normal behaviour, reduce that down to 1.5 GW. If you then apply smart charging incentives, you can reduce that by a further 84%, and that—
Rob Marris
Q Hang on—but we still have to generate the electricity. For shorthand, this is just a kind of Economy 7 approach to the issue.
Marcus Stewart: Let’s just look at peak for the moment, and then I will talk about annuals. So you move from 7 GW down to 1.5 GW and to around 400. You can see that, very rapidly, the total system has to deliver a lot less when it is under stress, if you move to a smart world. The system is designed to meet those peaks, so you end up with generation outside those peaks being available. That generation is there to meet the demand you have moved from 6 o’clock in the evening to 8 o’clock in the evening, 10 o’clock or whenever. The electricity system from a pipes point of view and a capacity point of view is designed to meet those very high peaks.
By applying smart charging, you can accommodate a lot of electrical vehicles without necessarily having to increase that overall total capacity at a total system level. If you have clusters of demand at a local level, you would expect there to be local reinforcement to accommodate that—fast charging, for example, can provide heavy loads at certain points on a system, but you would connect that to a slightly higher voltage tier to ensure sufficient capacity. The system has the capability to deal with it if the type of charging is smart. The provisions put forward in the Bill make total sense to us.
Rob Marris
Q Do you think that the market will handle it, in terms of a tariff regime that incentivises midnight charging, or do you think that there needs to be regulatory intervention by the legislator—to spread that load, literally?
Marcus Stewart: We have seen in the past that people respond to the incentives of charging tariffs—these natural behaviours where people would plug in—but in the first instance the capability needs to be there. The market then has the opportunity to provide the incentives to do that. I do not think it needs to be fully legislated that you must plug in—
Rob Marris
Q No, it is not that. I am saying that one way of doing it is regulation over the power supply and to say that you have got to make these incentives available for midnight charging. Should that be regulatory, to bring it about, or do you think the market will do that?
Marcus Stewart: I think the market will do that. Suppliers would look at the cost to them of securing more energy and they would look at the opportunities to trade that off against their portfolios. The market should provide that.
Richard Burden
Q Mr Evans in an earlier answer described the purpose of the Bill being to take reserve powers to allow stepping in to stimulate the right kind of infrastructure where the market does not provide it already. May I press you a little more on what that is, and on whether the Bill is hitting the right target? The stress within the Bill is on the provision of charging infrastructure by what it describes as “large fuel retailers.”
A lot of the discussion we have had so far has been about the importance of having rapid availability of charging points, and sometimes smart charging points, in a much more dispersed area than what might be described as large fuel retailers—typically, the motorway service areas. Is the emphasis on that right? If it is not the right emphasis, do those powers need to be applied more broadly? If those reserved powers are applied more broadly, what safeguards need to be in the Bill to ensure that unreasonable regulatory requirements are not put on a whole dispersed range of potential electricity suppliers?
Robert Evans: That is a good point. The powers that we are looking at are primarily around the provision of information to the user, the ability to have smart charging should you need it, and the interoperability. Those sorts of questions are dealt with in the Bill and are key topic areas for the industry. On the question of where infrastructure is located, supermarkets are an interesting one. We have a situation in which not everybody has off-street parking. When one comes to a place such as London, it is not practical to put charging all down London streets. Supermarkets become an extremely practical, pragmatic place for charging to be accessible, along with retail shopping centres, in a crowded city such as London. The consideration of that, along with motorway service areas, which is about allowing people to travel distances across the UK, are two strategic priorities. That is not to say that there are not other areas. The Government have provided incentives for the deployment of infrastructure in other locations and have obviously taken a view that maybe the market can deliver in those locations.
Quentin Willson: However, technology does exist that would allow you to charge at a street lamp post, although admittedly that could be for slow charging at night. For people who do not have parking within their house and have to rely on the street, this facility could be available on every single lamp post in the UK.
Andy McDonald
The whole discussion has been predicated on the basis of saving the planet. What about reducing emissions? In the context of automated vehicles and vehicles generally, it is all about their obsolescence, not about sustainability. Given that we have talked about the updating of automated vehicles and the relationship of manufacturers with the end user throughout the duration, are we missing a trick here? Though there is nothing in the Bill that requires software updates, necessarily there will be that relationship.
Should we not be thinking about a new way of using automated and electric vehicles across the piece? Should we be having people owning vehicles, or should we be making the offer for that relationship to be maintained so that it is a sustainable product that can be revisited? At the moment there is going to be an obligation to keep in touch with these automated vehicles for their lifetime. We heard in earlier evidence that there will come a point where that is cut off. Are we talking about an opportunity for a whole new way of using the services provided by an independent, personal mode of transport?
Quentin Willson: This is the big cycle of change now, like televisions, aeroplanes and the internet. We will see car ownership decline and will be buying or leasing vehicles as a service, not a product. The long-term vision is that this is going to be based largely on electricity and some on fuel cell, and that we will be calling driverless vehicles on our phones to come and collect us. They will then drive to our destinations in what is known as a green wav; they will be hooked up and connected to junctions, to the road system and to traffic lights. These zero-emission, automated, self-driving cars will drive in platoons and, it is hoped, eliminate congestion and pollution. That is the superordinate goal, which perhaps is as near as 2040. But it will always be powered by electricity. The whole structure of who owns what is changing. As we are seeing with consumer habits now, they are buying cars on personal contract plans; they do not own things anymore. That is what the long-term future looks like.
Andrew Selous
Beginning with Quentin Willson, we are aware of the 2050 date that the Government have for all cars and vans to be zero-emission. My understanding for why that date was picked is that it is linked to the need to decarbonise the UK. To what extent do you think the legal issues that the United Kingdom is having with air quality at the moment mean that there might be a case for revisiting the speed with which we try to electrify the market? At the same time, I would be interested in your comments on what is happening internationally. I mentioned Norway and China earlier. There are different models and approaches that may not be suitable for the United Kingdom, but I would be interested if you could speak to air quality and the international perspective on these issues.
Quentin Willson: I had a meeting with the Secretary of State for Transport in January to tell him exactly this. The brutal fact of the matter is that possibly only 10% of consumers in the UK have driven an electric car; the vast majority are still hanging on to what I call the Clarkson effect—all that baggage about electric cars being slow, hopeless and driven by people who read The Guardian and hug trees. That has set the whole electrification of UK roads back enormously. We do not have a way of connecting with consumers when it comes to electric cars. We are informed, and the respondents to the consultation are informed, but I have been talking to groups of consumers for the past five years at test-drive events, and you would be surprised how few of them have actually even sat in an electric car.
I believe that there is potential here for the Government, and that is what I told Chris Grayling. I believe that there is potential for us to have national test-drive events whereby people can go to supermarkets, drive electric cars and undergo what I call the transformational moment, the damascene moment, when they get into the car with all their accumulated baggage about how bad it is and how unfeasible for their lifestyle, and then they come out as a completely converted person, who goes on to convert other people. It must be an extremely important part of the Government’s strategy to talk to the consumers out there who have little or no faith in the electric car industry and obsess about charging and infrastructure, when actually 90% of all EV drivers charge at home. We must not miss this essential point to move forward and to engage people with the process of electric cars.
Andrew Selous
Q I think your thesis is a sound one, but may I press you first on the date and secondly on the international question?
Quentin Willson: We will probably make 2050 if we really pull our finger out. Norway has put incentives behind this and really pushed, but there is a different culture there—there is a culture that embraces change and environmental issues more than we have. Selling electric cars on the basis of environmental issues has not worked in the UK—people are interested only in fiscal benefits. Ours is a different model, and we really need to bring the public with us. If we do that and we make special provision to do this, we will make 2050. If we don’t, we won’t.
Andrew Selous
Q Mr Stewart, did you want to come in?
Marcus Stewart: You talked about carbon emissions, but the other benefit of electric vehicles is in relation to NOx emissions, which have moved much higher up the public agenda. These vehicles offer a solution for cities. That is something that in my mind would accelerate the deployment of electric vehicles, particularly with city Mayors taking a view about what transport should or should not be in their city. We could see 1 million vehicles by the early 2020s, according to our latest set of scenarios, and about 10 million by 2040, if there is the support and the infrastructure and if, as Quentin said, the value proposition for the consumer continues in the direction it is going. I think it is continuing—
Andrew Selous
Q May I just press you on the numbers? I am very interested that you refer to 1 million vehicles by the early 2020s. Last September, we had 87,000 ultra low electric vehicles on our roads, so it is quite a leap to 1 million in four or five years’ time.
Marcus Stewart: But every manufacturer has an electric vehicle on their plan. Hybrids are bridging the gap. Company car drivers are being incentivised to drive hybrid vehicles because of the tax benefits. A market is developing for these vehicles. They are there or thereabouts from a proposition.
Robert Evans: There are two points I would like to make. The first one is from an industry perspective. We have been pressing the Government to have near-term targets for the increased deployment of electric vehicles. In business, we all work to having three-year plans and having an idea about what happens in the short term—about what is a good aspiration for electric vehicle roll-out. Our infrastructure follows the vehicles at this stage, so we are particularly keen that the Government should set near-term targets for electric vehicle roll-out.
Andrew Selous
Q What is your near-term target for, say, 2020?
Robert Evans: We want to cross the 5% mark in terms of total vehicle sales and head towards 10%, but I cannot translate that immediately into numbers.
Andrew Selous
Q It is quite confusing to talk about percentages of new car sales. What is that in numbers of vehicles on the roads?
Robert Evans: There are two points here. First, it is easier to set targets for new vehicle sales. Secondly, to return to the air quality point, we want to have electric vehicles in our city centres—be they hydrogen fuel cell or battery electric—because they are zero emissions at point of source. We also need to do something about the vehicles that are already out there with petrol and diesel engines.
There is a subtlety in the Bill, which I would be keen to explore, that relates to vehicle testing. At the moment in the UK we have a regime where vehicles are tested thoroughly and certified to initial standards, but thereafter our inspection and maintenance regime is quite lax, in that it is of a static vehicle with an engine probe up the exhaust.
Quentin Willson: And there is no particulates test whatsoever.
Robert Evans: No particulates. In other countries, such as Australia and the US, they have a much tighter regime on inspection and maintenance. They have particular tests where the vehicle is put under dynamic load and its emissions are measured—one test is called the I/M 240. I want to be sure that in the testing section there is carry-over, so that you retain the power, perhaps under proposed section 65B(3) in part 4 of the Bill, to revisit the nature of emissions testing in service, inspection and maintenance in the UK. You should also look at the MOT for electric vehicles, because what happens as the vehicles get a bit older has yet to be fully formalised. That is a request to the Committee to consider those two points.
Quentin Willson: In the MOT test, the MOT inspector will tell you that, for a car to fail on particulate emissions, it must be impossible to see out of the back window because of the smoke—I am not kidding. This is something that we could really do to help to clean the roads of these very, very smoky old cars.
Richard Burden
Q To try to get a more rapid pace of development towards meeting the 2050 target, we have talked about infrastructure as part of that mix and about tackling anxiety—Quentin referred to that—and trying to ensure that consumers are not scared about electric vehicles, which can be good to drive. The third element is, in a sense, disincentives to drive anything other than ultra low or zero emissions vehicles through beefing up the MOT test and whatever.
The other thing is the carrot that goes with that stick. What are the right consumer incentives that could be put in place to encourage the take-up of electric vehicles? Let us face it: at the moment, they are pricey, so many buyers—certainly private buyers—will not be able to afford an electric or other ultra low emissions vehicle. What do you think about the changes there have been in Government policy on that, where measures such as the plug-in car grant have come down rather than gone up?
Quentin Willson: On pricing, the general consensus is that an electric car is probably double the price of a conventional car. That is not broadly the case. What we are not doing enough is incentivising and telling people about used electric cars. Your seven-month-old Nissan LEAF, which started with a list price of £25,000 after the grant, is now available for £13,000. All these electric cars are coming off company fleets and going into the market, and consumers do not realise that that is a really effective way of getting an EV at a low price. If you buy a Nissan LEAF or a Renault ZOE for £6,000, which is possible, that investment is paid back within three years in terms of fuel, maintenance and road tax. It is a really compelling proposition.
Richard Burden
Q Is that not a double-edged one? For the market in new electric vehicles to take off, the fleet market will be important to that, and one thing that will be important to it is some certainty over residual values. Therefore, the low residual values at the moment, which might be an incentive to the private car buyer, are a disincentive to the big take-up of new EVs by fleets. Is that fair?
Quentin Willson: But if we have volume, the manufacturers’ prices will come down, and they are coming down. If you look at a Mitsubishi Outlander plug-in hybrid electric vehicle compared with a diesel hybrid one, they are the same price. Residuals on things like Teslas and Renault ZOEs are quite good. The market is levelling off, and we will find that prices and residual values start to firm up. Price guides and the motor industry still do not value electric cars properly. We will see a strengthening of residuals as demand increases and a lowering of prices as manufacturers get their volume and their supply up.
Richard Burden
Q Perhaps you could answer a question about the idea of Government action on consumer incentives. Is there more that could be done? What should be the targets?
Quentin Willson: There are simple things like free on-street parking everywhere in the UK for electric vehicles, use of bus lanes and some form of priority. The Americans have had huge success with priority lanes for electric vehicles. We need to think about the stuff that you cannot buy, the things that give people an advantage in city centres if they drive an ultra low emission or electric vehicle.
Robert Evans: The other alternative is low emission zones, and we could do that. London’s low emission zone, followed by an ultra low emission zone, is the direction of travel that a lot of cities would like to take. They want to do it in a staged format, working to national guidance as to what constitutes the standards you would set for access, so that a motorist travelling in the UK can know whether they can gain access to the low emission zone and the ultra low emission zone as they move from city to city. That is a particularly important activity. It is not covered in the scope of this Bill as such, but low and ultra low emission zones are one of the key ways of incentivising the right kind of behaviour. The second-hand market is incredibly important, and it makes those vehicles more accessible.
Company car taxation is a particular favourite that helps to drive electric vehicles into a market where others would not. The lightbulb has gone on with fleets. Previously, they would operate a diesel-only policy. “You never got sacked for buying IBM,” was the traditional term, then, “You never got sacked for buying diesel,” and that has now switched. They can see that the motor industry is not going to support that in the long term and that they need to make a change. They are now embracing what they can see is the future that they need to have in their fleet.
Quentin Willson: Any benefits in kind that the Treasury can keep going must be kept going if possible. The plug-in grant has been really significant.
Tom Tugendhat
Q Forgive me; in relation to the cycles that we are talking about in introducing new technology, as you correctly identified, Quentin, the way we are going is towards transport as a service rather than as an item. If that is so, then presumably automatic vehicles will, rather like those vacuum cleaners you get in homes, be able to drive themselves to a car park somewhere, charge themselves up during the downtime and come back out again, at which point we are talking about investing an enormous amount of public money into an infrastructure system that will, within 20 years—you were referring to 2040—be redundant. That is quite a short timescale for large-scale infrastructure investment to be redundant.
Quentin Willson: But that infrastructure investment will also be used for this new breed of autonomous cars, because they will all be plug-in. They will all be electric.
Tom Tugendhat
Q But presumably they will be plugging themselves in, rather than the current vehicles that require somebody to get up, pick up a wire and stick it into a vehicle.
Quentin Willson: I do not think that is a given at all. You will still have to have manual interference in that process, unless we can get to the stage where we have automatic wireless charging in the roads. To wait for that to come—
Tom Tugendhat
Q I am not sure that is necessarily to come. It is not beyond the wit of man to imagine that a car pulls up into a dock, and a little arm goes out. That is not the structure that we are intending to build right now.
Quentin Willson: That is further away than you think. We would have to have a commonality of autonomous cars, and somebody will own these autonomous cars and there will be charging stations. They will broadly resemble the ones that we are lobbying for now. This vision of the arm that comes out and charges your pod, if you like, is still some way away.
Robert Evans: Inductive charging has been referenced today: charging along the motorway as a form of dynamic inductive charging. Static inductive charging is when you drive over a pad and that pad is then able to charge your vehicle. The groundworks for all the current charge points can potentially be adapted to deploy inductive charging, as that starts to come through into the market. I do not think that is so much of an issue. We do not assume that what we deploy as charge points now will be as is in a 20 or 30-year timeframe; they are going to be updated over time as suits the vehicles coming to market.
Quentin Willson: As we are doing now, in effect.
Robert Evans: As we are doing now, yes.
Tom Tugendhat
Q What would you change in the Bill to make sure that that level of infrastructure change is more active?
Robert Evans: I do not think it is necessary to change the Bill, in the sense that as the vehicles start to come forward, the charge point infrastructure suppliers will start to bring forward commercially available inductor charging. At the moment, we talk about people having that in their garage for particular vehicles, but at the moment those are not inductive vehicles, other than, say, for some bus operations and the like. It is early pre-commercial.
Alan Brown
Q Is the technology used to operate autonomous vehicles safe and reliable at present?
Quentin Willson: That is a difficult question. Where do we begin? There have been some very successful trials of autonomous vehicles in America and Europe, and they have collectively driven many millions of miles with an infinitesimal amount of accidents. Significantly, they have driven in traffic. In Los Angeles, Nissan, Toyota, Lexus and Volvo have had great success in driving autonomous cars in traffic, which have mixed in successfully.
However, it would not be fair of us to say that there is not a great challenge. Ironically, the challenge comes probably not from autonomous cars themselves but other road users, some of whom may just think, “I’m going to have a go here.” All of the insurance legislation needs to be sorted out, but we need to absolutely understand that there will be a period of some pain. More than that I cannot give you.
Robert Evans: It is a tremendous opportunity for the UK motor industry. The industry has sought to progress and be competitive around new technologies, with low-carbon vehicles being one and connecting and autonomous vehicles being another. We have a series of projects in the UK—with both technology development and now with funding set aside in the Budget for demonstration locations—to be able to work through, understand the issues, and test and understand the state of development of the technology. There is something like 1 million lines of software involved in making a vehicle have the artificial intelligence to be able to progress. It is one thing to go down the motorway at high speed with clear lines; it is completely different to go down Fulham Road at 7 o’clock in the evening on a very busy day. There is a lot of work still to be done.
The good thing about the Bill is that it is the first time that automated vehicles have figured in UK legislation. This is the beginning of a process that makes the UK a potential lead market for the deployment of this technology. It will be hugely beneficial for our motor industry if we are able to be receptive and responsive to what we can all see will deliver huge value societally, in terms of reduced accidents or the ability of people to move when they are older or infirm, or younger people who cannot drive vehicles. There could be huge benefits to society, and this at least starts the process of making the UK ecosystem autonomous vehicle-friendly.
Quentin Willson: And to create literally tens of thousands of jobs, bring billions—that is not an exaggeration—of investment to the UK, and a new product cycle and a new consumption and production. We should be the world leader in this stuff.
Alan Brown
Q On roll-out and testing, is further testing suggested? One of the suggestions made on Second Reading was that the vehicles have not been tested in snow conditions yet, and there was a suggestion that different weather variables may need to be looked at. Robert gave the example of a busy Fulham Road at 7 o’clock at night. One example I gave on Second Reading was the single-track roads in Scotland, on which, if two vehicles drive head-on, somebody has to make the decision to back up to the nearest layby. Are there things like that that still need to be robustly looked at?
Quentin Willson: I am afraid I am not an expert in this autonomous technology, but there will have to be algorithms that can solve that and there will certainly have to be a testing regime.
Robert Evans: For connected and autonomous vehicles, there is now funding set aside for a series of demonstrations of different types. Those will reflect the real world as well as the virtual world in which the technology will be speedily developed before being put out into controlled demonstration environments and, ultimately, on to the open road. The UK is well placed, with activities and the announcements in the Budget, to do the preparatory work and the learning to make the UK a receptive environment for these vehicles to be deployed in and to deal with exactly the type of use cases you referenced.
Quentin Willson: However, it is possible to say that with autonomous vehicles you might even reduce the amount of accidents in the UK, because it is 90% human error. The 2,000 fatalities we have in the UK on our roads a year have plateaued and are due entirely to people making mistakes. If we put this technology in, that death toll could conceivably come down significantly.
Mr Hayes
Q It is good to hear you make the case for us being pre-eminent in this field. The Government are certainly determined to make this country a world leader. Returning to the issue of infrastructure, what are your views on on-street charging infrastructure? We spoke a bit about petrol stations, service stations, supermarkets and so on. Other places—Paris is a good example—have done quite a lot of work on spreading on-street charging infrastructure quite evenly across the city. What more could Government do on that?
In that spirit, what about the design of these charging points? Governments have not been entirely hopeless in past decades on that—one thinks of the Gilbert Scott telephone box, the Belisha beacon or the post box. In recent years it has perhaps been not so good, but we can do good things. Should we think more about the design of the charging points and what they look like, to make them instantly recognisable, iconic and widely respected and admired as such?
Quentin Willson: There is a powerful argument for making them iconic as part of this new and very important cycle of change that will make our lives better. In Bordeaux, they have a proliferation of on-street charges because they have a fleet of little electric cars that you can just go up and hire for the day, the hour or the quarter of an hour and then return to a little charging pod. It is a huge investment, but it works extremely well, and of course it limits the amount of traffic coming into cities because those cars are available. It would benefit us hugely if we started to think about urban car club schemes that are just electric cars and the proliferation, as with the Boris bikes, of a recognisable charging pole on the street. It would also help all those people who do not have parking to charge their cars.
Robert Evans: Members of the association take the view that they can produce an iconic charge point that is recognisable as their own brand. They have been in that business and have tried to make the best use of their equipment and make it as attractive as it can be. In the UK, we have quite a dynamic market for the supply of infrastructure. We now are learning that the major US supplier, ChargePoint, is looking to bring its technology into the UK market. We have had BluePoint, which is the Bolloré scheme, and others. They will bring what they view as the norm in their markets into our markets.
Quentin Willson: We could have a competition, could we not?
Robert Evans: We could, but I think there would be a resistance among the industry to effectively move to one standard shape of pole. You have a post and you plug into it, but the innovation is occurring in the way you access it. That is more about people using smartphones to input information and say, for example, “I want to charge for this period. I’m prepared to pay this. I might be prepared, if you incentivise me, to allow my vehicle to have managed charging, as long as it has so many kilowatt-hours in it by the time I come back.” That type of interface is where there will be a lot of innovation. The poles themselves work to pretty standard methodologies, and motorists are used to using them. The clever bit in the design will be about the user interface on the smartphone app that enables smart and managed charging.
The Chair
Mr Baker, I fear we are now running out of time and so cannot get you in. May I thank our three witnesses for their extremely useful and interesting evidence? I am sure it will help to inform Committee members better in their consideration of the Bill later this week.
Vehicle Technology and Aviation Bill (Second sitting)
(7 years, 9 months ago)
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The Chair
Q 65 We will now hear oral evidence from the Institute of the Motor Industry, the Downstream Fuel Association and the Association of Convenience Stores. We have until 3 pm for this session. Could the witnesses please introduce themselves for the record, starting with Mr Woodall?
Edward Woodall: Good afternoon. I am Ed Woodall. I am head of policy and public affairs at the Association of Convenience Stores, which represents 33,500 local shops and 8,000 forecourt retailers across the UK.
Teresa Sayers: I am Teresa Sayers. I am the chief executive of the Downstream Fuel Association. We represent the non-refining companies and major supermarkets.
Steve Nash: I am Steve Nash. I am the chief executive of the Institute of the Motor Industry, which is the professional body for individuals working in the motor industry.
Richard Burden (Birmingham, Northfield) (Lab)
Q Welcome. I have two sets of questions. The first is probably principally to Mr Woodall and Ms Sayers, and the second is principally to Mr Nash. On the Bill’s provisions on electric charging points, I think it is fair to say that your two organisations have been rather more critical of what the Government are suggesting than a number of others. Can you outline why you think they are going in the wrong the direction with the provisions on charging infrastructure?
Teresa Sayers: First, we welcome the opportunity to comment on the Bill and work with the Government on looking at ways to build up the infrastructure for electric vehicles. I represent four major retailers, and my members already have some provision for electric charging points within their infrastructure.
We believe that the emphasis on petrol forecourts is wrong for a number of reasons, not least because the configuration of forecourts does not lend itself to allowing cars to be placed there for in excess of 20 to 30 minutes. We provide electric charging points, as I say, but they are exclusively in the car parks of our stores and at head offices. We are looking closely at how we can further develop provision along those lines, but we are very concerned about the emphasis on placing them in the forecourt.
Edward Woodall: Also, there is the question of how we define “large fuel retailer” in the Bill to determine whether a retailer has the capacity for electric vehicle charging points on their sites. That is quite a difficult task to deliver in regulation, because this is quite a diverse and different sector. That could take into account fuel volumes and number of sites, and it would also have to take into account size of sites, as Teresa was saying, in terms of having the space for people to charge their vehicles on the site.
I suppose there is also a concern about the desire of consumers to charge in those locations. The Government’s own evidence suggests that 95% of vehicle users currently charge at home; 26% then charge their vehicles in workplaces; and only 12% look to charge their vehicles in public spaces. Would they choose to do that on fuel sites? It is a question; I am not sure. Do the fuel sites have the capacity to deliver in this way? Only 11% of our members have seating areas in their forecourt sites, so what does someone do for the 30 minutes if there are rapid charging facilities on those sites?
There are other logistical issues around whether sites have the capacity to deliver that energy. Electric vehicle charging points will need a direct connection with the grid; obviously, that does not cover all sites across the board. So there is a real challenge in how you define in regulations a large fuel retail site, and whether it has capacity to deliver those services.
Richard Burden
Q The Bill refers to “large fuel retailers”. Evidence that we heard this morning rather suggested that what will make or break the expansion of electric charging infrastructure is much broader than motorway service areas. There was a lot of discussion about supermarkets, what to do around on-street parking and smart charging at home. I will press you a bit further on whether your reservations about the parts of the Bill relating to electric charging are concerns about Ministers being given regulation-making powers to mandate others to provide charging points to certain specifications. Or do you basically accept that principle, but think that the provisions are targeted wrongly in focusing on large fuel retailers?
Edward Woodall: The latter. I understand the principle and the objectives, but is it right to focus this purely on fuel sites, when the evidence suggests that consumers are perhaps not looking to go to those sites to charge their vehicles? There is also a concern about whether it matches up with what drivers will do while they are charging their vehicles. It makes sense to have charging points in an area where they might be going to the cinema or the shops, as opposed to having them on a forecourt site, which may not have the space or the retail capacity to deal with that issue.
We also put, in our submission, evidence about ways to incentivise other partners to use this system—for example, changes to the national planning policy framework might give more specific direction on where charging points should go, so that local plans could be informed by that, and capacity could be increased across the board.
Richard Burden
Q Can I come to Mr Nash on a different area? In the written evidence you provided, you put quite a lot of emphasis on the importance of training and accreditation for people working on these charging points and autonomous vehicles in the future. Could you say a little bit more about your concerns?
Steve Nash: Absolutely. I think it is worth understanding a little bit about our sector. Everybody knows we have a franchise sector, and we tend to talk about the independent sector, but that is a catch-all phrase. There are about 40,000 businesses in there, ranging from Halfords and Kwik Fit down to a man working on someone’s drive.
Right now, of all the technicians out there working on cars—there are just under 200,000 people we know of, but there are probably quite a few that we do not know of, because they do not necessarily belong to a trade body or anything else—only about 1% are qualified to work on high-voltage electrics. Let us make no mistake about this: you have to be licensed to work on domestic electrics, and I would venture to suggest that the electrics in an electric car are potentially more lethal than the mains. We are talking about direct current—more than enough to fry you—so you do have to be properly trained and know what you are doing. In this sense, a car is not a car, just because it looks like a car. These are the biggest technical changes we have seen for 100 years. This is not an evolution of old technology—this is new technology.
We know that the manufacturers will do what they need to do to ensure that their franchise dealers can cope. Most of them are already using our accreditation scheme to qualify people at different levels, including knowing what you should not do and how to disable the electrics to work on other non-high-voltage systems safely. The higher level is for working on the high-voltage systems.
If you really want these cars to proliferate, there are a couple of problems. One is that right now it can cost you up to 50% more to insure one of these cars, because the insurance industry is quite aware that there is a limited repair market out there. If your car has been in an accident, you need somebody who knows what they are doing to put the thing back together, and the industry is assuming a higher cost because there is a limited repair market. That will continue unless you find a way of engaging the wider market, and the wider market will not readily make that step because there is cost involved, so it becomes a chicken and egg situation.
As I said, there is a very real health and safety issue. You do not see it now, because there are 32 million cars on the road that do not have this technology, and there is plenty to go round in the service and repair market. There are cars that have been around for a while, such as the Toyota Prius models and so on, but we know from our own experience that a lot of the independent guys do not touch those—they pass them back to the dealers—because they do not need that work to make a living. However, as these cars proliferate—and that is everyone’s intention; if you look at the product plans that all of the manufacturers have at all the motor shows, it is all about plug-in hybrids and electric cars, so these cars will proliferate—if you want a competitive market for servicing these cars, you need the independent sector to engage.
To make that happen, first you need regulations to protect people’s safety, and secondly you have to consider using some of the large fund—I believe it is something like £600 million—that has been put aside to help move us in that direction. Some of that money should be directed towards a training fund to help the independents engage in the training that they need to work on the cars safely.
Richard Burden
Q Could you outline how it would work? In other words, how would the Government, or whoever, define the vehicles that would require licensed people to work on them, and what things they would need to work on? For example, some might say you should not have to be licensed in order to check the tyres; that is different from working on the electrics. There is potential for this to be a difficult area for definition.
Steve Nash: We have worked very closely with manufacturers to define three levels of accreditation. Level 2 says you can work safely on the passive systems of the car, so you are still going to have steering and suspension. I was going to say brakes, but actually a lot of these cars have regenerative brakes, so even that is potentially risky. The second level of accreditation is knowing how to switch off the high-level electronics and knowing what you should not touch, because there are certain systems on the car that have very high residual currents in them, even when the car is turned off.
Level 4 accreditation is for people who are properly trained to work on the high-voltage systems, which include the control systems and the battery packs. Working with manufacturers, we have refined that to understand that it covers the entirety of their own group of technicians working in their franchise.
The Chair
If Members wish to remove their jackets, that would be fine. Let us try to keep questions and answers crisp.
Andrew Selous (South West Bedfordshire) (Con)
Q I have a question for Ms Sayers and Mr Woodall. I understand your concerns, because it is quite a change to your business model, but are you not missing out on future potential? Given that we all expect this to be a growing and significant market, do you not want to be part of it, to capture that revenue? Are you not looking at other ways to make money around this, reimagining your business model a bit?
Teresa Sayers: Absolutely. My members are very keen to engage in the development of alternative fuels infrastructure. As I said earlier, they already have some provision, they are actively exploring how best to develop that and they will happily work with the Government on that, but their considerations as to where it would be appropriate to place these additional electric vehicle sites are around convenience, the identification of strategic corridors, the proximity of the car parks to other retail parks, the duration of time that shoppers typically spend within stores and the size of the car park. All of these considerations are around existing car parks, so there is a willingness for and understanding of the potential growth of this. We are playing our part, but we maintain that the forecourt is not the appropriate place to put this emphasis.
Edward Woodall: I agree. This is about whether the development of the market needs to be regulation-led through the Bill, or whether it needs to be led through making the business case for the fact that this infrastructure is going to grow. The question that comes back to the Office for Low Emission Vehicles is about more research to make a business case for businesses to have these on their forecourts, and about looking at using funding to incentivise the introduction of this new infrastructure, instead of enforcing it. That incentivising might be done through business rates relief for people with very large business rates bills who put these on their forecourt sites, or through direct Government funding to think about how to put these on the sites. There is this question of whether it should be regulation or incentive-led.
Andrew Selous
Q Thank you. I have a final question for Mr Nash. Hearing about the training needs of the industry, what preparation is going on in schools and further education colleges to set up courses so that we have enough skilled technicians to service these vehicles in future?
Steve Nash: There are plenty of places around the country that can train people in the technology. Obviously, over time, the new apprenticeship standards will evolve, but it has to be remembered that an apprenticeship is a start, not a finish—we are talking about lifelong learning here. Apprentices will not come out of their apprenticeships ready and available to work on the high-voltage electrics. That will take time, and that is additional training that will come as they develop their career. We as an organisation, a professional body, work with a network of 600 FE colleges, training companies and manufacturers’ academies around the country, many of which are capable of delivering this kind of training. As I said earlier on, it is a sort of chicken and egg situation—a question of supply and demand. They are ready to offer it once people have moved in that direction, but it will not happen on its own.
Rob Marris (Wolverhampton South West) (Lab)
Q I want Ms Sayers to clarify a bit. The supermarket I go to every week is, I suspect, like quite a lot of them. It has a large car park—it is one of the major multiples—and alongside but distinct from that car park is a petrol station, which is branded by the supermarket but is a Shell station. As my hon. Friend the Member for Birmingham, Northfield (Richard Burden) said, the Bill gives “large fuel retailers” certain responsibilities. Would your members prefer the wording, “large retailers”, to make that clearer? In the supermarket car park, people may typically leave their car for 30 minutes. I am thinking of those old westerns where people hitch up their horse outside the saloon—people hook up their car, grab a trolley, go in to do their 30-minute shop and, when they come out and unplug it, they have had a fast charge. The charging points would therefore be better placed in each parking bay for the supermarket proper, which is not a large fuel retailer at the moment. Is that more consonant with the way in which your members are thinking?
Teresa Sayers: Very much so. Our apprehension about the wording is all about the location of the EV charging point on a forecourt, for the reasons we have discussed.
Rob Marris
Q The word “fuel” in “large fuel retailers” is causing you to scratch your head a bit?
Teresa Sayers: Yes, absolutely.
Rob Marris
Q “Large retailers” would be more palatable for your members. Am I right?
Teresa Sayers: Yes.
The Minister of State, Department for Transport (Mr John Hayes)
Q This is a question for Edward, and then perhaps Steve. Given the need to ensure that we have breadth in the charging infrastructure—not just number, but location—is it not important that we also base charging points in rural places, village shops and small post offices, rather than concentrating them in places that already have charging points? Similarly, is it not also important that we work with small garages, rather than simply the major garages, to avoid creating an uneven distribution of charging points that would be a major barrier to entry to the market for many potential consumers? Would you like to deal with that one before I come on to my second question?
Edward Woodall: Obviously, we do not want to be left behind. The fuel retailers in our membership are looking at this at the minute. They have electronic vehicle charging points, but significant costs are associated with delivering that. Keeping pace with those costs, if we introduce charging points by regulation, would be a challenge. It would be even more of a challenge for village post offices and shops to have charging points on their sites. Obviously, we do not want to be left behind, but I think the industry will naturally fill that space where it is appropriate.
Mr Hayes
Q We would not want to exaggerate or exacerbate the trend towards fewer places at which to buy fuel and food. Steve, on your point about skills, this morning, at a roundtable with the industry, the point was made that this might act as a spur to people who were keen to get into the industry. The excitement of the new technology, and of being part of an important, cathartic change, might attract more recruits. Have you come to any judgment on that and, if not, how can we make that happen, as it is surely a good thing?
Steve Nash: We are like every other industry: we are competing hard for talent, and we are definitely using the massive, incredibly exciting change we are going through to engage young people and show them that this is a cutting-edge, futuristic industry—so, absolutely. As the professional body for the industry, part of our raison d’être is to raise professionalism and bring new talent into the industry, and this a great catalyst for that, yes.
Mr Hayes
Q We heard from a witness this morning who suggested that we should have roadshows—demonstrations of electric vehicles in different localities—and that once people had tasted the fruit, they would want more of it. That might also apply to people who want work in the industry. Is this not about marketing in a sense?
Steve Nash: Yes. We are very much involved in UK skills and world skills. We are at the Skills Show. Last year, in co-operation with some of the manufacturers, we featured electric cars there, and it absolutely does pique interest. I very much go along with what you are saying.
Richard Burden
I should declare an interest. I am an honorary fellow of the Institute of the Motor Industry. It is non-pecuniary, but I thought I had better put that on the record.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
Q I want to ask a question similar to that asked by the Minister. Earlier, we were talking about the need to look not just at fuel stations as the only charging point locations. There is an issue of unintended consequences, arising perhaps from a lack of strategy and thinking over the deployment of charging points. Similar to the situation with village shops, in your view, is there a risk if we concentrate, for example, on large retailers, that we could see a further impact on high streets because there would be a disincentive to go there? A follow-up question would be, do you believe that enough work has been done and consideration given to other technologies such as in-road inductive charging as a possible solution to those conundrums?
Edward Woodall: Obviously we do not want further disincentives for people going to high streets. That comes back to the point I made earlier about how we can encourage this more widely. Perhaps we should look at the planning system and the national planning policy framework to ensure that people and planners are thinking about where to put charging points in future. I agree that we do not want to focus too much on one particular area. We should follow where the consumers—the people who have electric vehicles at the moment—are going. They are saying that they want to charge in locations that are convenient for them. It is not necessarily in fuel retailer sites, but in car parks and leisure facilities, on high streets and in other car park areas. That might include village shops and convenience stores.
Teresa Sayers: I support everything that Ed said. It is very much about destination and convenience. When you look at such criteria, a variety of alternatives offer themselves up as being appropriate for the positioning of EV charging points.
Drew Hendry
Q Can I press you for some thoughts on other charging technologies? That was the last part of my question.
Edward Woodall: I do not have a great deal to add on that.
Mr Steve Baker (Wycombe) (Con)
Q Mr Woodall, if I understood correctly—I listened very carefully to the answer about business models, because the same question occurred to me—you said you do not wish to be forced, but you would be happy to be paid one way or another to take charging stations. I am not surprised, but you did not mention profit as an incentive to provide this service to consumers. Can you elaborate? Why did you not mention the potential to make a profit out of charging?
Edward Woodall: Obviously there is a benefit to having charging on a site. I suppose I am focusing, in the context of the Bill, on how it will work in retailers’ thinking about investing in something that is developing in the long term.
Mr Baker
Q Is it just not profitable to provide charging to people?
Edward Woodall: Petrol forecourt sites make their money out of the shop. They do not make their money out of the fuel or the electric charging. That is a very low-margin part of their business. That is why you are seeing so much investment in the sector.
Mr Baker
Q That is what I imagined. To make a profit, you need to get people through as swiftly as possible, get them in the shop spending as much money as possible, and then on they go. Hopefully, they are happy and have had the service they want.
Edward Woodall: It is not quite that simple, but yes.
Mr Baker
Q Suppose you had an energy source that could be changed quickly, instead of over half an hour, would your current business model work? If, for example, we used hydrogen, as we were discussing this morning, your business model would continue to work in the same way, would it not?
Edward Woodall: Yes, but obviously the investment for putting hydrogen on fuel sites is significant. We asked fuel retailers about the cost of putting on electric vehicle charging points, and the estimate was between £50,000 and £60,000 per site, depending on the site. That increases significantly for hydrogen sites, because the infrastructure behind that is much bigger and more expensive, and it is a harder case to make because fewer consumers use that type of fuel source.
Alan Brown (Kilmarnock and Loudoun) (SNP)
Q Earlier, in the discussion with Rob, there was discussion about phraseology—about large fuel retailers or just retailers—and an issue with forecourts. I want to clarify something. I am not sure if forecourts are mentioned in the Bill, so is that a red herring? Is it not going to be up to the retailers to site the charging points where they are most convenient?
Following on from the previous question, if you are not blocking the forecourt, a rapid charger may take 30 minutes, but is that not an opportunity for sales if it is the shops that make all the money? I would have thought that for somebody who is travelling, if it is an intermediate store, it would be an ideal opportunity to park and charge their car, go into the shop, buy a newspaper or a magazine and a few snacks, sit in their car, then move on. Is there not a business opportunity there?
Edward Woodall: Yes, there is. As we said in our submission, only 11% of sites have seating areas for customers, so there might not be the capacity to manage all that. Equally, how big is a forecourt site? Think about your local forecourt site—how many cars can it fit? For some of these electric vehicle charging areas, they will not consider it unless it is an acre or an acre-and-a-half-sized site.
Teresa Sayers: Certainly, the charging sites would have to be on the periphery of a forecourt. The current configuration of estates has very limited space to accommodate any parked vehicles. As was previously mentioned, the business model is a very high throughput of vehicles. The maximum duration on the forecourt is usually below five minutes—they fill up, pay and leave. It is just not built and configured to have additional cars there for a very long period of time.
Kit Malthouse (North West Hampshire) (Con)
Q I want to ask about brevity. Mr Woodall, I have to confess that I cannot ever remember spending more than five or 10 minutes in a convenience store—presumably, that is why they are called convenience stores, because it is convenient and quick—so I cannot quite see the model of me pulling up in my electric car, plugging in for the half an hour or even 15 minutes, and spending that time in the convenience store, particularly when the number of spaces will necessarily be limited. There will not be 15 or 20 spaces; you might perhaps have two, which might therefore be full the whole time. Do your members really see this as a big business opportunity or is there a Government subsidy available so you might as well take it?
Edward Woodall: I agree with all those points. I think it is difficult in our format of retail to deliver electric charging, given that both on forecourts and in convenience stores, there is large throughput and we are usually in areas of small parades where there are limited parking spaces, or they are on forecourts that are likewise limited for parking space.
Kit Malthouse
Q So on your earlier point on the greater investment required for hydrogen, given that hydrogen requires no behavioural charge—you refuel in about the same amount of time as you do a current internal combustion engine—the throughput of people might be greater, so the return on investment could be higher. Rather than having two people sitting there for half an hour, you might have 30 people going through who would therefore spend commensurately more, even though the initial investment might be more.
Edward Woodall: In terms of the hydrogen market, we are a long way off hydrogen being—
Kit Malthouse
Q That is what everybody keeps saying. There is a body of us who do not necessarily buy that, but okay, I understand that.
Edward Woodall: It is hard for me to answer and model that—
Kit Malthouse
Q I understand that. I have one other question, which is about the very high voltage required for fast charging. On an existing petrol or diesel forecourt, you are not even supposed to use your mobile phone because of the possibility of some kind of arc or charging gas. Is there a safety issue with the incredibly high voltage that is required to charge a car in half an hour and the possibility of arcing in an atmosphere of gasoline fumes?
Teresa Sayers: I am not qualified to answer that question. However, that is something that needs careful consideration. There are technically qualified people who can give you a comprehensive answer.
Steve Nash: With current electric cars—no pun intended—and the connections you make, there is very little chance of arcing, but I understand that you are not going to put volatile things next to high electric charges.
I have some experience of hydrogen because I was formerly on the board of BMW in the UK and we were running hydrogen cars around London. To deliver hydrogen as a liquid, it has to be stored at absolute zero. That is very, very complicated. It is also a very small molecule, so it permeates just about everything, so storing it is a real challenge. We are talking about hydrogen fuel cells, which are still kind of in their infancy. It depends on how the hydrogen is required, whether as a gas or a liquid. Either way, there is a long way to go. I think there are only two places in the south-east of England that could deliver hydrogen if you wanted it at the moment.
Kit Malthouse
Q There are six actually.
Steve Nash: Maybe I am out of date but, even so, that is not a lot. It will come, but there are technical complications. The battery electric cars are the ones that are going to proliferate first.
The Chair
Do Members have any further questions for this panel? No? I thank the panel for their time and co-operation.
Examination of Witnesses
Ben Howarth and Iain Forbes gave evidence.
The Chair
Q We will now hear oral evidence from the Association of British Insurers and the Centre for Connected and Autonomous Vehicles. Could the witnesses please introduce themselves for the record, starting with Mr Forbes?
Iain Forbes: My name is Iain Forbes. I am head of a team called the Centre for Connected and Autonomous Vehicles, which is a policy team based in the Department for Transport and the Department for Business, Energy and Industrial Strategy.
Ben Howarth: I am Ben Howarth. I am policy adviser for motor insurance at the ABI. As part of that I have led all our work on the Automated Driving Insurance Group and drafted our response to the CCAV consultation that pre-empted the Bill.
Andy McDonald (Middlesbrough) (Lab)
Q Good afternoon, gentlemen. Thanks for coming. I have a number of questions. At the beginning of the Bill, we are told that automated vehicles are what the Secretary of State says are automated vehicles. Clearly, some thought has gone into the criteria for so-designated vehicles. What are your own thoughts and observations on how we can be sure we are getting that set of criteria correct?
Ben Howarth: From an insurance perspective, that is one of the clauses we particularly welcomed when we saw the Bill. One of our concerns in advance was that it would not be clear to the customer what cars needed this new insurance system, so the clarification that the Government are going to take responsibility for doing that is really welcome. It means basically that we know what cars we need to have this new insurance for, and the customers will know that as well.
In terms of criteria, it is relatively simple. It is more about the user than the technology. I think the technology might not move that much, but it is the point where the user can feel confident that, when the car is in automated mode, it can deal with everything. Thinking about the worst-case scenario of an accident, if the car senses it is going to go into emergency mode, the car is able to do something to deal with that, which does not require the driver to come back in. We feel that if there is any point where the driver needs to come back in, it is not really an automated car. It is that tipping point where the car is completely capable of dealing with every situation. It might not carry on driving, but, at the very least, it would do an emergency stop and get you into a safe stop manoeuvre. That is the tipping point, or distinction, that we see.
Iain Forbes: Just to underline that, the measures in the Bill are designed to deal with the sorts of situations where a vehicle can drive itself in automated mode and not require the oversight of a human when the driving test is being operated. The particular mechanism by which those vehicles are going to be certified is an active topic of discussion at international regulatory forums. We have actively participated in those discussions, but we felt it was important to flag at the outset of the Bill that that would be clear to people in the insurance industry and elsewhere, to make sure they were able to understand which vehicles these measures apply to and which ones they do not.
Ben Howarth: In practice, we would be hoping that, from an insurer’s perspective, it is pretty easy to find that out, just by looking at the licence plate or the VIN number. There would be a clear definition that this is a car with automated functionality.
Andy McDonald
Q Of course, we are now entering a major shift, because we have to have insurers who are going to be picking up the tab for accidents involving automated vehicles. Presumably, as we progress, we will be getting errorless driving in automated vehicles. That is the objective, and incidents will result. Therefore, we should be looking forward to cheaper insurance policies, but that may not automatically be the case, if you pardon the pun. How progressed or how ready is the insurance industry to deliver products that would make fully automated vehicles accessible to people in terms of costings, including the cost of insurance?
Ben Howarth: We are very advanced as an industry, particularly in the UK. Because of the clear message that the Government have given, we are perhaps ahead of our contemporaries in other countries. The two really important criteria in terms of the cost of insurance will be the volume of accidents. We are fairly confident—Thatcham Research has done quite a bit of research that suggests the number of accidents is going to come down a lot once we get automated driving. That will obviously reduce the number of insurance claims, which will inevitably have an impact on the cost of insurance.
One factor that we probably do not know about at this point is the actual cost of the vehicles themselves, and how much they cost to repair. We might have considerably fewer claims, but very high costs associated with repair might have an impact. That said, that is something that is happening already. Vehicle technology is changing a lot already, so it is not a case of a huge tipping point in technology once we switch to fully automated cars. The technological change will happen more steadily, so I am very confident that the insurance industry is ready to deliver competitive insurance products that will be affordable, will help people and will make them want to take up this technology.
Andy McDonald
Q Will you help me on another matter? When an accident is caused by an automated vehicle, we are told in the Bill that the insurer is liable for the damage, but when the automated vehicle is involved but is not insured, it is the owner of the vehicle who is responsible for the damage. I am wondering what your view is on whether that ought that to be the person in charge of the vehicle, rather than the owner. We might have the perverse situation of a stolen vehicle being involved in an accident but, according to this, the owner of the vehicle would be in the frame. Do you understand?
Ben Howarth: I think I know what clauses you are referring to and my understanding of them is that that covers publicly owned vehicles and Crown Estate vehicles. They would not have insurance because they do not need them. In those cases, where it is a publicly owned vehicle, the liability would fall on the public body. It is a separate arrangement for genuinely uninsured driving—private cars that are uninsured.
Andy McDonald
That is really helpful.
Iain Forbes: That is exactly right. That clause covers publicly owned vehicles. We anticipate the situation being similar to the situation at the moment for conventional vehicles. It is often the case that they self-insure, rather than going through an insurance company.
Andy McDonald
Q I do not know what your handle is on this, and that was terrific clarification, but do you not see that it is possible to interpret it in the way I did? A vehicle that has been stolen is not insured, but the owner of the vehicle is picking up the cost, not the person who stole it.
Iain Forbes: Certainly, our legal team has been through the regulations to effect that as the policy aim, but if the Committee has comments, we have to look at it.
Andy McDonald
Q Finally from me, we are in the world of upgrades, which will present opportunities for manufacturers to continue to engage with the vehicle, in effect. I was wondering whether you had applied your minds to any future product liability exposures with the advent of new software. What does that mean in terms of those future liabilities and in terms of limitation, because current liability, once you part with the vehicle, has a 10-year limitation, although we have got some issues around extensions for people with disability insurance and so on? But if it is a product liability issue, there could be a succession of products that could give rise to liability. Is that factored into your thinking? Is it relevant? Have you dismissed it?
Ben Howarth: That is very relevant. When the consultation first came out, one of the questions was, “Do we bolt product liability into the motor insurance policy?” We looked at it in quite a lot of detail, and that was our initial assumption for how it would work. When we thought about it, those issues that you referred to and the fact that product liability lasts for only 10 years made it feel like too much of a change for product liability to be put directly into a Road Traffic Act situation. That is why we came to the conclusion that it should be a primary motor insurance policy, with the option then to recover from manufacturers.
Our conclusion is that you probably do not need to change the product liability, as it is kind of a backstop and it will not affect the original claimant. There might be a case on some occasions, if it is an older vehicle. We do not know quite how the market is going to develop—whether cars will be on the road for 10 years or longer in this situation, or maybe the product liability will renew itself every time there has been an upgrade. Let us assume that it does not, and you do expire at 10 years. My understanding is that there will still potentially be the option for a civil liability claim, so you might be able to argue that the manufacturer is not product liable, but they are in effect acting as the driver, so there is another claim that you might be able to bring.
Andy McDonald
Q You could be caught with a person with a disability, or a child, who is not subject to ordinary limitation; it would be from the date of their majority. There could be an action on the attaining of that majority and your product liability recompense from the manufacturer is effectively null and void.
Ben Howarth: Yes. I think that is factored in. The Bill means that that is a problem for the insurer, rather than the victim. I suppose part of the calculations that insurers will make is how many of those claims they will be likely to face. Are they insuring vehicles that are over 10 years old? That might have an impact. What is important in the Bill is that it makes that a problem for us as an industry. It will not affect, say, a disabled person who is using these vehicles. I think that is the insurance we need at the moment.
Mr Hayes
Q On this insurance issue, there has been quite a lot of speculation about what might happen to the products that the industry offers, which will clearly have to evolve. We were told that again this morning. Is it your estimation that that will affect premiums? One would expect premiums to fall, given the fact that these cars will be safer; many of your claims are related to human error, after all. Is that how you see things developing? However, we are also told that many people who cannot currently drive will now be able to—the infirm, the elderly, some disabled people. In a way, that is the most exciting thing about this development. How would that affect your assessment of premiums?
Ben Howarth: On the first case, I would think of it more in terms of claims costs than actually speculating on what the premiums would be. Obviously, if the number of accidents comes down dramatically, that is going to have a significant impact on the costs that insurers face. Motor insurance is very competitive, and it is inevitable that, if we see a significant reduction in costs, we will see a significant reduction in the premiums charged. So I think we can be pretty confident of that. As far as we know, it is still four or five years before these products will come to market.
Looking ahead to the cars you are referring to, where, say, there is a severely disabled person who possibly cannot drive at all at the moment, we are probably thinking about a level 5 car that can go from A to B in fully autonomous mode. It is fair to say that this legislation is primarily aimed at cars that will be manual for some of the time, automated for the rest: more of a level 4 car. Once you get to level 5, that is probably the point at which the insurance system is going to have to change more significantly.
Where the Bill is really helpful is that it allows us to learn from the first developments, get an insurance function in place and see that that system works. It is probable that we are going to have to evolve further once we get to a fully automated car. David Williams, who was one of your witnesses this morning, is one of the insurers involved in trials of fully automated technology. There is a significant degree of interest from insurers in the next generation of technology as well; but it is probably fair to say that this Bill is more around a level 4 car. I prefer to think of it as a binary distinction between automated and not-automated. I am not completely convinced about the levels and how useful they will be for consumers. It is probably fair to say that we think of it as level 4.
Drew Hendry
Q Public confidence in autonomous vehicles will be critical in terms of how quickly we can take advantage of some of the benefits that are portrayed by the industry. Given that the technology largely exists, do you feel that the Bill is going to go far enough to encourage the uptake of autonomous vehicles? I am specifically interested in whether you feel that the connectivity will allow a truly UK-wide uptake and also in rural areas, given that, as we have heard previously about electric vehicles, range and the ability to get to the destination is one of the limiting factors.
Iain Forbes: The point about confidence is really important. Trust in the technology is going to be a vital factor in seeing some of the benefits we are talking about. It is part of the reason that the Government are investing with industry in demonstration projects, which will involve members of the public trying the technology, understanding what it might mean for them and helping the developers to learn from that in terms of their public messaging and how they take the technology forward.
With regard to connectivity, what is interesting is that different developers are following different development paths for the technology, some of which rely on connectivity and some for which do not. So, from a Government perspective, it is difficult to say exactly what the final technological solution will look like. Some time is needed to work that through, but we are actively trialling this technology with the industrial players to understand, from a Government perspective, what action we need to take to make sure we are prepared for it.
Drew Hendry
Q Just to press that point about the end-to-end availability, is enough being done to ensure that you get truly wide coverage to allow people from outlying areas to get out and back again in the new technology?
Iain Forbes: It is an important bit of work that will need to be done as we develop out the technology. We are investing in connected vehicle test-beds to understand what the requirement is, and certainly one aim of that work is to try to understand how it can benefit everyone, not just people in cities.
Mr Baker
Q I would like to turn to clause 4, which relates to accidents resulting from unauthorised alterations or failure to update software. Hopefully, you have had a chance to look at this section of the Bill. It is all couched in terms of the operating system—interference with and failure to update the operating system. I am concerned that there are other aspects of software in a car that are relevant. Are you satisfied that the Bill is in the right shape, referring to the operating system, or would you prefer to see some other definition, in which case, what?
Iain Forbes: I guess it is my team that has been looking at the Bill, so I will ask Mr Howarth to comment first.
Ben Howarth: From our perspective, my initial reading of it was that it covered what we thought it was, and I am thinking it is the technology. I have to say, I am not a software expert, so if the wording could be clearer—the clause basically says you are not liable if a stupid individual mucks around with the car’s systems and does things that the manufacturer would not permit.
Mr Baker
Q We have a shared understanding of the purpose of this clause. I should say that I am a software engineer—or at least I was before I first came here—and I am slightly concerned that if this was tested in court and somebody had interfered or failed to update their firmware—a low level software—or if the driving was done by application software sitting on top of the operating system, the purpose of the Bill, of which we have a shared understanding, could be defeated. You are saying that you have not formed a view on whether “operating system” is the right definition.
Ben Howarth: To be fair, I do not think we have looked into the wording in that much detail. If the wording needs to be clearer, we would support that. We definitely want the same thing.
Rob Marris
Q I have three quick points for Mr Howarth. First, the Bill talks about the vehicle being insured as opposed to what currently happens, from my understanding, which is that driver is insured. So I have policy motor insurance that enables me to drive certain vehicles, including my principal one. Is the insurance industry happy with what appears to be a change in focus—that is it now on the vehicle rather than the driver?
Ben Howarth: I think it is not a huge change in focus. In practice, the enforcement that industry currently does—via the motor insurance bureau—to check that you have insurance is done via the vehicle. It is done by checking licence plates. The responsibility is on the human driver, but the practical enforcement is to check whether that car, on the road, at that time, is covered by insurance. This Bill is primarily designed for vehicles that will be manually driven some of the time and automated some of the time. It is just the practicality that, once you are switching to an automated car, you need to be thinking about the car rather than the driver.
Rob Marris
Q On that basis, is the industry also happy that the insurer is liable rather than the owner-driver, which is currently the case?
Ben Howarth: Again, it is a practicality that we are essentially stepping to the front. We are coming into the sun.
Rob Marris
Q Yes, you used to be behind the scenes. For these vehicles, you would be up front. That is all right with the industry?
Ben Howarth: The whole purpose of the legislation is, I suppose, to be an enabler and say to people, “You can be confident using this technology, because you will not have to worry about getting into complex battles with your manufacturer.” We do not know for certain that that is what will happen. Some manufacturers have given positive statements about it, but if that does happen, the insurers will step into the front of the system and say, “We are actually going to take these on. We are the first port of call, even in the case where the person to whom we have sold the insurance policy to is not directly liable.”
Rob Marris
Q The third point is on the software updates. From memory, when I bought my car, which has a touch screen on it for the radio and things, it would have cost me an extra £600 to have sat-nav put in. That is just the software because it already has the screen and the buttons and everything. I am thinking about software updates, which we have talked about, and a failure to install software updates could invalidate the insurance policy under clause 4. I understand that, but I am a bit concerned that the Bill appears to have no provisions to cap the charges for software updates. For the sake of argument, I have just spent £15,000 on a two-year-old automated vehicle and then some software update comes in that is £1,000 and a month later they want another £1,000 out of me. If I do not do it, the thing is useless, because it is uninsurable and therefore undriveable. Do you think there should be provision for a cap on software update costs, so that vehicles do not become uninsurable and therefore driven without insurance?
Ben Howarth: I have not really got a view on a cap, per se, but I have got a view that if it is a fundamental safety upgrade and it will change the functionality of the vehicle significantly, there needs to be an arrangement in place to make sure that is not optional. It is probably for other stakeholders to say how we make that affordable to the public. From an insurance perspective, we do not want cars to be unsafe simply because people cannot afford safety upgrades. That is true today, thinking about automated braking: it would be great if that was a standard feature of all new cars because it is proven to be safe. It is optional and it is often not taken up because it is too costly.
Rob Marris
Q This stuff would not be optional, would it? The software update, effectively, would not be optional.
Ben Howarth: No, where it is fundamental to the car’s safety, it needs to be non-optional. We are hoping for a system where it is impossible not to get the safety-critical upgrades. I cannot really comment on how much to charge for them.
Andrew Selous
Q I just want to return to two groups that miss out on the freedom and opportunities of being able to drive. We talked about older people and disabled people but also young drivers, for whom insurance is often prohibitively expensive, running into many thousands of pounds. What analysis have you done of the advantages of connected and autonomous vehicles over and above taxis, private hire vehicles, getting an Uber? What extra benefits do you see those two groups being able to derive once this technology is established and there is widespread take-up? Have you done any analysis or thinking on the social benefits for those two particular groups?
Iain Forbes: We have not done a research project on this, but I am aware that new products enabled by connected systems are opening up the ability to drive to a wider range of people. For example, younger people now have access to a wider range of insurance products enabled by telematics than was the case previously. Certainly, there is innovation within the industry that I am aware of, which is opening up options for accessing insurance to younger people as well as to some other groups as well.
Andrew Selous
Q Has the insurance industry thought about these two groups?
Ben Howarth: The potential limitation is that we do not know when this completely automated technology is going to come to market. We are assuming about 2021, but we cannot be 100% certain. There is quite a gap until then.
Telematics, which Iain mentioned, are not directly linked because it is a plug-in the insurer gives you that is not necessarily built directly into the car, but that is probably the first step towards an insurance policy tailored much more around tracking what you as an individual do, rather than broader risk factors.
Longer term, we are talking about cars that will take away the most common human errors and make the road safer. Increasingly, insurance is going to be tailored around the vehicle rather than how the individual behaves. Where you are talking about younger drivers particularly, their behaviour is going to become less of a factor. So you would not necessarily be thinking about age as a relevant risk factor when you look forward into the future. For older people and people who are vulnerable and do not have access to cars at the moment, this is transformational. We probably have not done any more work than any other witnesses on the evidence of that.
Alan Brown
Q I have a couple of questions. The first one is for Ben. We have conflicting information about insurance cost. Insurance cost could be much higher because of the repair cost and the lack of people qualified to do the repairs, as well as the cost of the car itself, but there are also expectations that insurance costs will come down because there will be fewer accidents. Is it fair to say that at the moment there is just not enough information to do accurate modelling to understand what insurance figures are going to look like?
Ben Howarth: I think that some people have tried to do modelling, but there is that uncertainty between those two things. We don’t actually know what the cars are going to cost on the market, and that is obviously going to be a factor in the insurance premiums as well. That said, our members are really enthusiastic about the technology. I think they all recognise that it is the future of driving. We don’t know exactly when it is going to come to the road, but it is going to happen. I think they are going to be very keen to be involved in it from day one, and to therefore be offering competitive products that people will want. So there is a market incentive to say, “Don’t make this too expensive.”
In terms of really detailed modelling on the exact price, we do not know enough. On the technology side, a lot of that is developing now. We are going to get many more assisted cars. They might not be fully autonomous and self-driven, but that technology is the same kind of technology that will eventually lead to automated driving. We have already started work on resolving the questions around how good the repair network is going to be, so it is not just a question of waiting for automated driving and then it switching over.
Alan Brown
Q Are there any special requirements that insurance companies would need for different testing, for example showing that people are capable of using the software or, with a semi-autonomous vehicle, when the right moment is to take action? We know that some people have trouble switching from a gear stick to manual, so this is another quantum leap. Are there any special requirements that insurance companies would like to see, going forward?
Ben Howarth: I do not think we would have any, other than what interested parties in the road safety world would want. I think we want drivers to be well informed about what they have to do. They have to know how this technology that they are taking on the road works and be confident about when they can and cannot use it. That is probably going to need to be part of the driver testing regime. It is a valid question to ask whether the driving test that you take at 17, which never changes again, is fit for purpose when technology will potentially be upgraded on a regular basis. That is worth further consideration. I am not sure that is for this Bill, but it is definitely something we will need to think about before the cars are commercially available.
Alan Brown
Q I just wonder what input your organisations have in the testing trials that are ongoing. I know that there have been four trials in different parts of England, but I am thinking of the bigger issues. If we look at it from a Scottish perspective, we have rural roads, single-track roads and different weather conditions. There are connectivity issues, which my colleague touched on earlier. What plans are there to review the tests that are ongoing? How much more robust do the tests need to be and how is that going to be rolled out across the rest of the UK?
Iain Forbes: My team actually oversees the research programme that is paying for the tests you mention, the four city driverless car trials. It is really important when taking forward the competitions to have as open a process as possible. We work closely with Innovate UK, the Government’s innovation agency, to design competitions around challenges where we think it is likely that the UK is going to be able to pull through developments in the research base into products that are going to be usable and commercially viable. The initial set of tests were in London, Bristol, Milton Keynes and Coventry. We anticipate having future rounds of competitions that will be open to anyone in the UK to participate in if they want to form consortium bidding.
Mr Hayes
Q You know that the Bill attempts to strike a balance between, on the one hand, doing enough not to constrain future development—indeed, to facilitate it—and, on the other hand, trying to determine what the schedule describes as an “unknowable future”. Have we got that right, or should we have done more? I draw particular attention to the relationship between connection and automation and the issues of privacy and security of data. Should we do more now, or is it enough that we take powers to do things when we know more later?
Iain Forbes: It is a really important question. The advent of automated vehicle technology will in time require changes to different parts of our regulatory system. We have heard about some of those already today. The trick is to try to find ways of targeting the areas where we think action is necessary now in order to unblock barriers, or where we know technology is near to market. We need to make sure that we have the framework in place to enable the safe use of that technology.
To some extent it is a question that different people have different views on, but we certainly consulted last year with a range of different stakeholders on the areas where they thought action was necessary in order to ensure that the UK was doing the right things to set up a framework. The area in the Bill was the one that stakeholders highlighted as the one that was most important to act on first.
In time we will have to have further steps in the process of getting our regulatory framework ready. In doing so, I would hope to follow the same approach of identifying where the barriers are that need action now and which technologies are nearer to market. We need to make sure that we have the framework in place to enable those.
Richard Burden
Q Can I go back to the definition? At the start of the session you said that the thing you welcomed in the Bill was that it would define what an automated vehicle is by whether or not that vehicle was on the list produced by the Secretary of State. Do you think that creating a definition will be simple? Where would autonomous emergency braking come into that? A large number of vehicles might have autonomous emergency braking that one would not normally define as automated vehicles. Nevertheless, autonomous emergency braking, by its nature, will take control of the car and stop it whatever the driver is doing. So would the car fitted with autonomous emergency braking need to appear on that list, because it would
“in at least some circumstances or situations”
be capable of driving itself without having to be monitored by an individual? If it were included, are we saying that this new insurance product that the Bill brings into effect is essentially going to be the norm, not the exception, much more quickly than we thought?
Iain Forbes: Autonomous emergency braking is one of a suite of technologies sometimes referred to as advanced driver assistance systems. The Bill does not seek to set out a regime to manage those systems. It is about automated driving in vehicles where the driver can step out of the loop and does not need to be involved in monitoring the system. The difference between those systems and ADAS systems, as they are sometimes called, is that the driver always has to oversee what is going on in the vehicle. For those sorts of systems we anticipate the current regime being appropriate.
Richard Burden
Q Is the boundary between those two as exact as you say? In a sense, with autonomous emergency braking, the driver has to monitor it. Whether the driver is monitoring it or not, that technology will take control of the vehicle.
Iain Forbes: We anticipate the measures in the Bill interacting with other aspects of law, including type approval requirements for vehicles, which will be looking at how different systems should be approved for safe use on the roads in this country. There is a lot of technical work to do to understand what the particular approval regimes will be for different forms of technology, but we anticipate the higher levels of automation that we are targeting in the Bill being different and distinct in the way they are approved from the ABS system that you were talking about.
Richard Burden
Q What kind of consultation would you expect the Minister to go through before producing his or her list? At the moment, the Minister has complete discretion. There is nothing in the Bill that says he or she has to consult anywhere.
Iain Forbes: I would anticipate quite a lot of work at international level to set the regulatory framework and technical standards that will underpin the safety framework for approving these vehicles. When that happens, there will be a decision for Ministers to take about how they consult with stakeholders in the UK to make sure that people are comfortable with those definitions before they are transferred into UK law.
Tom Tugendhat (Tonbridge and Malling) (Con)
Q May I ask a couple of questions relating to the way that you have looked at the insurance? It seems to me that you are treating the concept of ownership as it is today, rather than as it is likely to become; transport is likely to become a service, rather than a commodity. Is that fair?
Iain Forbes: The policy aim of the Bill was to set up a framework that protected innocent victims of incidents relating to these vehicles in such a way that it felt similar to the current framework. We can have a framework around vehicle sale that is based on current patterns of ownership. In future that might change, as you say, in which case we would have to review the framework to make sure that we were making appropriate provision in law to allow people to operate the system safely.
Tom Tugendhat
Q It will probably become unlikely that car companies will end up selling their cars; they will lease them for shorter and shorter periods, as many car companies already do with their corporate fleets. It would seem sensible to have a look at that.
Perhaps we can go straight on to insurance. The safety systems before full autonomy—what you are calling level 4 cars—
Ben Howarth: I prefer to call them fully automated cars, but level 4 is the definition.
Tom Tugendhat
Q Various cars, while not fully automated, already warn you if you are going to cross a white line or are getting too close to the car in front. As automation levels come up, are insurance companies intending to offer better premiums?
Ben Howarth: I would say that insurers have already done that. Autonomous emergency braking was referred to. Even before we had any claims data to back this up, we set any car that had that technology a lower group rating. If you have that technology in your car as standard, you get a cheaper insurance premium. We now have evidence to back that up; we have pretty robust data that say that that technology works. That is definitely the intention, going forward.
One of the key things that we as an industry need to know is when that technology is in a car. That is a practical challenge that we have. I do not think it will be a problem in four years’ time, when the Bill comes in. We as an industry would really like to know when this technology is in cars, to make sure that we are pricing accurately. It is a data-sharing challenge, because it is often impossible to find out whether we have got it.
Tom Tugendhat
Q As the Bill comes in and starts to make greater provision for understanding who is liable, the question of ownership kicks in: is the driver responsible for upgrading the software, or does Toyota or whoever maintain ownership throughout? As semi-autonomy moves more towards full autonomy, you get an opportunity, but you also get this question: at what point do you start pricing out real drivers of real cars, if you see what I mean?
Ben Howarth: You do, potentially, but bear in mind that there will be a tipping point at which there are so many really safe cars on the road that it will have an overall impact on the number of accidents. The number of accidents will go down across the board. Also, the whole fleet will get safer; there will be a decreasing number of people in cars with no automated function at all, and even they will get the benefits of generally safer roads.
Tom Tugendhat
Q Of course, as the number of incidents goes down, premiums will presumably fall for everybody. Given that car insurance is the most lucrative area of the insurance market, have you done any work on what this will mean for house insurance and various other forms of insurance, on the grounds that it seems unlikely that your members will voluntarily lay profit aside?
Ben Howarth: I am not sure whether it is true that it is the most lucrative part of the insurance market, but we have not looked at the wider impact on the industry.
Tom Tugendhat
It makes up about 50% of insurance profits in the UK.
Ben Howarth: I am sure that individual insurers will look at the potential impact on other parts of the market, but we have not.
Andy McDonald
Q Returning to the issue of software, clause 4 devotes a lot of attention to when insurers will not be picking up the can—something that we are familiar with. Can you say a little bit about how you are expecting software to be updated? What is the process for doing that? We all update our phones; we plug them in and press “install”, and the phone tells us when it is done. What is the current state of knowledge? Where are we, scientifically, on achieving that?
Linked to that, what responsibilities should there be on manufacturers to provide updates and tell the owners or users of vehicles that those updates have to be made? As I read it, there is nothing in the Bill that places any obligations on manufacturers to do that. A lot of time is devoted to when the software has not been updated, but where is the principal obligation for the manufacturer to do it? There are a lot of questions, but I am wondering whether that loops back to the definition and whether that needs attention to ensure that we have addressed the obligation. So how is it done and what are the obligations on the manufacturer?
Iain Forbes: Those are good questions. To answer the second one first, what is important about this Bill is that it is looking just at the insurance regime for these vehicles. It will have to work in concert with other parts of the law, including the system by which vehicles are approved for sale. You might imagine that if vehicles that operated automated systems were to be approved for sale there would be a close look at what would be necessary to ensure that the systems were updated where necessary to take account of any changes that were important to ensure safety.
Andy McDonald
Q Have we got this the wrong way around, then? Surely you have to establish how something happens before you start dealing with its insurance consequences. This is putting the cart before the horse, isn’t it?
Iain Forbes: We are focusing on this now because this is an area where in consultation people told us that it was important to set out a framework now to allow insurers and manufacturers to have those discussions about what might be necessary to inform the products that come to market when these vehicles do in four or five years’ time. In the meantime, we need to be working very hard to ensure that the appropriate approval regime for these vehicles is also in place. The vehicles will not come to market without that, so this will have to work in concert with another part of the law, which will say how these vehicles will be approved for sale.
Ben Howarth: If I can add one other thing, I think that the Bill is intended to do a new thing by protecting someone who is in the driving seat as, because they are not in control of the vehicle at the time of the incident, they are being treated as a victim. If they have done something to the car that means that they are responsible for the accident—perhaps they have not maintained it properly—it is reasonable to put it into their insurance policy that that is not something that they could claim for, as they would not be a victim. That is what these policies are broadly intended to do. I take your point that we absolutely need to define what updates need to be made and who is responsible for them, but if you turn it the other way by insuring the person in the driving seat and ensuring that they can claim if they are injured, the situation changes if they caused their own injuries.
Andy McDonald
Q If we are getting into a discussion on clause 4 about failures to update software, where is your starting point? You are basically telling me, “Ah, we’ll do that somewhere else separately. We will have to get those regulations on board.” All that I am suggesting is that that is out of sync and we should be looking at the processes first, at least for what we are expecting, before we start dealing with the insurance consequences.
Iain Forbes: To answer the first part of your question about how this is done, that is likely to develop over time as new systems come to market. It is already the case that some manufacturers upgrade software systems by asking customers to take their vehicles to a dealer and some do it over the air, in a similar way to how a phone is updated, for example. That is an area that is currently the subject of international discussions, and indeed the UK is co-chairing the international regulatory group that is having a look at how over-the-air updates will function in future.
Andy McDonald
Q Really, what the manufacturer would say is that if a vehicle has not been updated for one reason or another, or if they discover some other technical reason to shut it down, they will make sure that vehicle does not shift. Is it within the contemplation of the industry to take it that far?
Iain Forbes: What we need is systems that are transparent to people who are using them and that provide appropriate protections so that they feel confident using them. That is part of the discussion that we are having internationally at the moment.
Kit Malthouse
Q I have a couple of questions. We have a problem in this country with uninsured cars. Given that these cars are likely to be connected to the matrix in some way, do you think that it would be sensible for the Government to take a power to require that the car has to check whether it is insured before it moves? When I go and buy my tax disc, the system checks that the car is insured before it allows me to do so. Should these cars be required to do the same?
Iain Forbes: We are at too early a stage in the development of the technology to be able to consider that, but it is certainly something we could look at.
Kit Malthouse
Q Why?
Iain Forbes: It is not clear exactly how those systems will interact with a wider data network to enable the system to work.
Kit Malthouse
Q It is technically possible, right?
Iain Forbes: Many things are technically possible, but we do not know exactly how it will come to market and how the systems will operate.
Kit Malthouse
Q You seem to imply, Mr Howarth, that the insurance industry would be indifferent to the characteristics of the passenger, who need not be the driver of a level 5 car.
Ben Howarth: That seems reasonable to assume. As I understand it, a level 5 car will not even have a steering wheel so the driver will have a pretty minimal role in how the car performs.
Kit Malthouse
Q Would it be fair to say that level 5 cars might be the saviour of the rural pub? Can I drink and drive a level 5 car?
Ben Howarth: I am a big fan of the rural pub, but I do not know the answer for certain. That is probably also an infrastructure question: I can see the cars working in certain inner-city areas, but personally, I am not 100% sure whether level 5 is ready for some rural roads yet. I think evangelists for level 5 technology will say that it is.
Rob Marris
Q One for Mr Howarth. What will the industry do about Northern Ireland and automated vehicles? That is not covered in the Bill.
Ben Howarth: Is there any particular aspect of Northern Ireland that you think is not working?
Rob Marris
I do not know. I wondered whether you guys discussed it because the automated vehicle elements of the Bill do not apply to Northern Ireland, yet one would expect people in Northern Ireland, as elsewhere in the United Kingdom, to wish to have automated vehicles available to use.
Ben Howarth: I am not aware of any problem with Northern Ireland.
Rob Marris
From an insurance point of view?
Ben Howarth: I am not aware that we have any particular concerns about Northern Ireland, but I am not sure why it is not in the Bill.
Rob Marris
Okay, but from an insurance point of view, you have no concerns about Northern Ireland?
Ben Howarth: Not that I am aware of.
Tom Tugendhat
Q I assume that you looked at other countries as you prepared for the Bill. Will you say a little bit about how other countries are addressing the insurance and regulatory challenges?
Iain Forbes: The legal frameworks in different countries are often specific to those countries, so it is not possible to do an exact read-across, but we are looking at what people are doing to see whether there are broad lessons that we can learn. For example, in California, if you want to test automated vehicles, you have to put up a surety bond to ensure that there is a provision to cope with any accidents. Looking at that and other systems, we felt that the system in the Bill was appropriate for the UK and how our insurance system operates. It builds on a system that people would recognise, so it would look similar to what people do now, and it targets an important policy, which is to ensure that innocent victims caught up in an incident involving a vehicle in automated mode can get quick access to claims.
Tom Tugendhat
Q What about our European partners?
Ben Howarth: I was going to mention European partners, but from an insurance industry perspective, I think that we are ahead of everyone else in having clarity about how the legislation will work. Obviously there are still things that need to be done before the technology goes to market, but I get the sense that other people are debating the issues, but not with a formal proposal on the table. I genuinely think that we are a step ahead of everybody else.
Tom Tugendhat
Q The reason this matters is that a lot of people will now be thinking about booking their ferry and Eurotunnel tickets. Will we be able to take those cars abroad?
Iain Forbes: Interoperability is important, as you mentioned, and it is frequently discussed.
Tom Tugendhat
Q It does not matter which hand drive a car is, does it?
Iain Forbes: Which is part of the reason why it is important for some of the discussions about the regulatory framework to take place at international level, under the United Nations Economic Commission for Europe or other bodies that regulate how vehicles operate to ensure that, where possible, we have interoperable systems.
Ben Howarth: If you are thinking about cross-border insurance, as long as the broad principles are united—there are already big differences between the UK and other parts of Europe and how they insure vehicles; we have a driver-centric version whereas a lot of other European countries have a vehicle-centric system and a form of strict liability with various definitions—one would hope that we could evolve a system that gives at least minimum cover on a unified basis. We should not therefore have too much of a problem.
Rob Marris
Q Mr Tugendhat made an interesting point. It had not occurred to me, but if I am in my automated vehicle, which I have taken through Eurotunnel, and I am driving down a road in France and a non-automated vehicle is coming at me in the middle of the road, I do not want my British automated vehicle diving off to the left—which is what you would do to take evasive action in this country—
Rob Marris
This is a serious point in the context of Mr Forbes’s discussing interoperability. I presume there has been a discussion about the coding—I would like reassurance about this—so that the evasive action that automated vehicles might take when faced by unsafe manoeuvres by non-automated vehicles is appropriate to the side of the road on which one drives. Otherwise, we will have a big problem, as Mr Baker will know, with software coding and so on.
Iain Forbes: These are the sorts of challenges that you have to work through when you sit down to think about how the system will operate in practice. We are still at the stage of the technology where the developers are making sure that they can get their systems to work in particular locations—particular cities or areas. If the developers want to sell products and services that can be used in more than one country, that is something we will have to bear in mind when taking forward our development programmes. Indeed, if they are going to operate in accordance with the right regulatory framework, they will have to have discussions with regulators about how that will operate in practice.
Rob Marris
Q Do we need legislation now, in the United Kingdom, to assist that process?
Iain Forbes: From my perspective, it feels a bit early to take forward regulation in that space, but we should definitely be involved in the discussions at international level and with developers, to make sure that those issues are dealt with in due course.
The Chair
If there are no further questions, may I thank the witnesses for their evidence, time and co-operation? We will move on to our next panel.
Examination of Witnesses
Richard Moriarty and John de Vial gave evidence.
The Chair
Q We will now hear oral evidence from the Civil Aviation Authority and the Association of British Travel Agents. Welcome. Would the witnesses introduce themselves for the record? Shall we start with Mr Moriarty?
Richard Moriarty: I am Richard Moriarty and I am the group director of consumers and markets at the Civil Aviation Authority.
John de Vial: I am John de Vial and I am director of financial protection at ABTA.
Richard Burden
Q May I begin by exploring some of the Bill provisions relating to the relationship between the CAA and National Air Traffic Services? Perhaps we can come on to the issues relating to the air travel organisers’ licence after that. I understand that the proposed changes have been broadly welcomed by stakeholders. I am struggling to understand how significant they are. They change the procedure through which the CAA can modify regulations under which NATS operates. Do we have any sense of how many of them are likely to happen and how often? The impact assessment says that the scale of the issue with which we are dealing is highly uncertain. Can you give us any guidance on the scale of the changes?
Richard Moriarty: The changes are all aimed at modernising our regime. We change the licence periodically: perhaps once or twice every three or four years we introduce a raft of changes, which are mainly to do with the charges that NATS can pass on to airlines and the service standards that it needs to meet. Of course, all of that needs to be balanced, because we need to ensure that it can finance its businesses.
I think it is worth saying, in order to give you comfort, that these measures are almost precisely similar to measures that were passed in the Civil Aviation Act 2012 in relation to our regulation of airports such as Heathrow and Gatwick. My answer to your question is that they are very helpful and to be welcomed. They modernise what is now quite an outdated regime for NATS, and they put NATS on a very similar footing to other regulated entities.
In terms of NATS’s protection, it is important to say that nothing in these changes takes away our primary duty towards the safe system—safety. We also have a secondary duty to make sure that NATS cannot find it unduly difficult to finance its licence for activities. For those reasons, I strongly welcome these measures.
Richard Burden
Q Looking ahead to the next few years, for the moment we will be part of the single European sky framework. That, presumably, could bring a number of initiatives under it that would be relevant to the provisions in this Bill. Am I right about that? What could the impact of Brexit be on this area of the Bill?
Richard Moriarty: I fear I would be misleading you to be too precise about what some of those impacts would be, but one thing we have made clear in conversation with departmental colleagues is that we can regulate NATS successfully using our domestic legislation under the Transport Act 2000. This is one of the reasons why we are keen to modernise it in this way.
Richard Burden
Q So there should not be any impact at all?
Richard Moriarty: It is too early for me to say whether there would be an impact one way or the other. On the things we most care about—safety—NATS has been able to charge good prices to airlines and provide a good level of service. I am quite comfortable that the regime we would have in the UK based on the Transport Act 2000 would give us sufficient levers, particularly with these modernisation changes.
Richard Burden
Q The impact assessment, again, talks about the likelihood of there being what it describes as a “light-touch” review of these new arrangements after five years and “a full review” after 10. I must confess that I could not see reference to either of those in the Bill. What was your understanding of the review arrangements around these changes?
Richard Moriarty: I cannot speak to that specific review, but I think it makes sense to review the powers that have been introduced after the event. We have done that in other arenas, so it is something we would welcome. We can work with the Department on the timing of that.
Richard Burden
Q But the principle of a review after a period of time would be something—
Richard Moriarty: I do not have a problem with that.
Richard Burden
Q Can we move on to the ATOL questions within the Bill? Can you describe what the changes mean in practice for consumers and holidaymakers?
Richard Moriarty: First, it is worth saying that the changes in the Bill at the moment are enabling provisions, but they are to enable us to implement the package travel directive. There are a number of important and welcome developments from that which will be good for UK consumers. First, the directive makes it much clearer what the definition of a package is. This may seem self-evident to most people but an industry of loopholes has developed over the years. Having clarity on this is a good thing.
Secondly, the package travel directive puts a requirement on member states to have effective regimes in place for insolvency. This is a big step forward compared with where we are today. It is also worth saying—although John may have a better view on this—that this provides a growth opportunity for UK businesses as firms in this country will be able to sell their goods and services into Europe.
John de Vial: We certainly support that view. The provisions in this Bill are necessary and we have no concerns about them as enabling legislation. I agree with Richard’s subsequent points. UK companies can currently sell in other European markets but they are required to license separately and individually in each market to comply with its version and its implementation of the 1990 directive. If we have a regime with the directive to come, which the provisions lay the ground for, and our traders in the UK can use the ATOL system and the Department for Business, Energy and Industrial Strategy arrangements to comply across Europe, that is a clear advantage for them trading across European member states.
Richard Burden
Q Are those companies covered by that protection because they are established in the UK?
John de Vial: By virtue of being established in the UK, you would be entitled to it.
Richard Burden
Q Looking at it the other way round, if there is a company that is established in another part of the European Union but sells into the UK, I understand that the package travel directive would say that the protections that it should offer would be those that would be applicable in that member state, rather than those that would be applicable in the UK.
John de Vial: Yes.
Richard Burden
Q Is there any potential downside to that? For any packages sold into the UK by companies established outside of the UK, could the protection be less than it is now?
John de Vial: Not less than it is now—we have that problem today. The current UK ATOL regulations and package travel regulations exempt companies that are compliant elsewhere. We have seen the problem in recent history. Our view is that, to the extent that this new directive is more robust and should raise the bar of implementation and enforcement in other member states, that can only be a good thing.
Richard Burden
Q Will it raise it to the level of ATOL protection?
John de Vial: No, I don’t believe it will. I think there are a number of aspects where the ATOL position is superior. The most obvious example is repatriation. The directive requires the costs of repatriation to be protected, so all member states should be doing that. The UK is not unique, but is one of a small number of member states, where organised repatriations—where the customer is, as it were, rescued—is the norm. We do have a superior system in the UK in that sense.
Richard Burden
Q A final couple of questions from me, and it is back to Brexit again. A lot of the changes in the Bill arise out of the package travel directive. From what you have said, some of our domestic ATOL protection is superior to what is in the package travel directive anyway, but are there any implications of Brexit for what this Bill brings in?
Richard Moriarty: Regardless of Brexit, this is a set of provisions that we would be supporting. It is worth remembering that 77% of UK consumers choose their holiday in Europe. As John suggested, the position around insolvency protection may not be all the way up to ATOL gold standard, but it will be a lot better, and enhanced by this package travel directive, than it is today. The former directive we fall back on is from the early ’90s, which predates the growth of the internet and people buying their holidays online.
John de Vial: I support that. It is also part of our job, with the ATOL brand and our brand as the Department for Business, Energy and Industrial Strategy’s approved body, to promote the merits of the schemes in the UK with UK businesses, where those exceed the European base level.
Richard Burden
Q The Bill provides for an air travel trust to be set up by the Secretary of State, but also leaves open the possibility that that could be split into a number of trusts if circumstances change. Could you tell us a bit about what that is all about and the kind of circumstances?
Richard Moriarty: If I may, I will declare an interest as a trustee of the current air travel trust. The consultations and discussions that the Department has had with the industry and consumer groups have suggested that the position around how people buy holidays could change. They are very keen to have some flexibility. Rather than have one trust hardwired into legislation, they want to give themselves some more flexibility. For instance, one example that has been talked about a lot is linked travel arrangements, where it is not quite a package, but is two transactions for hotel and travel that are very closely associated. In my view, it would be prudent and sensible for Government to have the flexibility to respond to that. It is my understanding that that is why they are taking the enabling provision at the current time. In implementing that, I hope that they will follow the practice that they have followed today: consult with us, consult the industry, do the impact assessment, and so on.
Richard Burden
Q I would be grateful if I could explore one other area with you briefly. One thing that raised a number of eyebrows when this Bill was published was the fact that it did not say anything about the regulation or safety of drones. How do you see the existing regulatory framework, and if we were going to look to improve that framework, who do you think should be responsible, for example, for bringing in geo-fencing?
Richard Moriarty: Drones are something that we are spending an enormous amount of time on—getting the balance right between effective regulation to prevent aviation-related risks and allowing this new technology and market to grow. There is an existing set of regulations for both commercial and public operators, but it is worth highlighting two important initiatives that we should all take stock of.
First, the Government are consulting on the future regulation of drones at the moment; we are working with them on that. Also, at the European level, the European Aviation Safety Agency, EASA, is doing some important work, which we hope it will publish in April and which may relate to international manufacturing standards, because things like geo-fencing, which effectively prevents drones flying into controlled space, are only really effective if that can be done through international manufacturing standards. That is one of the reasons why we are keen to see that EASA publication, which is mooted for April, before we decide next steps.
Mr Hayes
Q On the issue of penalties in respect of ATOL, you will know that this Bill attempts to amend the Transport Act 2000. In respect of section 225 of the Transport Act 2000, you will also know that there is a responsibility to prepare and publish a policy statement on the use of penalties. How do you envisage these penalties taking shape, and how will you ensure that their use is proportionate?
Richard Moriarty: The first thing I would say is that our having powers to introduce financial penalties for NATS brings us into line with the powers that we have for airports. It also brings us into line with other economic regulatory regimes in energy, water and telecoms, so it brings the regulation of NATS up to the modern standards of the other sectors.
We already have a published policy on how we would go about issuing a financial penalty for the airports. My starting position would be that the policy should be similar for NATS. Financial penalties are rare events in economic regulation: they do not come around too often, and there is a good reason for that. But they are a necessary part of the armoury, if you like, to drive the right behaviours and give a deterrent effect.
We would obviously have a graduated approach to enforcement. That would start off through informal means—conversations with the company, looking to it to put the issue right. If that had failed, we would move on to a more formal footing with them. I tend to think of financial penalties as a bit of a last resort but, as I said, it is important to have them there because it incentivises the right behaviours.
Mr Hayes
Q The other question I was going to ask reflects the point made by the hon. Member for Birmingham, Northfield about the post-Brexit deal on travel. We have been a leading player—one might say a trailblazer—in terms of providing protection for holiday makers, haven’t we? Post-Brexit, it is really important that we retain consumer protection across Europe. What are your views on that?
Richard Moriarty: I completely share that objective. To go back to the point that John made, I think there is a job to be done by the CAA, ABTA and other groups on raising awareness with UK consumers about the level of protection that they get from different types of products. You can imagine a future where we are in a less binary world in package travel than whether something is ATOL-protected or not. There will be a graduation of protections that consumers can get. It is important that we work with consumer bodies to raise the level of awareness.
We start from a solid and good basis. The scores for levels of awareness of ATOL, which is often seen as the gold standard, are about 75% or 80%, so we start in a good position for that work.
Drew Hendry
Q Some UK operators have stated that they feel that passenger rights go too far. Which passenger rights do you feel are most contentious in the industry?
Richard Moriarty: A number of airlines have expressed concern not about the principle of compensating consumers for delays, but about the tariff—the amount that is charged. It is important to get the balance right. It was not so long ago that airlines did not take the issue at all seriously. We saw long delays and a lot of consumer detriment as a result. I hear from a lot of chief execs of airlines that although they would wish for a lower tariff, because it is clearly straight off their bottom line, this is not front and centre of their urgent priorities. I do not know whether John would take a different view.
John de Vial: I think that our members would agree. If you look at the package travel directive—that particular piece of work has been updated to allow for a new directive—there is broad industry support for it. I do not think there are any great concerns about it. The EU regulation 261 regime on denied boarding and flight delays is a different issue. A much smaller number of airlines have concerns about the denied boarding piece, but the concerns are principally around the delay regime whereby, through the European Court of Justice process, the same sort of tariff for delays has been adopted as existed and was intended for denied boarding. That is viewed as a rather blunt and sometimes counter-productive regime. The loudest voices are heard around that and there is considerable merit in it being revisited.
On Richard’s point, it is about the level and proportionality of the tariff, where compensation for a few hours’ delay can be a multiple of the purchase of a low-cost ticket. That is seen to be an injustice—it is not the principle of providing the protection, but the way in which it operates.
Andrew Selous
Q I would like to come to NATS, which I understand expressed concern about economic uncertainty and market volatility following the Brexit vote. It thought that air travel demand and, therefore, its revenues might suffer. Has there been any evidence of that to date?
Richard Moriarty: Not that I can tell from the financial numbers that I look at. Indeed, in terms of the assumptions that we made with it for the last regulatory settlement, traffic has been better than we predicted.
Andrew Selous
Q So that we can have a better understanding of how NATS works, let me ask about the ability to extend the length of its contracts to give them greater financial certainty. What sort of length of contracts do they typically operate with London airports at the moment? What levels of extra investment would you be looking to see NATS make with longer-term contracts, because presumably it is unable to put that in at the moment?
Richard Moriarty: The position is different at different airports and in different regulatory regimes. The issue is the minimum notice period that is required before the Government can terminate the franchise, if you like—for want of a better expression. That minimum notice period counted down. NATS quite rightly, in our view, said, “We need to make long-term investments, and we need to raise debt on the open and private markets.” People looking at a shorter, shorter franchise find it quite difficult.
We did quite a bit of work to look at this. We spoke to financial advisers and looked at other regulatory regimes. Our advice, after looking at the asset price of the business and other regulatory regimes, was that 15 years feels like the right number for NATS. NATS is a slightly different business from some of the asset-intensive industries. It is operational based, rather than capital intensive. Having done the analysis, we very much support the Government provision to move this out from 10 to 15 years.
Andrew Selous
Q To clarify our understanding, can you elaborate a little on how the CAA will take action swiftly to protect passenger and staff safety when there is a serious system failure or when some aspect of NATS’s performance is worrying to you?
Richard Moriarty: One of the most important and significant aspects of the Bill is the provision enabling us to take action on past licence breaches. One feature of NATS is that if the systems have an outage, as they did in December 2013, you do not need a lot of time to create a lot of disruption to passengers. For instance, a 24-hour outage led to disruption for nearly 250,000 passengers, and there were 300 cancelled flights. Of course, you can put the system back very quickly—it is a 24-hour event—but if we do not have the power to look at past breaches, there is a risk, on behalf of consumers, that we are going to look toothless. That is one reason why I support the provisions that the Government are putting forward in this regard. I think that is one of the most important aspects of the package.
Richard Burden
Q Can I ask about rights in the Bill? The big change is that you make the modification and NATS has the right to appeal, as opposed to the co-determination model that we have at the moment. There is also a provision for other parties to appeal, including the owners or operators of aircraft that you consider appropriate and the owners or managers of prescribed aerodromes that you consider appropriate. I am struggling to work out who has got the right to appeal the modifications you make to NATS’s licence. What does prescribed aerodromes mean?
Richard Moriarty: The appeal mechanisms that are being introduced for NATS effectively replicate the same appeal mechanisms that we have for the regulated airports. For instance, an airline can appeal a determination that we make for Heathrow or Gatwick airport. There is an element of consistency across aviation in these provisions. Because NATS provides the London terminal airspace service, it also touches directly on some of the London airports—principally the large ones, but there may be some small London airports in it as well. It is right that the Government has a provision to name those airports, because they will be materially affected by certain decisions that we will take over the settlement that we reach with NATS.
The Chair
If there are no further questions from members of the Committee, I thank our witnesses for their evidence, and for their time and co-operation. It has been most helpful. Thank you very much. We are running a little ahead of schedule, so I propose to suspend the Committee until 4.10 pm, as the witnesses for the next panel have not yet arrived.
The Chair
Q We will now hear oral evidence from the British Airline Pilots Association, the Metropolitan police, the National Police Air Service and the UK Flight Safety Committee.
I welcome our witnesses; thank you for joining us. Could the witnesses please introduce themselves for the record? Shall we start with Mr Moriarty, who has already given evidence to us this afternoon?
Richard Moriarty: I am Richard Moriarty, director of consumers and markets at the Civil Aviation Authority.
Paul Watts: I am Paul Watts, chief pilot of the National Police Air Service.
Richard Goodwin: I am Chief Inspector Richard Goodwin, airport commander at London City airport.
Simon Bray: I am Simon Bray, commander of security at the Met, but I am also the National Police Chiefs Council lead for airport policing.
Steve Landells: I am Steve Landells. I am a flight safety specialist at the British Airline Pilots Association.
Martin Drake: I am Captain Martin Drake. I am a current 747 captain and I am also chairman of the security committee at the British Airline Pilots Association.
Andy McDonald
Q Good afternoon, gentlemen. Could you help me with the issue of shining or directing a laser at a vehicle? The Bill as drafted states that it will be an offence to direct
“a laser beam at a vehicle which is in the course of a journey, and…the laser beam dazzles or distracts a person with control of the vehicle.”
I am concerned about that, because I have never flown a plane and I have never, to my knowledge, had a laser shined at me. I am just thinking the matter through. Is that the totality of the thing that concerns you all, or are there other instances short of being dazzled or distracted that would cause you concern and cause you to think that something ought to be an offence? Also, although such an activity may have taken place, the driver or person in control of the vehicle might have no knowledge whatsoever of it having happened. I do not understand the experience. Does someone who is in control of a vehicle experience it only when their eyes are actually dazzled, or is there another perception of the event having taken place?
Steve Landells: From a British airline pilots’ point of view, our main concern is the distraction as well as the dazzle. As it stands, the dazzle has to be part of the offence. Our view is that it would be better to have the offence being just the pointing of a laser at a vehicle, because from an aviation point of view, if you cannot prove the dazzle and distraction—if it is not reported or the police do not know where the aircraft is going—you may not end up with the second part of that offence.
Andy McDonald
Q Would you even have to know that it has happened for an offence to have taken place?
Steve Landells: From our point of view in BALPA, no. It is about the act of shining a laser at the aircraft. If we see it, it will be reported, but if we do not see it, we would still like to see an offence there. The problem is that as the power of lasers gets greater and greater, there is a higher chance of injury occurring.
Andy McDonald
Q Thank you for that. Does anybody else want to comment on that aspect of this offence?
Paul Watts: From a helicopter perspective, again the dazzle and the distraction are the main concern, especially as helicopters operate in a much lower-level environment than airliners, and we rely on flying visually and visually avoiding other aircraft, buildings and obstructions. We also share the concern about the power of lasers and the frequency range—the fact that it may be possible in the future to have lasers that are not even visible. Again, we would like to see it being about somebody attempting to shine a laser at an aircraft, rather than having to show that it dazzled and distracted the pilot.
Martin Drake: It is possible to sustain an injury from a highly collimated laser—one where the beam is very narrow. It is possible to sustain an injury from that laser without having the dazzle and distract element. If it comes through your aircraft windscreen at a 90° angle, the dazzle and distract can be reduced, but if the pilot were to have that go into his eye, he could get retinal damage without getting the dazzle and distract element. I would say that that was fairly rare at the moment, but as the power of the lasers goes up and the frequency of the lasers changes, that is a concern that we have.
Simon Bray: Obviously the dazzling and distracting is the effect on the driver, pilot or whoever is in the cab. That is where the harm and the potential danger are. As well as having a victim, the legislation enables us to investigate more readily to prove an offence. If it were merely in the general direction of a vehicle, that would be more tricky to prove unless we were at the other end of that particular laser and had an opportunity to get into more of an investigation at that end of it.
Andy McDonald
Q Although we are not specifically restricting this discussion to aviation, because it could be another vessel, I think BALPA has suggested in evidence to the Committee that it is equally important and significant when lasers are shone at air traffic control towers. Have we got a history of that happening? Is it a significant risk? Would you prefer to see the legislation embrace air traffic control towers, rather than just vehicles, as currently described?
Martin Drake: There certainly is history of it in the USA, and I can think of a couple of times in the UK where a laser has been shone at the air traffic control tower. For an air traffic controller working the tower—that is the control bit that does the final approach and the controlling of the aircraft as they depart, so it is within close proximity of the airport—most of that is done visually. If his or her eyes were to be affected, it could reduce their capability of seeing aircraft close to the airport. They would then have to come off duty and be replaced fairly rapidly. It is not as common as shining at aircraft, but it does happen.
Steve Landells: Can I expand on that slightly? It depends on the airport’s procedures, but I know of one airport where, if a laser is shone at the visual control tower, they take the visual controllers out of that tower. You effectively shut down the airfield.
Tom Tugendhat
I am sorry; what did you say?
Steve Landells: They take the visual controllers out of the tower to protect them, and if that happens, the airport is effectively shut down.
Andy McDonald
Q What do you think should be happening to better control the availability of the devices themselves? What restrictions would you prefer to see in place to stop the devices being acquired?
Simon Bray: There have been discussions about whether to deal with some of these items as offensive weapons. Clearly, if there is an intent to shine and to harm someone’s eyesight with one of these devices, you can deal with them in that way, provided you get the evidence behind it that demonstrates possession of an offensive weapon with intent to cause harm; likewise if you assault someone with a laser. The difficulty is investigating and proving those instances.
What the Bill does do is provide blanket legislation that is suitably serious—more so than the different sorts of legislation that we are having to use at the moment. It is an advance on what we have currently got. I definitely take the point that were we to have additional powers restricting sale and possession, it would be easier for us to deal with things before they take place.
Richard Goodwin: Colleagues I have been working with in the Department for Transport are working with colleagues in the Department responsible for business employment, looking at potential import restrictions and some of the issues around how we control the sale of some of these lasers. That work has been going on for seven or eight years, and during that time the availability and power of lasers has increased and the cost has come down. There is a Department looking at that control now, and clearly we support that.
Andy McDonald
Q Finally, changing tack totally, can the police officers help me with an unrelated matter in the Bill about diversionary courses for road traffic offenders? Have you come prepared to speak about that at all? Could you give some indication of your experience of those courses, how effective they are and, just as importantly, the evidence base that you may or may not have on whether they are effective and reduce repeat offending? Are you able to comment on that?
Simon Bray: It is not my area of expertise and I have never had to undergo one of those courses myself. There is a good look at diversionary methods at the moment. There are certainly plans to streamline the various diversionary methods and out-of-court disposals around the country. Clearly, that would fit in that overall picture, but it is not specifically traffic.
Mr Hayes
Q As you know, gentlemen, the CAA says that many of the incidents involving lasers are unreported and it is probable that there are many more than those of which we currently know. Is it your view that it is a growing problem? How do you think the proposed legislation will help with reporting? If you think it does not do enough, what more could it do?
Paul Watts: I am from the National Police Air Service and we saw it as a growing problem, probably about three or four years ago. Over the last three years, we have averaged out at about 100 incidents a year, so it seems to have plateaued somewhat, but it has gone from a low level to a very high level. We would welcome any legislation that makes it easier to catch an offender, but we would also still like to see a reduction in the availability.
We did see a tailing off of offences after the first few prosecutions for endangering an aircraft came into play. Over London, there was a reduction in the number of times a laser was used and less of the casual targeting of an aircraft. That seems to have tailed off and we seem to be back to a level of use that seems fairly stable and fairly high. On average, about 100 offences a year are reported through our safety system.
Simon Bray: I do not know whether Richard wishes to comment on the Met figures.
Richard Goodwin: We took a view that this matter was so serious that, despite the fact that it is not currently a reportable and recordable offence under Home Office counting rules—the legislation will change that—on 1 April last year we started reporting all lasers reported to us as crimes in London. I know that colleagues in Scotland have done the same thing. Across the year, we are averaging around 100 to 120 incidents within London being reported to us. The CAA figures are slightly higher.
Colleagues from BALPA did a survey of their members, which indicates that the figures are drastically underreported. We can get into the reasons for that, but some of it could be the perception that as pilots they were not being treated as victims and the matter was not being taken seriously. The legislation will give the degree of gravity that we think the offence deserves and it will have an impact on the aviation community, pilots and captains. It will show them that we as the police will take it seriously, because we will have a consistent recording of all offences, particularly across aviation.
Richard Moriarty: We at the Civil Aviation Authority would strongly support the measures. Our figures show that laser incidents are at about 1,500 a year. That is probably an underestimate, for reasons that have been suggested by other panel members. To put that in perspective, that is three or four incidents a day in and around UK airports. We have talked before about injury to pilots and often these attacks are during their peak workload—either landing or take off, in and around airports—so there is a real aviation and public safety aspect, which it is very important to get right. We would strongly support it for those reasons.
Beyond the Bill, we are interested in continuing to work with other authorities and Departments on other measures to complement this, whether through import controls or working with the police on offensive weapons. The good news is that the provisions in the Bill will send a very strong signal that we all take this risk very seriously.
Mr Hayes
Q Clearly, the use of these devices in the way you have described is malevolent, but have you made any assessment of how much of this is what might be described as irresponsible, thuggish behaviour, and how much is more serious than that? Potentially, we could be talking about devices that were used by some very serious criminals indeed. What is your assessment of that? How much is this people grabbing hold of these things and causing trouble, and how much of it is planned, plotted and serious?
Simon Bray: The difficulty is that our detection rate of these offences so far has been pretty low. That is partly because of the legislation available to us. There is a range of it for the different areas of transport: the Offences Against the Person Act 1861 goes back many years on the railways, and air navigation orders are used in the policing environment for airports. In truth, the successes that we have had in prosecution have been where the National Police Air Service has been involved—we have our own helicopters, linking with our officers on the ground and so on.
One of the issues with the legislation that we have been able to use around distract and dazzle is that the offence under the air navigation orders has been not only not recordable, but not indictable. We have therefore not been able to use the full range of powers—entering premises in order to arrest someone or, once we have arrested them, going into premises to get evidence—and the proposed new offences will allow us the use of those powers. That is a real advance, which we welcome. We think that we will benefit from a defined power of stop and search around that. I have written to the Minister and had a response, but once the consultation goes live on that aspect we will certainly contribute to that debate, too.
Mr Hayes
Q Okay. But of course you would be able to search on suspicion following arrest.
Simon Bray: Yes, indeed. That would be the case. As regards the type of people involved, we have not got the full range of knowledge because there have been so many offences that we have not been able to get to the bottom of and we have not been able to make those arrests and prosecutions. In some cases it will be malicious; in some cases it will be because people do not understand that it is a big problem. Again, one of the benefits of the legislation will be the opportunity to educate the public and law enforcement officers at the same time.
Drew Hendry
Q I am interested in how we take further action to tackle reckless behaviour. You have said that, because of the previous legislation, it has been very difficult to get the numbers of offences that are actually being committed, but I imagine that, even if anecdotally, there is some evidence of serial offending in these cases of shining lasers at vehicles. Given that is the case, do you feel that there should be consideration within the work we are doing here on the Bill of future repeat offending to have further punishment?
Simon Bray: This legislation will allow the courts to do that in any event. It is an offence triable either way, which can be dealt with with summary powers and at a higher level, potentially, with short terms of imprisonment and so on. The fact that it will be a recordable offence means that we will be able, or required, to record all instances of it, which will give us a greater level of data about patterns and intelligence on where these happenings are taking place.
Martin Drake: The magistrates or judges can be informed by the Ministry of Justice and by the Crown Prosecution Service, which brings these prosecutions, of whether the offender has been prosecuted successfully before and, if they have, whether the case can be heard in the magistrates court or whether it is so serious that it needs to be pushed up to the Crown court. That can be done, given the span of punishments for somebody found guilty of that offence. Of course, there is also the question of the circumstances in which it occurred. If someone was using a laser slightly mischievously, that might be considered a lower offence, whereas if someone was doing that absolutely maliciously, it might be seen as a higher-level offence. The venue for the trial can be decided at the pre-trial hearing.
Drew Hendry
I should say that justice is devolved to Scotland, but I was curious about your views. Thank you.
Mr Baker
Q I want to pick up remarks that I made on Second Reading about the seriousness of the offence. As the Bill is framed, it is an offence only if the person shines or directs a laser beam at a vehicle that is in the course of a journey. As police officers, do you have adequate powers if a person is assaulted with a laser when not in a vehicle? You are nodding.
Richard Goodwin: If we are talking about retinal damage, we are talking about grievous bodily harm.
Mr Baker
Q Could you be clear on why those powers would not be adequate in the case of an aircraft in flight?
Richard Goodwin: It is difficult to prove, over that distance, the person’s intent. They are arguably shining the laser at an object. It is very difficult to be accurate at that point. It may be a reckless consequence, so there is potential for that, but there are various scientific opinions on what damage can be done at certain distances and angles, and depending on the strength of the laser—bits and pieces like that. Having said that, if somebody shines a laser and a plane crashes, there is a lot of injury to a lot of people; the consequences at that end are obviously catastrophic.
Mr Baker
Q You have pre-empted what I was going to ask. Can I ask BALPA whether it is possible that an attack with a laser could cause the loss of an aeroplane?
Martin Drake: Oh yes, absolutely. Most laser strikes happen within 3 miles of the threshold of the runway, when most aircraft are busy completing the due diligence checks that we do: “Are the wheels down? Are the flaps in the right place? Am I lined up with the runway?”—the things that pilots do all the time subconsciously. You approach at about 150 knots at that stage, so you are doing 2.5 miles a minute and are somewhere around the 1,000-foot mark. You are using all the visual cues that you get from the runway. The vast majority of these strikes happen at night, and you are using all lights. Your instruments are lit up. We have mostly cathode ray tube or LED instrumentation on the flight deck; there are very few aircraft still flying around with the old-fashioned dial-type instruments. The potential for a pilot to confuse whether he is looking at the centre line or a side set of lights—particularly in a crosswind, when you are canted over to deal with that—is huge. It is quite conceivable that if both pilots were affected by the dazzle effect at a critical stage of flight, they could attempt to land down the side of the runway, rather than down the centre of it.
Mr Baker
Q With that factor in mind, I have tabled an amendment to probe the Government’s position. It would double the term of imprisonment. The Bill sets out a term not exceeding five years; my amendment would take that to 10 years, because I had this point in mind. I should say that it is a probing amendment to provoke this conversation. What do you think the appropriate term of imprisonment should be for a deliberate attempt to dazzle at that point in the flight?
Martin Drake: You are very much into a catastrophic eventuality. Might I draw your attention to the aircraft that crashed on the threshold of Heathrow during the hours of daylight—the 777 that had the fuel issue? Had that occurred at night, the pilots would have really struggled to make the decisions that they made, and to get the aeroplane where they did. Had the pilots been dazzled or distracted by a laser, I very much doubt that that would have been successful as it was.
Mr Baker
Q In the circumstances—I ask this to the police officers—what is the appropriate maximum punishment?
Simon Bray: I would be reluctant to comment on what an appropriate sentence would be. We would recognise that it is being treated seriously and it is obviously a matter for the courts to determine how sentences given by Parliament should be dealt with on a case-by-case basis. We would not want to put a figure on it, to be honest—[Interruption.] My colleague mentioned that you are potentially talking about something in the region of manslaughter for that type of offence.
Richard Burden
Q Commander Bray, you mentioned that you have written looking for a defined power for stop and search relating to lasers.
Simon Bray: Yes.
Richard Burden
Q For that to work, would it need to be predicated on a redefinition of lasers in some way as an offensive weapon?
Simon Bray: Not necessarily, no, in support of this Act, if we had a power—it would be sparingly used—to search individuals for lasers that had been used for the purposes of the offence under clause 22.
Richard Burden
Q If lasers were going to be defined in some way as offensive weapons, would the kind of laser need to be defined more closely?
Simon Bray: If some of these lasers were to be classified as an offensive weapon as a matter of course, we could use existing legislation to stop and search for them in any event.
Richard Burden
Q But if there were to be a reclassification to make them offensive weapons, would that reclassification somehow need to define the strength of laser involved?
Simon Bray: Yes.
Richard Burden
Q At the moment, there is no need to do that because the action of pointing a laser, however strong it is, at a vehicle is the offence. Presumably, without reclassifying them as offensive weapons, if you got your power of stop and search, that would be because of suspicion that the laser would be used for—or had been used for—that purpose. But if you were simply going to say that the possession of a laser could be the possession of an offensive weapon, would that need to define the strength of the laser?
Simon Bray: You would have to have the definition of what is an offensive weapon clearly in the process of stopping and searching or when trying to work out whether it is of that type. You would not know unless you had the laser tested afterwards to see whether it met the criteria.
Richard Goodwin: I am trying to rack my brains about reasonable excuse and lawful excuse, which is in the current offensive weapons legislation—why someone in a park at 10 o’clock at night has a laser in their pocket. I am slightly reluctant to go down the route of power because that is difficult for an operational officer at the time to understand and define. Some lasers come in as one thing and then turn out, when they are tested, to be something completely different. For me it is more about what that person intends to do with any laser, rather than about some of the more high-powered ones.
Paul Watts: It is not necessarily the power that is causing the threat, but the dazzle and the distraction that we spoke about. That effect would come from a very large power range of lasers.
Tom Tugendhat
Q Given your point that the power is not entirely relevant because the dazzle is so important, can you talk about the other equipment that exists with lasers today? Surveyors use lasers, and presumably there is a risk, so they must be cautious about how they use them. Driverless vehicles are likely to use lasers in different ways and various autonomous measuring equipment is likely to use lasers. Can you talk about the dangers that they pose and how they might be mitigated?
Steve Landells: Public Health England says that lasers under about 20 milliwatts will not cause any eye damage—so, provided that they are not pointing up in the air, they are not going to dazzle and distract, and they will not cause eye damage if they happen to strike your eye. A normal blinking reaction will take into account a 20-milliwatt laser, but the problem is that the ones we are seeing now are 2,500 milliwatts or 4,000 milliwatts. They are the problem. Depending on the uses that they are put to—astronomers use them as well—and providing that they are at the lower end of the power range, if they are not being pointed in the air with driverless cars and things like that, maybe that is not an issue.
Tom Tugendhat
Q Does the Bill affect people such as astronomers using them as you suggest?
Martin Drake: We do not think so. We have done quite a bit of research on the legitimate use of laser technology, and boy, is it useful. Eye surgery uses lasers; you said surveying. There is a whole list of them. The equipment that uses those sorts of laser is designed to use the laser in that way, and it tends to have safety functions, so that if the laser strays, it shuts down, and of course it is used by trained people. The people who have those lasers fully understand their dangers and how to use them, and the Bill does talk about legitimate use. We are not in any way, shape or form saying that there are not really good reasons for using a laser. However, when they are used irresponsibly at the powers of laser that we are seeing, that gives us cause for concern. Most legitimate lasers do not have the powers that we are seeing. I say “most” because some do, but most of them do not have the powers that we are seeing, which people can quite happily buy over the internet and have delivered to their home.
Simon Bray: There is a clear defence within the Bill, and that is something that we have been paying close attention to in terms of our investigations.
Alan Brown
Q We have heard that lasers are becoming more common, and you obviously support the proposed legislation. It is similar with drones, which are becoming more accessible and more common. Would you like to see proposals to ensure better regulation and safety with regard to the use of drones?
Steve Landells: From BALPA’s point of view, we would certainly like to see more regulations and toughening up around drones. We understand that a lot of work is going on at the moment and there is a DFT consultation, but yes, it would be good to see drones in there.
Simon Bray: Likewise, whatever regulation comes out and whatever changes there might be to navigation orders and so on, we would like a simple set of regulations for the police to get involved with enforcing.
Andrew Selous
Q Chief Inspector Goodwin, I think you were expressing some concern about the increase in sales of lasers recently, and the possible need to regulate their sale. Do we have any figures on recent sales of lasers? Has there been a significant increase recently, and do we have any sense of the split in sales between legitimate use—such as for eye surgery, which we just heard about—and illegitimate use?
Richard Goodwin: I think what we are talking about is laser pens in particular. I suspect my colleagues from BALPA are probably better placed to go into the detail, because they have done some of their own market testing.
Martin Drake: Yes, indeed. When we realised that lasers were becoming an issue, we decided to spend some time looking at what was available. In some parts of the world—in fact, just down the road here—you can go into the local market and buy a laser that purports to be 500 milliwatts. We bought three of those and had them tested, and they varied between 280 and 650 milliwatts. They are about $20, give or take, and they are readily available.
At the higher end—you tend not to be able to buy those on the street; you have to go to the internet—a quick search will show you that they are available. The price has fallen considerably. When we started 10 years ago, £700 would be what you would pay for the most powerful laser. You can buy a 5-watt laser today off the internet for around $269. I do not think anyone has done the numbers, but experience tells me they are probably out there and being used.
There are certain countries where you cannot post a laser to over the internet; the USA springs to mind. You can only buy legitimate lasers from legitimate sources in the US. One of the companies we have investigated clearly says on its website: “We cannot post these products to the USA”. They are out there and they are relatively easy to buy. The advertising is up there and if you are of that mind, you can burst balloons, set fire to matches and do all these lovely things, make your cat chase around the room with it. They are up there. The advertising is there, so there is a market.
Andrew Selous
Q As a supplementary, if the legislation before us does not provide the redress that we are all urgently seeking, given the seriousness of this problem outlined by Mr Baker and others, what would be the appropriate follow-on action and within what timescale?
Martin Drake: We would like to see some import control on the recreational lasers, if I can refer to them as recreational lasers rather than legitimate lasers. That is possible; we restrict the importation of all sorts of things, so I think that is doable. We have got the problem of the ones that are here already, but that is something we can address.
Andrew Selous
Q Do I detect there is a slight sense of urgency on this and we probably want to see how this legislation goes and if there is not an improvement, you would be looking to Government to review the situation again, with a view to taking further action? Is that a fair summary?
Martin Drake: Absolutely. We started off with a laser that was about 1,200 milliwatts—we purchased one at 2,500 milliwatts. We sent it up to the University of Manchester and had both the power and collimation checked and it did what it said on the tin. We are seeing lasers today at 3.5 watts, 5 watts, and there is somebody claiming to sell you a 10-watt one. I am not quite sure how legitimate that particular advert is. Every so often, we are seeing the technology double—I am sure there is a rule for that. What gives us cause for concern is that as the power of these lasers goes up, the dazzle and distract effect on my colleagues could be such that you might not only incapacitate one pilot; you might incapacitate both of them. Then you have a problem on your hands.
At the moment, the laser normally comes through a side window and the pilot who happens to be sitting on that side is the one who takes the brunt of it and it is possible to hand over control to the other pilot and put some compensatory measures in place. We have shone the really bright ones at aircraft windows we have in the office—windows that have come off aeroplanes out of service—and it is really impressive to see what you can do even with the power of lasers that we have. We do see some urgency in this and we see the development going in the wrong direction. We would be seeking powers for the Government to do something.
Andrew Selous
Q Can I come to the police and the operational aspect of this? With the extra powers in this Bill, what confidence do you have as police officers in your colleagues’ ability to swiftly apprehend culprits?
Simon Bray: There are limitations, come what may. There are delays between us getting the information from air traffic control through the pilots to being able to identify the people on the ground and the locations of the premises where people might be. It is difficult anyway, if you are in an aircraft coming at that speed and height, to identify specifically where that will be. That is why we have benefited from police helicopters getting involved. This will be a better reactive set of options than is currently the case. However, it does not allow us to be preventive and proactive in the way we would like. That is where we come into not just powers around stop and search—as I say, judiciously used—but also the whole bit about possessing these things and being able to access them in the first instance.
If our police officers come across a group of youths who have got these things, what are they there for? What are they going to be doing with these items? Playing with them, but in what way? There is potential harm among friends, let alone people they do not like. If they have got them, there is the potential use for damage and mischief.
Andrew Selous
Q Are you satisfied that the means you have to influence Government are sufficiently robust and flexible that if you were to speak to Ministers in a few months’ time, or after this legislation has gone through, because it was still a problem, that the system would react with the degree of seriousness that you suggest it should?
Simon Bray: Both the Home Office and the Department for Transport have been keen to engage with us and to listen to what we say. They have worked with us closely on this, so I am confident that they will be listening and asking us questions.
Andrew Selous
Q My final question—I do not know if you have a copy of the Bill in front of you—is on clause 22(2), which is about the defence that could be offered if someone did not intend to commit an offence and was exercising all due diligence. I am struggling a bit to imagine an astrologer near an airport or a surveyor working late at night on some building project. Who do you think clause 22(2) has in mind? It is probably right that it is in the Bill, but I am struggling to see who might legitimately use that defence.
Paul Watts: We have seen lasers used in light displays. I could see a laser being used in a light display and someone not realising that it is in proximity to an aircraft flight path.
Andrew Selous
Q Does that happen often? Are there light displays that are permitted to take place near airports or flight paths?
Paul Watts: Not necessarily near airports, but certainly in cities and large urban areas. You would not expect them on the flight path into a major airport, but you do see lasers used by nightclubs and the like.
Andrew Selous
Q Are light displays a current issue for pilots?
Martin Drake: Generally speaking, no. The laser displays tend to be very broad beam—there is little collimation to the lasers. Displays tend to be licensed if they are close to airports, and we are usually told when they are there, so that is not really the issue. Paris has a laser that spins around the Eiffel tower, and Greenwich has one that goes up the Greenwich meridian at the moment. Those are not a problem to us at all. They tend to be low-level and pointed down across the heads of the crowd rather than up into the air.
One thing the measure would address is search and rescue. They have a thing called a laser flare, which has a fan of laser that, again, is not well collimated. The search and rescue aircraft can see those things for miles, so if someone is bobbing around in a little dinghy or is stuck on the top of a hill it is really useful. Obviously someone would not be intending to dazzle and distract—they would be intending to be rescued. I think there are legitimate uses that would be absolutely fine.
Steve Landells: Airliners tend to be going into a predictable place, whereas helicopter operators tend to operate in areas where you might not normally expect air traffic. It is probably not such a big issue for the airlines.
Simon Bray: But for people who, for example, have a laser and want to shine it on the clouds, the big question is whether they have exercised all due diligence and taken all reasonable precautions. That is going to be the crux of it at court.
Richard Burden
Q May I move on to another subject? In the previous panel I asked Mr Moriarty to comment on the fact that there is nothing in the Bill relating to the regulation of drones. It is an omission from the Bill that has been commented on in a number of quarters. Do the rest of you have any observations on whether the Bill could be usefully extended to say something about drone safety? If so, what?
Steve Landells: From BALPA’s point of view, we would like to see the Bill extended to include drones. The prime thing we would like to see is a mandatory registration process for drones. At the moment, anyone can buy a drone and fly it anywhere, and they do not have to take any responsibility for it. At the moment, if the police find a drone inside the environs of an airport or on the runway, they have no idea who that drone belongs to. We would really like to see a compulsory registration process.
Perhaps before first flight you would have to go online to get an unlock code. During that process we could get exposure to the rules and an online test for a drone operator. That would also mean that the operators would have an idea of what the rules were. A lot of the problems being caused by drones are through ignorance— 17 near-misses were reported between manned aircraft and drones last year—so we need to educate the people flying the drones that there are rules and regulations in place. It is a dangerous thing to do, and we think that a compulsory registration scheme would address a lot of the problems.
Simon Bray: We would not disagree with that. We are mindful that there need to be restrictions around particular locations, as there are currently. However, in the case of aircraft, it matters not hugely where you put in those restrictions; it is the whole bit about the flight paths in and out that we have concerns about.
Kit Malthouse
Q I have a couple of quick questions. I was slightly concerned about the definition of a vehicle. In the Bill it says that it means
“any thing used for travel by land, water or air”.
Do you think it might be sensible to extend that slightly to include vehicles that are not used for travel such as bulldozers and very tall cranes in the scope? Does a police horse used for travel count as a vehicle? If a police horse in a public order situation were to be dazzled by lasers, should it be included? The definition is quite specific, so do you feel it might benefit from being widened a little?
Simon Bray: I think it would be worth looking at. Things like police horses could be dealt with in different ways—cruelty to animals, assault of the police officers riding them and so on. It would be worth looking at that to ensure that the definition is suitably inclusive of some of the things you just mentioned.
Kit Malthouse
Q I do not know if you have had instances of people in tall cranes being dazzled, but tall construction cranes heave tons of stuff and could be quite dangerous. We have seen collapses in the past if someone has been distracted and got the angle wrong. It might seem obscure, but the purpose of the law is sometimes to deal with obscure situations.
Simon Bray: Yes, indeed.
Kit Malthouse
Q It might be worth having a look. The other issue was on the definition of an aircraft being in flight. The Bill defines an aircraft as being in flight from
“the moment when it first moves for the purposes of take-off”.
Presumably that is from push-back and includes taxiing to the runways. However, it then says
“ending with the moment when it next comes to rest after landing.”
There can often be quite a lot of taxiing after it comes to rest. It waits five minutes for its gate to come free and then it taxis for 10 minutes—or 25 minutes if it is the wrong end of Heathrow airport. Do you think that definition is a problem? Obviously taxiing is not as dangerous, but it is a dangerous moment as well.
Martin Drake: We did discuss that. The issue with taxiing is that you tend to taxi aircraft at a maximum speed of 10 to 15 mph and, if you do get dazzled, you can put the brakes on and stop. At that point, you can bring the whole thing to a graceful halt.
The definition of flight is a tricky one. If you look into it, I think there are about seven or eight definitions of flight. The current one that I think the International Civil Aviation Organisation accepts is doors closed for the purposes of a service to doors open at the end of that service. I think that covers all aspects of what you are considering.
Kit Malthouse
Q It might be easier to say “Any vehicle that is moving.”
Martin Drake: It might very well.
Kit Malthouse
Q As you say, with a stationary vehicle there are dangers, but at the moment it moves and there is danger, there is a problem.
Martin Drake: Indeed. I take on board what you said about the cranes. That is something that had not occurred to us, I must confess. In our research we have come across train drivers being lasered—apparently it is great fun to let them go through a red light and watch the brakes come on. The Seacat, coming into Holyhead harbour, was lasered a couple of years ago. Again, I do not know why. They were trying to hit the bridge.
Kit Malthouse
Q Yes, hovercraft are covered as a vessel.
Martin Drake: Yes. These are not in the scope of the Bill, but we have come across goalkeepers being lasered when an important penalty is to be taken, and we have heard of referees being lasered. It is a transport Bill, so it is not within the scope of that, and I know the police have powers to deal with it, but it is a growing problem.
Mr Baker
Q Captain Drake, you mentioned that you have got windows in your office from which you have had spectacular effects when you have shone lasers at them. For the purposes of public education, have you considered letting some videos go out there to wherever to show us what happens?
Martin Drake: We have, yes. There is some nervousness about publicising what happens because countries where that has been done have seen a spike in events. That may be a cost we have to bear: we may have to see a spike in events then to see a contraction. We could do that—it is a very sensible idea.
The Chair
There are no further questions from members of the Committee. I thank the witnesses for their evidence, time and co-operation. That has been most helpful. I ask you to remain seated for just a moment while I invite the Whip to move the Adjournment. Line-by-line consideration of the Bill will begin at 11.30 am on Thursday in Committee Room 10.
Ordered, That further consideration be now adjourned.—(Jackie Doyle-Price.)
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Health and Social Care Budgets
(7 years, 9 months ago)
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Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
I beg to move,
That this House has considered budgets for health and social care.
It is a pleasure, as ever, to serve under your chairmanship, Mr Bailey. I thank the Backbench Business Committee for granting this important debate about the funding of health and social care. I pay tribute to my fellow Committee Chairs—the hon. Member for Totnes (Dr Wollaston), Chair of the Select Committee on Health, and my hon. Friend the Member for Sheffield South East (Mr Betts), Chair of the Select Committee on Communities and Local Government—for their work, including with my Committee, to shine a light on the challenges of funding our health and social care system for the next generations. I also pay tribute to the Select Committee on Public Administration and Constitutional Affairs for its work in this area. The fact that four Select Committees, and three in particular, are focusing their attention on the issue demonstrates its importance to the nation and to the long-term health of our citizens.
The Public Accounts Committee’s view and concern, which is well documented in a dozen reports produced by us in this Parliament alone, is that there is a challenge with the funding settlement for the national health service. I will not repeat all the arguments that I made in the Chamber during the debate on the estimates the other week, but we are also in the grip of a crisis in social care. The NHS accounts are showing the strain again as we approach the year end.
Last year, as I am well documented as saying, the Comptroller and Auditor General put an extraordinary commentary on the Department of Health accounts, which were laid on the last day of Parliament’s sitting. Extraordinary measures were taken to get them into balance—again, I will not mention them all, but it was a difficult adjustment. The permanent secretary at the Department of Health has acknowledged that that was not good enough, and that such one-off measures should not be repeated. We are now hearing concerns that NHS trusts are delaying paying their suppliers in order to ensure that their budgets balance. We know that, once again, capital funds will be raided and converted into resource funding to keep the NHS on track.
My Committee has discovered that funding in every area of the NHS is facing increasing demand, including specialist services, diabetes and discharge from hospital, which we have considered. The increasing age of the population and advances in medicine mean greater demand on our national health service. When the Government tell us that they are putting more money into the NHS, we must treat that with caution: more money without consideration for the number of people using the service and those who will need it in future is not always enough. Not only is the money not meeting current need, but it will not meet the growing demand.
I will speak briefly, as I am aware that 15 or so Members are scheduled to speak in this debate. The Budget came up with some solutions, as the Chancellor sees them, for funding the NHS. Our concern is that, once again, piecemeal funding is being offered rather than long-term solutions. The Chancellor talked about putting £2 billion into social care, £1 billion of it in the next financial year, starting in April. However, the Local Government Association estimates that more than £1 billion every year is needed to fund the gap in social care. The 2% council tax, often vaunted as a great solution, is a challenge in some areas, particularly where the council tax base is low. My own local authority has increased council tax to cover it, which of course means that local taxpayers are helping fund the system.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
I congratulate my hon. Friend on securing this important debate. Dementia Care, a charity based in my constituency, has deep concerns about the current and future funding plans for social care. Dementia Care believes, and I agree, that funding should be based on need, not on a local area’s ability to raise council tax, which clearly disadvantages people in areas such as Newcastle. I know that my hon. Friend shares this view, but I wanted to reiterate on the record that charities providing vital services up and down the country share her concerns.
Meg Hillier
I know that my hon. Friend the Member for Sheffield South East will discuss the funding of social care in more detail.
Caroline Lucas (Brighton, Pavilion) (Green)
I, too, congratulate the hon. Lady. Does she agree that Ministers are engaged in wishful thinking? The ability to reduce the number of hospital beds relies on the availability of better and more social care, yet in Brighton our sustainability and transformation plan footprint means that we are being forced to find another £112 million in efficiencies specifically in social care. It just does not add up, and it is not sustainable.
Meg Hillier
One concern that our Committee has uncovered is the pressure to make 4% efficiency savings. That figure was used in the last Parliament, but has now been acknowledged to be too stiff a target. However, we are also seeing a move to 4% efficiency savings in STPs. That is challenging to achieve while going through transformation. One would expect the Public Accounts Committee to be no slouch in considering where efficiencies can be found, but even with efficiencies there is just not enough money in the system. It is being squeezed.
One welcome aspect of the Budget—I hope that the Minister can give us more detail—is that there will be a Green Paper later in the year on the future funding of social care; again, I know that my hon. Friend the Member for Sheffield South East will want to talk more about that. There are also other bits of money: £100 million to support 100 new on-site GP triage projects at accident and emergency departments in hospitals in time for next winter; £325 million in capital funding to support the implementation of sustainability and transformation plans that are ready to proceed; and a multi-year capital programme for health. That all sounds like a lot of money, but relative to the total NHS budget, it is a very small amount, and the concern is that it is not long-term and sustainable. That is what our Committee said. A long-term plan is necessary for funding the NHS.
After looking at this year’s accounts, we are concerned about the number of trusts in deficit; perhaps the Minister can update us on that. As of month 9 of this financial year, 74 of 238 trusts were in deficit, to the tune of £886 million total. Granted, that is less than the £2.5 billion last year, but it is still not a healthy situation. Raiding capital funds to pay for resource and other such measures is just not acceptable in the long term.
Jason McCartney (Colne Valley) (Con)
I commend the hon. Lady on working cross-party to find long-term solutions for the huge issues facing social care and the NHS. She highlighted the fact that capital money has been transferred to revenue. Does she agree that in places such as Huddersfield, in my area, that makes the prospect of looking for another disastrous private finance initiative deal to fund capital improvements more likely? The disastrous PFI at Halifax is now dictating disastrous changes at Huddersfield; services are being moved to fund that PFI deal.
Meg Hillier
The hon. Gentleman rightly highlights that the NHS is not new to challenges in dealing with capital projects. One of our concerns about taking out capital is that NHS buildings and equipment will deteriorate, costing more in the end. That is not good value for money, which is what my Committee considers. We should all be watching the situation. The consequences might not be apparent today, but they will become so as time goes on, and we as parliamentarians need to keep a close eye on what is happening in our local area. I am glad that the hon. Gentleman is doing so.
I will finish, as I am aware that an awful lot of Members want to speak. We must not forget that the situation has an impact on patients. For instance, the target for accident and emergency waiting times is 95%, but actual performance is just under 87%. Diagnostic waiting times have risen from 1% to 1.68%, and referral to treatment within 18 weeks has not reached its 92% target; it is just under 90%, at 89.41%. The number of people waiting more than 52 weeks for referral to treatment is 1,220. Those are just some of the figures demonstrating the impact of how NHS and social care finances are being managed and what is happening to patient outcomes.
Ms Margaret Ritchie (South Down) (SDLP)
I congratulate the hon. Lady on securing this much needed debate. Does she agree with me and other stakeholders that a comprehensive review is needed in which everybody—stakeholders, the Government and the Opposition—works together to find a way forward for a comprehensive funding solution?
Meg Hillier
The hon. Lady neatly brings me to my conclusion. That is what we need: a long-term, sustainable future for our national health service. The present situation will not last from Parliament to Parliament and from one governing party to another. We need to agree a way forward and have a national conversation. We did that with pensions. It was difficult, but we got there—I know that there are still issues, but we reached cross-party agreement. We cannot chop and change, and we cannot have Governments pretending that throwing a little bit of money at the problem in a Budget is a solution. We need a long-term, sustainable solution and a national conversation about what the NHS will deliver and what outcomes we want to achieve.
Several hon. Members rose—
Mr Adrian Bailey (in the Chair)
Order. Before I call the next speaker, I will just make it clear that I am trying to shoehorn a three-hour debate into one and a half hours. I need to call the Chairs of the relevant Select Committees, and I am looking for five minutes each from them. There will be a hard and fast three-minute time limit for subsequent Back-Bench contributions. If anyone wishes to intervene, they are perfectly free to do so, but I might take it into consideration when I consider the order of speakers.
Dr Sarah Wollaston (Totnes) (Con)
It is a pleasure to follow the hon. Member for Hackney South and Shoreditch (Meg Hillier). I pay tribute to all the Select Committees and their members for the work that they done and to all those outside this House who made the compelling case that led to the announcements in the Budget. I say to the Minister that I unequivocally welcome those announcements, and I thank the Government for listening to the case that was made, not only about social care but about capital.
However, I would nuance some of that, because the point about social care is that we must not consider it “job done”. The £2 billion over the next three years is very welcome—it is also welcome that it has been profiled to address the back-loading of the previous settlement. However, I would like the Minister to say how we will ensure that it gets to the frontline and is distributed fairly according to need, and also that that reflects the different abilities of councils to raise their own money through the social care precept, because that is important for public confidence about how the money is spent.
I also welcome the announcements on capital—the £325 million for the sustainability and transformation plans that are ahead of time is very welcome. I look forward to the announcements in the autumn Budget about further money, although the Minister will know that £1.2 billion has been transferred to revenue from capital. That is an ongoing issue that is hampering the ability of areas to put effective plans in place. Will he touch on that and say how quickly he thinks we will get to a position where we do not see these capital-to-revenue transfers as being necessary?
Another welcome announcement was about the capital improvements available to accident and emergency departments, although I would caution that this is being linked to putting general practitioners alongside casualty departments through co-location. This is not only about funding; it is about having a general practice workforce that can fund these co-located departments alongside out-of-hours departments and providing routine surgeries on Sundays. I am afraid that we simply do not have the workforce to sustain that activity. I know that there is a commitment to increase the workforce in primary care, but that is alongside a significant retirement bulge in primary care. Something will have to give. As things stand, I simply do not feel that we have the workforce to do that work.
Finally on the Budget, there was a very welcome announcement of a review and a Green Paper in the autumn, which we all look forward to. However, I call on the Government to stop and take stock, because next year will be the 70th birthday of the NHS, and it will come at a time when it is under unprecedented financial pressure. Over the last Parliament we saw a 1.1% annual uplift, against the background of uplifts of around 3.8% traditionally since the late ’70s. This is a sustained financial squeeze, at the same time as an extraordinary demographic change and an increase in demand across the whole service. As welcome as the announcements were last week, I am afraid that they do not go far enough to address the scale of the generational challenge that we face. It is of course very welcome that more people are living longer, but that is happening alongside a shrinking base of our working population who are able to fund that demand.
We simply cannot carry on as we are. If the review focuses simply on social care, we will miss an extraordinary opportunity to address the issue in time for the 70th anniversary of the NHS. I would therefore ask the Minister to go back to colleagues and say, “Can we widen this Green Paper to take in health and social care, and can we try to do that on a consensual, cross-party basis?”, as has been said by many across the House. Notwithstanding the issues about that in the past, the scale of the challenge is so great that we owe it to all our constituents to put that aside and to take nothing off the table in considering the scale of the challenge and the solutions ahead.
We have an opportunity to explain that to the public, because whenever I address public meetings and I ask people whether they would be prepared to pay more to fund our health and social care adequately, I find that the response is almost unanimous. People are ready for this. They understand the pressures, and they value health and social care immensely. That would be my big ask of the Minister: think again, widen the review, make it consensual and explain it to the public. Let us get the consent and move forward.
Mr Clive Betts (Sheffield South East) (Lab)
It is a pleasure to follow the two Select Committee Chairs, my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier) and the hon. Member for Totnes (Dr Wollaston); we have worked very closely on these issues. It is also a great pleasure to see so many other colleagues in the Chamber today. It is obvious that social care and health issues are now coming very high up the agenda, which is absolutely right.
I will refer to the report that the Communities and Local Government Committee has just produced, “Adult social care: a pre-Budget report”. In the next few weeks, we will produce a longer report about longer-term issues in social care. To begin in the here and now, the Committee welcomed the fact that the Government have allowed local authorities to increase the precept in the next two years and have encouraged local authorities to take up that offer, while still recognising that there are challenges around the fact that the precept raises very different amounts of money in different local authority areas. We asked for an immediate further injection of £1.5 billion, so it is welcome that the Chancellor announced an increase of £1 billion, even though £1.5 billion would have been more welcome—I think that is how the Committee will look at that.
Recognising that that would not be a permanent solution for this Parliament, however, we asked for the National Audit Office to be given the responsibility to look at what is required for the rest of this Parliament—the further two years of the spending rounds—to address the issues in social care. Those issues are very real, with an increase by a third in the number of people in their 80s or 90s over a 10-year period, with local authority spending on social care down by 7% since 2010 in real terms, with the increase in the minimum wage, with the Care Act 2014 and with all these other pressures.
Paul Blomfield (Sheffield Central) (Lab)
Does my hon. Friend recognise that there are two groups of victims of the crisis in social care? They are not only those who depend on the services, but those who work in the sector and who face, for example, widespread non-compliance with national minimum wage legislation, which the Government are aware of but not acting on. Does he agree that needs to be recognised in a future settlement? We need a paradigm shift in how we view care work.
Mr Betts
We will return to the proper training, long-term commitment and pay of staff in the care sector in our Committee’s further report, but we certainly had evidence to that effect.
We need another way of dealing with the funding gap for the rest of this Parliament. For the longer term, I very much welcome the announcement of the Green Paper, but I echo the comments of the two previous speakers. We need to get cross-party agreement on a sustainable, long-term settlement that will last not merely for the next Parliament, but for several Parliaments after that. There are major challenges. I agree that we should look at health and social care together, but there are fundamental differences in governance and accountability between the two systems, so how do we resolve that?
We should certainly look closely at what is happening in Manchester, to learn about the devolution deal there and how the two can work together within the same governance structure. Personally, I feel that losing the local accountability that the social care system currently has and simply centralising the whole system would be a mistake. That would take us in the wrong direction, so it is important to look at what is happening in Manchester. We have two very different funding systems. We have the health system, which is free at the point of use, but I do not think that anyone suggested in evidence that we could fund social care on exactly the same basis. We will have to consider something slightly different to fund social care, but how the two systems fit together will be a challenge.
If we are considering the future for social care funding, we should bear in mind that currently we have a mixture of funding. We have some central Government funding, local authority funding and the personal contributions that come through people paying for their care, particularly in residential homes, and what happens to their estate when they die. Will that mean a bit extra from those different elements—a bit more from central Government, local Government and personal contributions—so that the total whole grows? However, the Government have said that they will introduce the Dilnot proposals in the next Parliament—that is what the Minister said to us—which will cap and reduce the contributions that may come in from people’s private estates when they die, so does that mean more money from somewhere else?
I am sorry that the Chancellor did this, because everything should be on the table, but he ruled out a different way of taxing or receiving contributions from people’s personal estates when they die: taking a percentage of everyone’s estate. Currently, people contribute their estate if they end up with dementia and go into a care home, but if they have a heart attack, they tend to contribute nothing. Is that system fair? Is that a challenge we must look at? Even with Dilnot, the £72,000 limit would take most of the estate from a small house sold when someone in my constituency dies, but it would be only a fraction of the value of a property sold in the more expensive parts of London. Is that fair either? Do we simply scrap the whole thing and go on to a German system of social insurance?
The Communities and Local Government Committee went to Germany to have a look at its model. There are pros and cons to it, but we really need to put everything on the table and not rule out any possibilities. We need something that we can, in the end, reach cross-party agreement on, recognising that the social care system will probably be different in its funding from the health system. How they can fit together and be governed together will be absolutely crucial to the success of a long-term settlement, when we eventually reach one.
Mr Adrian Bailey (in the Chair)
I remind Back-Bench contributors that there is a three-minute time limit. I call Anne Marie Morris.
Anne Marie Morris (Newton Abbot) (Con)
I shall be brief, Mr Bailey.
Our NHS is the envy of the world; our social care system, frankly, is not. Much has changed since the war years, and that has not yet been reflected or accepted. The health budget of £120 billion sounds a lot, but it is inadequate. It assumes that demand is falling; it is not, it is rising. Even NHS England has admitted that it is not enough. It is not sustainable—that is what the Public Accounts Committee report has set out. Trusts are still in deficit. Clinical commissioning groups have a very varied outcome, financially. The GP triaging offer is welcome, but it is a drop in a proverbial ocean.
The move to sustainability and transformation plans is absolutely right; the problem is that it is not properly funded and we are considering implementing models of care that are untried, untested and uncosted. That cannot be right. There is no transition funding and, although I welcome the capital funding for the project, £325 million is, I am afraid, not enough, Minister. Social care represents a third of local authority spending. We currently spend £14.4 billion. Unlike with the NHS, it is means-tested. Again, demand is going up but the funding is going down.
The funding to local government is inadequate. The 3% precept is helpful, but those of us in rural areas clearly have to pay more because we pay more council tax overall, compared with input from the state. The £2 billion is very welcome, but as my neighbour, my hon. Friend the Member for Totnes (Dr Wollaston), explained, it is a little bit but not enough and we need a proper review. We must also ensure that that money does not get stuck with our local authorities. That has happened before and I would not be happy with its happening again.
On the big picture, we do not really measure the system. We do not look at, or measure, need. We do not look at the people who do not even ask for help. Until we start measuring input, output and outcomes across the whole of health and social care, we will not solve the problem. The Green Paper is extremely welcome, and I agree with my hon. Friend the Member for Totnes that it must cover both health and social care. It would be better than a commission, but it must look at the whole system. It must look at the free/means-tested issue. It must look at integration, joint commissioning and a joint budget and accept some structural changes. We have had Sutherland, Wanless, Dilnot and Barker; the issue really is not that simple.
The Government must face up to the problem, but the public also must play their part. We have to accept change, and that is not easy. We must, as others have said, look at general tax, hypothecated tax, insurance, compulsory saving and much more, but the issue is not about just money, but models of care. While we are at it, Minister, please could we have some fair funding for rural areas? We have a disproportionate number of over-85s and rural sparsity that is not properly dealt with. Please Minister, can we have honest acceptance of the problem and the will to face up to it?
Karin Smyth (Bristol South) (Lab)
It is a pleasure to serve under your chairmanship, Mr Bailey, and also to serve on the Public Accounts Committee.
Whatever the right level of funding is, there must be agreement on what that is and, crucially, on what it can provide. In our Select Committee sittings over the past year, we have come to the conclusion that the promised programme cannot be delivered with the money available. Via the NHS mandate, which sets out each year what is expected, we know what the NHS is set to provide and what money is available. However, today is 14 March and we have not really had sight of what is mandated for next year.
The mandate is a requirement of the Health and Social Care Act 2012; it sets the direction for the NHS, helps to ensure accountability to Parliament and, crucially, sets objectives. We know from this year’s mandate that the indicative budget from April is £109,853,000 and the capital is £310 million, but it would be useful to hear from the Minister today when we can expect to see next year’s mandate.
The second crucial document in this debate is the NHS constitution, which we do not talk about enough. The constitution sets out the rights to which patients, the public and staff are entitled, including consultant-led care within 18 weeks of a referral from a GP and a specialist referral from a GP for urgent cases when it comes to suspected cancer. It sets out pledges and people’s responsibilities.
I agree that we need to involve the public much more in this debate. Waiting times will, I think, quickly start to increase. We have already seen today information from the King’s Fund on what is happening with hip operations. We will, invariably, go back to the days of the 1990s, with longer lists. Access to GPs and other professionals will continue to decrease and, largely, we will start to depend more on families and local care—not just for social care, but because of the consequences of not having well-accessed healthcare. Staff will become more demoralised and we know that morale is crucial for patient safety.
What I want to hear from the Government today, therefore, is how we are going to include the public in the trade-offs that are now necessary with the sustainability and transformation plans in local communities. How will that be done? Will Parliament start to debate the erosion of the NHS constitution and the rights that people have come to expect? Crucially, will the Minister say when—within the next two and a half weeks—we will see the mandate, so that we will know what funds are available and what they are set out to do?
David Mackintosh (Northampton South) (Con)
Like many colleagues from across the House, I recognise that the issue of adult social care is not easy to fix. It will affect many of our constituents at some point in their lifetimes, and some of the barriers to care can be heart-breaking for families.
In May this year, I will stand down as a county councillor in Northamptonshire after eight years’ service; I was also leader of Northampton Borough Council for four years, so I have witnessed at first hand how the system works. Also, as a member of the Communities and Local Government Committee, I have been part of a four-month inquiry into adult social care. We published an interim report ahead of the Budget. I have also had discussions with professionals in the system, from the chief executive of Northampton general hospital down to care workers.
It is clear that the recently announced additional £2 billion of new money in social care is welcome. I recognise that it shows that the Government have listened to representations made by many Members of the House and the social care sector, and to the Select Committee recommendations. But no one on either side of the House is under any illusion that that will fix everything or, indeed, that money is the only issue. It is vital that we find a more sustainable way of paying for the increasing cost of social care over the long term, but we must also fix the systemic problems.
I welcome the Government’s statement that they will shortly set out proposals in a Green Paper. Although short-term action is vital, the social care sector faces medium and long-term funding, structural and other problems that need to be addressed, and it is important that we have a full review of the service for the long term. We must move the debate away from the idea that the entire sector can be saved with increased funding, because the issues go much deeper.
The idea of joined-up care must be exactly that. I have lost track of the number of cases I have worked on with families who are trying to resolve issues between the care provider and the local authority—in some cases, local authorities—and deal with the multiple pressures of finding solutions while dealing with the emotions and trauma of an ill relative, sometimes with many complex or difficult medical conditions.
The systemic problems in some cases can lead to financial pressures, which will only get greater as we have an ageing population, demographic growth and enhanced medical treatment. Often, too many organisations are involved: the poor family can get overwhelmed and unsure about which organisation is dealing with which part of the care package and who they should be chasing to make something happen.
The carers and staff involved are usually equally frustrated, and concerned for the patient and their family. The Green Paper needs to focus both on the structural barriers that prevent care packages from being put in place or patients from being discharged from hospital, and on a serious examination of how the different organisations involved work together. In my opinion, the review must take a wide-ranging look at whether the organisations currently involved are fit for purpose, whether the current splits between health and adult social care can be justified, and the possibilities for reform.
Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)
I congratulate my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier) on securing this important debate. I want to draw attention to the crisis in social care in Liverpool. The background is the severe cuts put on a city with a very low council tax base. Some 80% of Liverpool’s properties are in council bands A and B. Cuts to Government funding will reach 68% by 2020, resulting in a £90 million cut in funding for adult social care. The consequences up to now have been a reduction in social care packages from 14,000 to 9,000.
There are two aspects to social care: domiciliary care that enables people to live independently in their own homes, and social care that enables people to be discharged from hospital. Both are equally important. I certainly welcome the announcement of an additional £27 million for Liverpool over the next three years from the £2 billion additional allocation. That money is very important and has staved off an immediate crisis, but it will be eaten up by demographic changes.
For example, the increase in the number of people aged 65 and over will lead to an £8 million increase in cost next year. The increase in funding required to implement the living wage means that an additional £25 million is required by 2019-20. Welcome as that £27 million is, it will be eaten up by those increases. The situation is compounded by an error by the Department for Communities and Local Government in assessing how much funding could be raised from Liverpool’s council tax. I gather that that error has now been rectified, but it confused the situation.
What do we need? Additional funding now is welcome, but we need long-term consistent funding related to need and more integration between the national health service and social care. I recognise the problems that the Chair of the Select Committee, the hon. Member for Totnes (Dr Wollaston), identified, but a move towards integration is essential. Liverpool is innovative and is already trying to do that, but it needs funding and general support from the Government to enable it to work constructively with the NHS.
Kevin Hollinrake (Thirsk and Malton) (Con)
I congratulate the hon. Member for Hackney South and Shoreditch (Meg Hillier) on securing this important debate. I would like to touch on three different elements of adult social care: the short, medium and long-term aspects of funding. In the short term, the Government have allowed revenue raising of nearly £14 billion since 2010; most recently, there was the £2 billion in the Budget. That was very welcome and has had an immediate impact on my constituency. North Yorkshire will see an extra £18 million over three years. While I very much appreciate that response to the various different submissions that have been made, I think that most people, including the Chancellor, accept that it does not provide a long-term solution.
The medium-term solution would be to look at business rates retention, which is coming down the line for 2020. A lot more money will be coming into the system, with £12.5 billion to local authorities. What bang for their buck the Government want for that, we do not quite know. The reality is that more money will be coming in, but the point has been made that the current distribution of local authority funding is not fit for purpose. There is no correlation between the need in local authorities and the amount of funding that goes in. It is based on an old formula—regression—and we need it to be based on cost drivers, which are around such things as age and deprivation.
We often fight the battle here between rural authorities and metropolitan authorities, but the battle we should be fighting is about the fact that the lion’s share of funding goes to London authorities. If we add up all the different elements, including the revenue support grant, business rates and council tax, total spending power in London is on average 40% higher than any other authority. Often those London authorities have lower need, younger populations and wealthier populations. There is no correlation, and I think we all want to see a fair system. I have nothing against London—it is a fantastic place—but I want a fair deal for North Yorkshire.
The other issue with business rates retention is the quantum. Will it grow to meet the need as need grows? The need is growing exponentially, and we need a longer-term solution. We have hugely increasing demand, and there needs to be correlation between need and the money coming in. In business, we always used to say when we came to such problems, “Ideas are ten a penny. We need a proven solution that is sustainable and scalable.” On our Select Committee visit to Germany, we saw that sustainable, scalable solution, which was delivered with cross-party agreement. I absolutely agree with the calls for us to tackle the issue on a cross-party basis.
Mr Ben Bradshaw (Exeter) (Lab)
I think there is a consensus in Westminster Hall, informed by multiple Select Committee reports that have highlighted the crisis in our health and social care system. My clinical commissioning group is facing a £40 million deficit. My local hospital, which is one of the best run in the country, is facing a £20 million deficit. It is obvious that that simply is not sustainable.
As other colleagues have pointed out, accident and emergency figures are deteriorating, waiting times are lengthening and there are increasing difficulties in seeing a GP. In Devon, we face controversial plans to close community hospital beds and to close a number of community hospitals completely. That is not an accident; it is the result of seven years of the most stringent restraint on NHS investment in its history, combined with 40% cuts to social care when we have a growing elderly population and increasing demand. The issue was exacerbated by the disastrous Lansley reforms in the Health and Social Care Act 2012—the biggest structural upheaval in the NHS’s history— implemented at the same time as maximum spending restraint.
As well as that organisational upheaval, we face a workforce crisis in health and social care, as the Chair of the Select Committee, the hon. Member for Totnes (Dr Wollaston), pointed out. That has been exacerbated by the uncertainty over Brexit. Until recently, the Government have appeared pretty oblivious to all that. The £2 billion extra in the Budget was welcome, but it is a drop in the ocean compared with the amount of money that is needed.
I welcome the commitment in the Green Paper to look root and branch at a sustainable funding solution for health and social care. I worry, however, that a Green Paper is often a euphemism for kicking an issue into the green grass. I would like to see a policy announcement or a White Paper. As colleagues have pointed out, we have had much cross-party support. One proposal was scuppered in the run-up to the last general election. I worry that to grapple with the issue in the second half of a Parliament is not sensible timing. Governments need to get a grip on the issue at the beginning of a Parliament so that there is maximum time for cross-party working to get something in place. I am not optimistic that the Green Paper will come to a conclusion.
We also need to have an honest conversation with the British public about how we fund health and social care. I share Members’ regret that the Chancellor seems to have ruled out any sort of posthumous levy on people’s estates. We need to look at all options, including the excellent sugar tax that was recommended by our Select Committee. It is already having a dramatic effect in getting drinks manufacturers to reduce the sugar in their products and therefore improve public health.
Finally, we would like the Government to end the uncertainty over EU nationals working here in our health and social care system. They could do that today when the Prime Minister stands up in the House and gives her statement on article 50. That would give a huge boost to morale and end the uncertainty. People are already leaving, and the system is not able to recruit. That workforce crisis will do more damage in the short term than anything else.
Peter Heaton-Jones (North Devon) (Con)
It is a pleasure to serve under your chairmanship, Mr Bailey. I congratulate the hon. Member for Hackney South and Shoreditch (Meg Hillier) on securing this important debate. It will not surprise colleagues to hear that I am unashamedly here to speak up for Devon, and North Devon in particular. We are part of the south-west, and it is significant, looking around the Chamber, to see so many Members from the south-west from all sides. It is because we are concerned that rural areas in the south-west are not getting our fair share in the distribution of available funds.
I join my hon. Friend the Member for Totnes (Dr Wollaston) in unequivocally welcoming the extra money that the Government have put into health and social care. The £10 billion extra for the NHS over this Parliament and the £2 billion for social care announced in the Budget are extremely welcome, as are the extra revenue-raising powers that have been given to local authorities for social care, and I thank the Minister and his team for those.
However, we need our fair share in areas such as Devon and the south-west. As has been mentioned by the right hon. Member for Exeter (Mr Bradshaw), we face a sustainability and transformation plan that is causing huge concern among my residents in North Devon and among those of other colleagues here from Devon constituencies. There are particular concerns about the future of some acute services at North Devon district hospital. I have said before and I will say again that any cuts to services at that hospital would be absolutely unacceptable. That is because of what I describe as the three Ds: distances, demographics and deprivation. I will not rehearse the arguments here; the Minister knows them well. He has been kind enough to hear me out on many occasions, as have the Secretary of State and many others. Those three factors in Devon and in North Devon in particular mean that we have to look at a fairer way of funding our health service so that we get the services we need. I repeat that any cuts to services at North Devon District Hospital would be absolutely unacceptable.
The holy grail of social care is the integration of the health and social care systems, which many colleagues have mentioned. I want to pay tribute to the Northern Devon Healthcare NHS Trust, which does better than most in working with its social care partners to ensure that packages of care are in place when people are able to move out of hospital. I welcome the hard work of all the people who work in the North Devon services to achieve that.
Peter Heaton-Jones
I will not. The Chair was clear about the time limits; I apologise to my hon. Friend.
I will end by saying we must remember the three Ds. Let us work together across parties to find a long-term solution for the fairer funding of health and social care.
Norman Lamb (North Norfolk) (LD)
The consensus in this room on the scale of the challenge that we face strikes me as remarkable. The £1 billion for social care this coming year is welcome, but against the £2 billion gap identified by the Health Foundation, the real risk is that this will result in more older people ending up unnecessarily in hospital because care fails at home, which puts more pressure on the NHS. In the following financial year, 2018-19, real-terms spending per head on the NHS will start to fall. That is a remarkable statistic. At a time when demand is rising rapidly, that makes no sense to anyone, wherever they are on the political spectrum. I want to touch on the human consequences of that.
Across the country families with children who have significant mental health problems routinely wait months for treatment. They suffer enormous anxiety. A man in my constituency was told he had a two-year wait for the adult ADHD clinic. Routinely across the country we are breaching the referral to treatment standard on cancer care. There is now an awful insidious trend whereby anyone who has money—we cannot blame people for this—is minded to opt out and fast-track treatment privately. Families faced with long delays do what they can for their loved ones, but do any of us really want to live in a country where timely access to treatment and potentially survival depend on whether we can pay? That is where we are heading.
No party has come up with a full solution to the crisis facing our NHS and care system. We have to be honest about that. Collectively, we are letting down the people of this country. It is remarkable how many speakers today have called for the Government to embrace a cross-party process. A load of MPs—senior MPs, Select Committee Chairs and former Ministers—have come together to call on the Prime Minister to establish an NHS and care convention to engage with the public in the mature discussion that we know we need to have but keep putting off. So I call on the Minister to support us within government, be audacious and recognise that this is a once-in-a-lifetime challenge. The Government will get credit for working with others to achieve the solution that this country badly needs.
Kevin Foster (Torbay) (Con)
It is a pleasure to serve under your chairmanship, Mr Bailey. I congratulate my friend from the Public Accounts Committee, the hon. Member for Hackney South and Shoreditch (Meg Hillier), on securing this debate, which is welcome. To start on a positive note, we are having this debate because the NHS has been a great success. Life expectancy in England is now approaching 81, which would have been unimaginable when the service first started. Treatments in today’s hospitals would have been seen only in “Star Trek” in the late 1980s. So, to be positive, the story is about how we deal with a challenge created by the greatest success.
I remember my time in local government. Other former councillors in the room may have seen the same graph showing that emptying bins and disposing of rubbish and social care would be the only thing left that councils would be able to afford to provide owing to the predicted rise in the cost of social care as demand increased. We have heard a lot today about the possibility of integrating services. I can certainly reflect on the challenges that my hon. Friend the Member for Northampton South (David Mackintosh) faced in terms of different budgets and different organisations.
In Torbay we have an integrated care organisation that is fairly successful in removing barriers. It has certainly helped contribute to one of the lowest levels, if not the lowest level, of delayed discharges over winter, yet now we are having to discuss how the risk-share agreement is structured, because the NHS organisations still need to comply with budgetary rules for them as individual organisations. It is not about the amount of money in the system overall; it is not about the spending of taxpayer pounds; it is about how that is divvied up in terms of a risk-share agreement. That is the exact opposite of what we want to see when we look at integrated care.
The issue is also the pace of some of the changes. Paignton Hospital will stop taking inpatients on 3 April after a consultation that many of us felt was a bit of a done deal and a waste of time. I was shut out of the first meeting because a small venue had been booked for a large meeting. There was a feeling that the measure was going to happen anyway. On top of that, we have 32 beds being closed at Torbay hospital in the same period. For me the issue is how the pace of change is being forced.
There is a long-term debate. We have touched on pensions and—let us be blunt—there was an element of cross-party agreement when the pension age for my generation was increased to 68. It can be tempting to talk about the amnesia of opposition. We need to discuss long-term solutions. The Budget was welcome, but it has to be seen as a short-term measure. We need a long-term schedule that will last for more than one Parliament and more than one Government.
Rachael Maskell (York Central) (Lab/Co-op)
I congratulate my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier) on securing today’s debate. There must be honesty in the room. The trajectory of the funding crisis started with the Health and Social Care Act 2012, which introduced a funding formula that has failed. It also put the wrong financial drivers into the system, which has pushed us into this crisis.
I need only look to my own clinical commissioning group, which is seeking £1,150 per patient in an area of ageing demographics and increasing social deprivation. From the primary care group to the primary care trust right through to the CCG, my area has been seriously underfunded, and it is now having to pay heavily when a CCG down the road is getting over 50% more per head. That does not suggest equality across our NHS. Our CCG is now being pushed into special measures and is having to make a £50 million saving because of a governmental failure instead of trying to meet the real needs of our community. Of course, we see that reflected across the country. In addition, the STP includes a £420 million cut, and that will really affect patient outcomes.
Of course we need to agree a way forward on funding for health and social care, but public health also has to be included, because we are seeing public health funding severely cut. Public health measures and prevention are the drivers of better healthcare in future. We have seen the end of the smoking cessation programme, NHS health checks, and the ability to drive better health for future generations. The local authority will see a further £250,000 cut in that budget over the next three years and a £400,000 cut to sexual health services.
Rationing is coming into the service. Just two weeks ago, the Minister and I debated the rationing of surgery. Putting the wrong, perverse financial drivers in yet again is going to escalate costs in the medium term. We need to examine the way CCGs and trusts are handling the current financial crisis to make sure that we are not just kicking the can down the road and therefore escalating costs as we move forward.
Ensuring that we have early diagnosis in the system is also important. We have heard about waiting times for diagnoses of mental health conditions and emotional and psychological difficulties. In York, I heard from a parent who had spent four to seven years waiting for a diagnosis; support did not come forward until the diagnosis had been made. We should really be looking at functional care and supporting the family as a whole—we know that not supporting the family brings an additional cost. In any review, we need to make sure that we focus on prevention and early intervention, and its financial impact, and put the right financial drivers in the system now.
Dr Andrew Murrison (South West Wiltshire) (Con)
I congratulate the hon. Member for Hackney South and Shoreditch (Meg Hillier), the Chair of the Public Accounts Committee, on securing this debate. First, I would point out that a strong NHS requires a strong economy, and on that front the Budget brought good news.
In the short term, we need to think about how to deal with some of the problems we now face. To that extent, I very much welcome the £2 billion for social care, the £300 million to underpin sustainability and transformation plans and the £100 million for A&E. I also welcome the rumours of more medical school places, which, as my hon. Friend the Member for Totnes (Dr Wollaston), the Chairman of the Health Committee, said, are very important indeed.
We need to look at intergenerational fairness. Sadly, most healthcare cost is generated in our declining years. It is reasonable, after 2020, to look at instruments such as the triple lock to see whether those substantial sums of money should be handed to our national health service. Most elderly people I know would welcome such a thing.
We need to look fundamentally at what to do with healthcare funding going forward. It is very good to hear of the injection of money in the Budget, but it will not do in the long term, for reasons that have been explained. A Green Paper will not do either. Although that is welcome for social care, health care is much more complex.
A conversation with the public means looking fundamentally at what underpins our health service and trying to work out why outcomes in this country fall significantly short of those in countries such as Germany, which has been mentioned, France and Holland. That means examining Beveridge versus Bismarck, something in between or something completely different, which requires a commission or a convention—perhaps an Adair Turner-type commission. It needs to have that conversation with the public. On the NHS’s 70th birthday, that is appropriate, because we need to carry the public with us if what we are ultimately suggesting is quite substantial sums of money injected into healthcare to bring our healthcare outcomes to where they should be.
As an optimistic sort of person, I rather suspect that the reason why a Green Paper has not been suggested for healthcare—notwithstanding the “Five Year Forward View”, which is only halfway through its evolution—is that the Government are considering such a conversation as a proposition. I very much hope that the support I think the Prime Minister gave to the concept when a number of our colleagues met a short while ago is translated into concrete proposals in the near future, so that—on a cross-party basis—we can have the convention, commission or conversation that we need with the public to establish, in the NHS’s 70th year, a long-term funding arrangement for this national institution that we all hold so dear.
Jim Shannon (Strangford) (DUP)
I congratulate the hon. Member for Hackney South and Shoreditch (Meg Hillier) on securing this debate and thank you, Mr Bailey, for making sure that we all get a chance to participate. As my party’s health spokesperson, this is an issue that I long considered in the run-up to the Budget, hoping and praying that there would be funding for drugs such as Orkambi for cystic fibrosis sufferers, money available for the training of additional GPs and more cancer drug funding. The list is exhaustive—we all have a long list of things—but I want to mention three issues in the short time that I have.
Together for Short Lives provided me with a briefing full of information for this debate. It is clear that local authority funding for children’s palliative care charities does not reflect the level of social care provided by such organisations. In the spring Budget, the Government announced a further £2 billion for adult social care funding over the next three years.
Given the vital role that these charities play in delivering children’s social care, including short breaks, what guidance will the Government give local authorities to make sure that they provide financial support to those organisations? Will the Government use the forthcoming Green Paper on social care funding to consider evidence and proposals for increasing funding for children’s social care? The care costs for children’s palliative care rose by 10% in the last year, due to an increase in the number of children with life-limiting and life-threatening conditions and the increasing complexity of their needs and the care that they require.
As a member of the all-party parliamentary group on blood cancer, I am aware of the inquiry into blood cancer care that is being launched on Wednesday. Blood cancer, as the Minister knows, is the fifth most common cancer in the UK and the third biggest cancer killer, yet awareness among the general public and policy audiences is very low. I trust that the Minister will look at that report. It is important that we consider reports, because we want the willingness to act on them. I respectfully ask the Minister to consider that.
My third point is about multiple sclerosis. Some 100,000 people in the UK have MS—4,500 of those in Northern Ireland. Great research has been done by Queen’s University Belfast to revolutionise life for people with MS. They are trying to find a way forward, looking at how the damaged brain repairs itself. The research is good stuff. I remind Members of the importance of ensuring that funding is available for research into diseases. I believe the Department must step up and make sure that that happens.
I know that there is not an unending supply of funding, but I believe that it is necessary that the money is used in the most productive way. I am subsequently asking that consideration be given to the issues that I and others have raised this morning. My mother often said, “Your health is your wealth,” and that is very much the truth. We must do all we can to protect the real wealth of this nation, and make sure that help is available to those who need it most at the time they need it.
Margaret Greenwood (Wirral West) (Lab)
I congratulate my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier) on securing this important debate.
On 4 March, just over a week ago, a quarter of a million people marched through central London to call on the Government to stop the cuts and the privatisation of the national health service. I pay tribute to each and every one of those people who came to London to make that protest to the Government. When a quarter of a million people assemble directly outside this Parliament, the Government should think about what they are asking for. People value the NHS highly and are prepared to fight for it.
Many of the problems that we are facing in the health service have their roots in the Health and Social Care Act 2012. I hope that in any cross-party discussion, where we say that everything will be on the table, repeal of the 2012 Act will be on the table for consideration. One of the very many changes it introduced was the removal of the requirement to provide a comprehensive health service in England. As a result, we are seeing increasing rationing, and patients are suffering.
My hon. Friend the Member for York Central (Rachael Maskell) made an excellent speech in the Adjournment debate she recently secured on the rationing of surgery. As a former physiotherapist, she is very well-placed to make those points. Earlier this year, three clinical commissioning groups in the west midlands produced proposals to reduce the number of people qualifying for hip replacements by 12% and for knee replacements by 19%. Clearly, that has nothing to do with addressing patient need; it is all about balancing the books on the part of a Government with an austerity agenda that they are wedded to. Thousands of elderly people in our country are losing their sight, due to the rationing of cataract operations. That kind of rationing has a real and painful cost to many people in our society.
We are seeing the emergence of a postcode lottery. People are being told that we cannot afford a comprehensive service any more, but that needs to be challenged. Ministers will cite the ageing population and the costs of technology. Well, technology can reduce the costs of care; treating somebody sooner for a cataract operation— a relatively cheap operation—is a much more efficient way of using money than letting somebody become blind and hence terribly dependent on social care.
The coalition cut £4.6 billion from social care. The £2 billion over three years that the Government are providing is nowhere near enough. We want an injection of £2 billion now to stabilise the social care system. The public will not stand for it, and they will not forgive or forget a Tory Government who take the national health service off them. Ministers might think that they can erode it by trimming a little bit here and a little bit there—[Interruption.] But the public know what is going on. Those who have hospitals that are going to close understand what I am talking about. People will not stand for it: they will march again, and it will not be—[Interruption.]
Mr Adrian Bailey (in the Chair)
Order. I ask Back Benchers in sedentary positions to allow the speaker to speak. She did not interrupt their contributions, and I wish they would offer the same courtesy to her.
Margaret Greenwood
When 250,000 people are so unhappy about what the Government are doing and we are seeing the closure of A&Es, hospitals and all sorts of services, and the rationing of services that people really need, the Government should listen, as should Conservative Members.
Mr Adrian Bailey (in the Chair)
We now come to the Opposition spokespersons’ contributions. I wish the Minister to have a minimum of 10 minutes to respond to the debate, because many points have been made. I can allow the Opposition spokespersons 10 minutes each, but it would be helpful if they kept their speeches a little shorter so that Meg Hillier may respond to the Minister’s comments.
Neil Gray (Airdrie and Shotts) (SNP)
It is a pleasure to take part in this debate, Mr Bailey, once again with you in the Chair. I will keep my remarks brief to allow the required summing up to take place.
I pay tribute to the hon. Member for Hackney South and Shoreditch (Meg Hillier) for securing the debate, and I congratulate her on her speech. She highlighted the issues very well and was right to focus on the shift from capital to resource: £940 million this year, the third year in a row of such a shift in NHS England.
This has been another good debate on the subject. Only three weeks ago, I summed up for the Scottish National party in a social care debate. The right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson) said in that debate—I agreed with him—that social care was the greatest domestic policy challenge facing the UK Government. Some revisions to what was said in that debate are required, however, as a result of the Chancellor’s Budget statement. It was welcome that he chose to spend £2 billion on health and social care in England, but it was a mistake for him to stagger it over three years. That is simply not enough.
We welcome the Barnett consequentials that go to the Scottish Government as a result of the social care enhancement—£99 million in 2017-18, £66 million in 2018-19 and £33 million in 2019-20. I am sure that those funds will be used by the Scottish Government to continue investing in the new health and social care joint boards which have been legislated for and recently established. The joint boards are local authorities and health boards working together to overcome the challenges of bed blocking, delayed discharge, domestic adaptations and care packages.
One of the most frustrating cases that we all deal with as MPs is delay to domestic adaptations, which is frustrating for the family, the recovery time and the flow through the healthcare system. I used to deal with dozens of those as an MP and previously as a parliamentary assistant. Thankfully, they are now becoming fewer and further apart. I am not saying that there are no challenges in Scotland—of course there are—but north of the border we are in a very different place from what we see in England.
Over the past two years, as we have started to integrate health and social care and invested record levels in our NHS in Scotland, Scotland’s core A&Es have been the best performing in the UK. On 5 February this year, in a report comparing UK health services, the BBC stated:
“Out of all the four nations, hospitals in Scotland seem to have fared the best...Much of the credit has been given to the way councils and the health service are working together.”
According to the most recent figures, the four-hour A&E waiting time target is being hit in 92% of cases in Scotland, 79% in England, 76% in Northern Ireland and 65% in Wales. Taken with other initiatives and investments, standard delayed discharge of more than two weeks has dropped by 43% in Scotland.
In the Scottish Government’s 2016-17 draft budget, we have allocated a further £250 million to health and social care partnerships to protect and grow social care services and to deliver our shared priorities, including paying the real living wage to adult care workers. In spite of the cuts to Scotland’s budget, the SNP has increased funding for adult social care. As a result, the average time received for home care is 11.3 hours a week, compared with 5.6 hours a week in 2000. Again, I am by no means saying that things are perfect in Scotland, but we faced up to the social care challenge long before it became the crisis we see south of the border. I hope that the UK Government can look to the Government up the road for inspiration as they face up to their own serious domestic policy challenges in England.
Barbara Keeley (Worsley and Eccles South) (Lab)
It is a pleasure to serve with you in the Chair, Mr Bailey. I congratulate my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier) on securing the debate and the excellent way in which she opened it.
Last week, in the spring Budget statement, the Chancellor announced that the Government would provide £2 billion in funding for social care over the next three years. We have heard a variety of comments about that in the debate. It is welcome that Ministers have finally heard the warnings from the Opposition, a wide range of health and care leaders and the three Select Committees represented in the Chamber today about the fragile and underfunded state of social care, but the extra funding has to be seen against the cuts to local council budgets, leading to the loss of about £5 billion from adult social care budgets since 2010. Clearly, the announced funding is not enough.
The cuts have already had an impact on the lives of many people. Older, vulnerable and disabled people have had support that they relied on taken away. Others have been turned away by local authorities and left to rely on friends and family for help. Last week, in this Chamber, we debated social care in Liverpool, when we heard that the cuts there meant that care could be funded for only 9,000 people, not the 14,000 people who had previously received care packages, as my hon. Friend the Member for Liverpool, Riverside (Mrs Ellman) reminded us today. In one city alone, that is 5,000 care packages lost and, nationally, 400,000 fewer older people than in 2010 receive publicly funded care.
We should remember that, as Age UK tells us, 1.2 million older people have to live with unmet needs for care—older people who do not have help they need to feed themselves, wash or get dressed. Apart from coping with future demographic change, we have to look at that unacceptable level of unmet need, because that is part of the serious state of social care and it is having a knock-on effect on the NHS. As Mark Porter from the British Medical Association said:
“When social care is on its knees, patients suffer delayed transfers, and the personal and financial cost is vast.”
In January we saw a record high in the number of delayed discharges from the NHS. The King’s Fund recently described social care as
“little more than a threadbare safety net for the poorest and most needy older and disabled people”—
it is a threadbare safety net that many people are now falling through, with the NHS left to pick up the pieces.
Given the damage done over the past seven years and the crisis that the Government have caused in social care, the £1 billion announced in the Budget for this year is simply not enough. As we have heard in the debate, the King’s Fund, the Nuffield Trust and the Health Foundation warned the Government about a £1.9 billion funding gap in social care, which means that the Government are funding only half of what is needed now. As for comments outside this place, the Care and Support Alliance has said that the extra funding
“keeps the wolf from the door”,
but no more, while the Academy of Medical Royal Colleges said that
“we’ve now got to get real and recognise that short term measures of the kind we’ve seen today won’t help in the longer term.”
Is it not time to examine the true gap in social funding? Will the Minister acknowledge that £2 billion in funding is needed now, rather than spread over the next three years?
We also heard about the intention to produce a Green Paper on the long-term funding options for social care. The Chancellor said that those options do not include what he described as “Labour’s hated death tax”. As my hon. Friend the Member for Sheffield South East (Mr Betts), the Chair of the Communities and Local Government Committee, said, the Government should not reject options proposed in the past by other parties, and the Chancellor should not label one such option as a “death tax”, because to describe it in that pejorative way is not helpful in securing cross-party support for a sustainable solution to funding social care. That was done back in 2010 for political reasons, and it is being done now for political reasons. Inheritance tax is not called a “death tax”, although it is a tax levied after death. It has been known in the past as probate duty, estate duty and capital transfer tax. The Labour party has not played such political games with the Government’s highly unpopular increase in probate fees, which will affect people in the coming months.
I also challenge what Ministers have said about previous work on a sustainable and long-term funding option for social care. We need to deal with the issue now. In the Budget debate, the Financial Secretary to the Treasury denied that the Government might kick it into the long grass, instead talking about previous reviews. Let us be clear about that, however. In 2010, the Labour Government produced a White Paper called “Building the National Care Service”, a copy of which I have with me. Before that, in 2009, we had a Green Paper and the “Big Care Debate”, involving 68,000 people. Members are right that we need that big conversation with the public, but we have already had it once—we held it in 2009. We had firm plans to build a national care service. In seven years, this Government abandoned those proposals, established the Dilnot commission on the future funding of adult social care, adapted Dilnot’s proposals for their 2015 manifesto and then abandoned them. I call those seven wasted years. We appear to be back where we were in 2009.
As we have heard, it is clear that the demographic pressures in social care have a real impact on the NHS. In a typical hospital at any one time, two thirds of in-patients are over 65 and more than a quarter have a diagnosis of dementia. On top of rising demand, the Government have simultaneously sought to pass on what I see as unachievable savings. As we have heard, hospitals already have record deficits. NHS providers ended last year with a £2.5 billion deficit, although the Nuffield Trust suggests that the real underlying deficit was closer to £3.7 billion. The Public Accounts Committee identified that the NHS is resorting to
“repeated raids on investment funds in order to meet day-to-day spending”.
We have heard those issues covered in this debate.
The decision to provide just £100 million in the Budget for capital investment looks odd, given that the NHS had to resort to raiding £1.2 billion from capital funding this year just for day-to-day running costs and faces a £5 billion repairs backlog. It has become increasingly clear that a £22 billion savings target for the NHS is simply not realistic. The Public Accounts Committee said:
“we remain concerned about whether plans are really achievable”.
Not one independent expert I have seen believes that such savings can be achieved with services maintained at current levels, and I am worried that efficiency savings on that scale will increasingly affect the quality of care that patients receive. We know that the number of trolley waits rose by 58% last year and the four-hour target has not been met since July 2015, and we have now heard about the rationing of hip replacements.
Importantly, the King’s Fund told us this week that the financial pressures on mental health services have been
“a major factor driving large-scale changes to services, which may have had a detrimental impact on patient care”.
Its report states that patients who are able to access treatment get fewer contacts with adult secondary mental health services. That suggests that there is rationing of support in England. It is also clear that the shortage of specialist mental health beds is resulting in a significant increase in the number of patients being sent for treatment away from their home area. In the four months to January this year alone, more than 2,000 vulnerable people in England with serious conditions such as schizophrenia, psychosis and anorexia were sent for out-of-area treatment. Almost half those placements were more than 60 miles from the patient’s home, and one in five of those patients were admitted to a psychiatric intensive care unit.
The Public Accounts Committee said that
“the financial performance of NHS bodies has worsened considerably and this trend is not sustainable.”
In social care, mental health and the NHS, it is evident that the most vulnerable people in our society are bearing the brunt of financial pressures. We have heard a strong consensus in this debate that that has to change.
The Minister of State, Department of Health (Mr Philip Dunne)
I congratulate you on chairing this substantial debate so efficiently, Mr Bailey. Some 31 colleagues were present—that is a very high turnout for Westminster Hall—of whom 18 spoke, including three distinguished Select Committee Chairs and two Opposition spokesmen. Certainly I have not attended such a significant debate in Westminster Hall, and it reflects our common interest in ensuring that the NHS and social care services in this country provide as high-quality a service to the public as possible.
Virtually all speakers welcomed the developments in last week’s Budget, and I welcome that broad consensus across the Chamber. Only one discordant note was struck—reference was made to a march in the streets of London led by the shadow Chancellor, the right hon. Member for Hayes and Harlington (John McDonnell). That march obviously demonstrated a degree of concern, but it happened before the Budget, which, as I shall touch on, responded to many of the concerns that have been raised.
We all recognise that the NHS faces a significant challenge, given the increasing demand for health services as a consequence of our ageing and growing population, new drugs and treatments, and safer staffing requirements, and that in turn is increasing the pressure on social care services. We know that finances are challenging for both areas, which is why we have ensured that spending on the NHS has increased as a proportion of total Government spending each year since 2010.
We backed the “Five Year Forward View” as part of the spending review in late 2015. That ensured that real-terms NHS funding will increase by £10 billion by 2020-21 compared with the year before the spending review. Some hon. Members said that they wanted to see a plan. We have supported the NHS’s own plan—the “Five Year Forward View”—and announced that we will publish a Green Paper this summer looking at how social care is funded in the long term, which hon. Members have welcomed, so it is churlish to deny that this Government are providing long-term strategic thinking about the way we fund both those services. I remind colleagues that the NHS budget was £98 billion in 2014-15 and will be £119.9 billion in 2020-21. That is a £21.8 billion increase in cash terms, which seems to get lost from time to time in these discussions.
We are almost at the end of the financial year. The NHS received a cash increase of more than £5 billion in 2016-17. That was front-loaded, as NHS chief executive Simon Stevens requested. For the year that starts on 1 April, there will be another significant increase in funding once the mandate is settled. The hon. Member for Bristol South (Karin Smyth), who is a member of the Public Accounts Committee, asked when we will see that document. It has to be published by the end of this month, and I assure her that it will be.
The measures announced last week, which many hon. Members referred to, have three features. I will not go into them in detail, because they have all been covered. Much of the focus has been on the additional £2 billion that we will provide for social care over the next three years, half of which will start to come in next month, when the new financial year begins.
Some hon. Members are aware of the numbers for their areas and some are not, and one colleague came up with a slightly incorrect figure. I will not go through every area, but I applaud the presence of Devon MPs in particular, given the manner in which they have massed themselves with colleagues from across the House. Devon will get a £30.3 million increase in its social care budget over the next three years and will receive half of that in the year that is about to start. My hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) referred to an £18 million increase for North Yorkshire. I can give him a bit of good news: it will actually be £19.6 million over the next three years. I am grateful to the Chair of the Public Accounts Committee, the hon. Member for Hackney South and Shoreditch (Meg Hillier), for her support for the Budget measures. Hackney will receive £12.8 million, as she acknowledged. Like many colleagues, she sought a long-term funding settlement.
Mr Dunne
I am afraid I cannot take interventions, as we have very little time.
The spending review provided a settlement for the NHS. The Chancellor indicated that there will be a social care Green Paper this summer. Several colleagues called for a cross-party consensus. The Green Paper will provide an opportunity for debate and consultation, and such discussions should focus on that.
The second Budget measure was a £100 million increase in funding for A&E services, so that people who present at A&E who do not need intense or urgent care can be diverted to GPs or clinics run by nurse practitioners. That best practice has been proven to work in A&Es that have such a streaming service, so we are looking to provide facilities for basic capital spend to ensure that every A&E hospital across the country has streaming in place by next winter. I am pleased that that has been welcomed by hon. Members from across the House.
The third measure—this was touched on in the debate, albeit not in such detail—is the £325 million capital investment in the first set of sustainability and transformation plans. Those who make the strongest case for investment and can deliver better, more joined-up services, which can bring real improvements to patient care, will benefit from the funding. We look to that to be an exemplar for other areas whose plans are less well developed, to encourage them to develop a better, more integrated approach to patient care for the future, including closer working with local authorities for the provision of social care. That should encourage areas to bring forward more comprehensive plans for the next wave of STPs, which will be supported. As hon. Members have said, we look forward to explaining more about that at the time of the next Budget.
Mrs Drummond
Something that has been missing from the debate is the 6.5 million carers in the UK— 17,000 of them are in Portsmouth—who save costs of £132 billion a year. Will the Minister recognise that in the Green Paper and, in particular, respite care for them?
Mr Dunne
In the sustainability and transformation plans there is the opportunity for commissioners of care and health services to look holistically at the demands of the residents in their area, which to a degree includes palliative care and respite care. As we move towards an STP, there is a greater opportunity for those things to be considered as well.
Barbara Keeley
I agree with the hon. Member for Portsmouth South (Mrs Drummond). There is a real dearth now and respite care for carers has got lost. With £120 million, 40,000 carers could be helped with a respite care break. The Minister should look at that.
Mr Dunne
As I just said, the STPs provide an opportunity for areas to place greater focus on respite care if they consider that to be required.
I would like to touch on the adequacy of the social care funding package. The announcement means that in the next three years councils will have access to some £9.25 billion of more dedicated funding. That includes extra money going to local authorities through the combination of the improved better care fund and the social care precept, which, for those councils introducing it with effect from next month, will raise some £1 billion extra. The £1 billion provided in the Budget and the £1 billion from the precept amount to the £2 billion called for by external sources for the coming year. That funding will allow councils to expand the numbers of people they are able to support and, in turn, address issues at the interface with the NHS such as delayed discharges from hospital, which as we know cause problems with patient flow through the system.
Questions were raised about how the social care funding is to be allocated. I inform colleagues that 90% will be allocated using the improved better care fund formula to local authorities that have responsibility for adult social care. That distribution takes account of the ability to raise money through the council tax precept for social care and means that it is well targeted at areas of greater need and market fragility. However, in recognition of the social care pressures faced by all councils, 10% of the funding will be allocated using the relative needs formula.
The response to the measures from external audiences reflects comments made by hon. Members today: they have been broadly welcomed. Of course, several hon. Members said that it is not enough, but that is a traditional response to any increase in money—it is always easier to say that it is not enough. Hon. Members have generally recognised that the Government have listened to concerns about social funding. Those of us with responsibility for the health service recognise that there has been a particular problem in dealing with delayed discharges from hospital. Through closer working in the sustainability and transformation plans as they are rolled out across the country, with local authorities working more closely with health service providers, we think that the money will provide a lifeline to help to remove some of those pressures and to improve patient flow through our hospitals.
I would like to touch on the medium-term challenge and how in the coming months we can try to use the development of a social care Green Paper to address the longer-term concerns. The Government are committed to establishing a fair and more sustainable basis for funding adult social care in the light of the future demographic challenges that the country faces. We will therefore bring forward proposals to put the state-funded system on a more secure and sustainable long-term footing, setting out plans in a Green Paper. Some hon. Members asked when the Green Paper will be published. If I was in charge of Government timetabling, I would be in a better position to answer. They will not be surprised to hear that I cannot give a definitive answer, but, to use traditional parliamentary language, it would be fair to say that it is expected to be published in the summer.
Mr Bradshaw
Will the Minister clarify the Government’s position on the idea of a posthumous levy on estates? The Chancellor ruled that out, yet we read in the newspapers that the Prime Minister slapped him down over that. Are the Government ruling it out or not?
Mr Dunne
I will not pre-empt anything in the Green Paper, and it is not for me to give the right hon. Gentleman any comfort on discussions that might or might not have happened around the Budget.
We recognise that the NHS and social care face huge pressures and that there is more for us as a Government to do. However, we can be confident that we have plans in place both to cope with the pressures that we currently face—winter, A&E pressures and delayed discharges—and to sustain the system for the future. We have a long-term plan in place through the “Five Year Forward View” and the efficiency work being undertaken and rolled out progressively this year. We have given extra funding to both the NHS and social care to support those plans, and we have plans to bring forward a Green Paper on social care. I am pleased that that was broadly welcomed and recognised by hon. Members and distinguished parliamentarians in the debate, and I am grateful for that support.
Meg Hillier
I thank all hon. Members for their contributions to this thoughtful and reasoned debate. I do however need to challenge the Minister on his suggestion that there was strong support for the Budget measures. Let us not overplay it: there were “buts” in the speeches of nearly all hon. Members. Therefore, while those measures are a help, I think everyone agreed that they are not sufficient, because that is not long-term funding.
Let us be clear. We have had short-term funding though the better care fund, a recent announcement on money for GPs at A&E, the cash injection of £2 billion for social care front-loaded for the next financial year, and a precept increase of 2%. None of that is long-term sustainable funding. Let us also nail the issue of the £10 billion with which the NHS plan has been resourced. That has now been stretched by the Government over a six-year period, not five years—both my Committee and the Health Committee have highlighted that—while they continue to seek a 4% efficiency saving. It is not just the Select Committees saying that; the Comptroller and Auditor General said of the NHS accounts that there is not yet
“a coherent plan to close the gap between resources and patients’ needs.”
Ministers really need to get a grip on that.
Will the Minister write to the Select Committee Chairs, outlining in more detail not just the timescale for the Green Paper’s publication but the proposed plans for discussions around that and when it will be taken further forward? Will he also write to us about the Care Act, phase 2, which has come up in the debate, albeit not mentioned directly? The permanent secretary at the Department of Health could not give an answer to our Committee. He talked about it being postponed, possibly to 2020. It would be helpful if the Minister would write to say what is happening with that element of the Care Act.
There is a strong view that there is a need for a long-term solution, and the Budget measures are not yet that. Health and social care are interconnected, and hospitals are not a great place for older people to be in. We need to ensure that we have a long-term sustainable solution to keep people out of hospital, keep them well as long as possible and keep them independent. That requires long-term thinking, not the sticking-plaster measures that we keep seeing unveiled by all Governments at the time of elections, especially in the light of cuts.
Motion lapsed (Standing Order No.10(6)).
Food Labelling
(7 years, 9 months ago)
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Julian Sturdy (York Outer) (Con)
I beg to move,
That this House has considered the future of food labelling.
I draw hon. Members’ attention to my declaration in the Register of Members’ Financial Interests.
Accurate food labelling is vital to UK food producers and consumers. It is important in ensuring that there is a fair, functioning market in the sector. It enables products to compete on a fair basis—especially given that imports are often made to lower quality, with poorer animal welfare standards. It allows consumers to make informed choices about how they want to buy, without being misled. As the 2013 horsemeat scandal demonstrated, our labelling regime has an impact on consumers and businesses in every community in the country. Of course it also has a particular impact on farming and food manufacturing businesses and the wider rural economy.
The Minister’s Department calculates that the value of food and farming to the economy is about £108 billion, and the sector employs one in eight members of the total workforce. The strength of British agriculture is essential to maintaining food security and to the conservation, through its vital role in land management, of the countryside and landscapes. A strong farming sector also sustains rural communities, especially in more remote areas where there may be fewer alternative sources of employment. I know that the Government are committed to supporting the agriculture sector, and that support is all the more important as we face the challenges and opportunities of leaving the European Union.
Julian Sturdy
I give way to the Chairman of the Select Committee on Environment, Food and Rural Affairs.
Neil Parish
I thank my hon. Friend for obtaining this excellent debate. It is great that we have high standards of animal welfare, but they cost the industry money; does he agree that, as we get new trade deals and leave the European Union, we must be certain to label products securely so that we can stop imports coming in if they do not meet our standards? We should properly label our products; otherwise our farming community and food industry will be seriously disadvantaged.
Julian Sturdy
I entirely agree, and that is exactly why I wanted to have the debate now. I do not know whether my hon. Friend has seen a copy of my speech; but he is right. There will be opportunities and challenges for the food and farming sector in leaving the European Union. Developing a comprehensive and accurate food labelling regime is an indispensable element of that.
Rebecca Pow (Taunton Deane) (Con)
I applaud my hon. Friend for obtaining the debate, at just the right moment. Often when we shop online we do not know whether the food is British. Could consideration be given to a button to press when doing an online shop to enable people to choose from just British produce? Surely that would really help us as we leave the EU.
Julian Sturdy
As always, my hon. Friend brings a new dimension to the debate. If I am honest, that is something I had not thought about, but I applaud the idea, which is excellent. I hope that the Minister will take the point on board.
As hon. Members will be aware, the relevant law has mainly been decided by the European Union, so our withdrawal gives us the opportunity to tailor the rules to the needs of the United Kingdom. I firmly believe that withdrawal must not mean going back on the progress made during our EU membership.
David Simpson (Upper Bann) (DUP)
I too refer hon. Members to my entry in the Register of Members’ Financial Interests. I do not disagree with anything that the hon. Gentleman has put forward, but how are we to motivate consumers, who are driven by price and not always by concerns about the country of origin?
Julian Sturdy
I have some sympathy with what the hon. Gentleman says, but I will remind him about a supermarket founded in Yorkshire that has put a levy on its milk and gives that money back to the farmer. The consumers pay slightly more for their milk but know that the extra goes directly back to farmers. I will not name the supermarket, but that item has been its fastest growing product. That shows that when consumers have knowledge, because of proper labelling, they are prepared to buy British.
Dr Daniel Poulter (Central Suffolk and North Ipswich) (Con)
I commend my hon. Friend on bringing the debate today. I am sure that he will be aware, as I am from the experiences of Suffolk farmers, that far too often some current EU regulations—I say this having voted remain—prohibit the proper marketing of local produce. They make it much more difficult for consumers to know that they are buying genuinely British beef from farms in Great Britain. At the moment, some of the beef they buy could be from overseas.
Julian Sturdy
I entirely agree. My hon. Friend is right that it is crucial to have accurate labelling. That should not only mean country of origin labelling; it should go right down to local and regional labelling.
Justin Tomlinson (North Swindon) (Con)
My hon. Friend is making a typically powerful and timely speech on an important subject. On the same point, does he share my frustration when some supermarkets try to take advantage of consumers’ good will and support for local manufacturers by making up fictitious brands such as “Nightingale Farms”? We consumers make purchases, thinking we are supporting the UK industry, only to discover that it is a fictitious brand.
Julian Sturdy
That is another excellent point in what is indeed an important debate. I entirely agree: this is about making sure that labelling is accurate and fair to the producer and the consumer—so that the latter can make a properly informed choice. As my hon. Friend pointed out, that is not always the case.
I firmly believe that withdrawal from the EU must not mean going back on the progress that we have made.
Neil Parish
On the point about mislabelling, there is a big chain in this city and others that sells Angus beef, which I suspect is not Aberdeen Angus, from either Scotland or the rest of the United Kingdom, but mostly south American. I suspect that because it is labelled Angus beef, a lot of people eating it think that it is home-grown Angus beef.
Julian Sturdy
My hon. Friend makes a good point. I know exactly the places that he is talking about; I cannot say I have frequented them, but I know where they are and they stand out very well in the capital. What he says is right, and it goes back to the point made earlier. It is a question of consumer choice, but consumers want accurate information—whether online or in restaurants—so that they can make an informed choice about the products they buy.
The three main types of origin label are country of origin, method of production and method of slaughter. In this short debate—I am already running out of time—I intend to concentrate mainly on country of origin labelling, because I feel it is both the category for which accurate labelling is most important and because a British product is already guaranteed to be made to some of the highest standards of quality and animal welfare in the world. While accurate labelling is obviously important for producers, we also know that it matters deeply to consumers. It is therefore only right that labelling is clear and accurate.
Department for Environment, Food and Rural Affairs figures from 2016 show that just under 40% of shoppers check food labels for national origin, while separate research suggests that figure rises to 47% for meat products—double the percentage who look at nutritional information. Under EU rules, country of origin labelling is currently mandatory for unprocessed pork, sheep, beef, goat’s meat, shellfish, poultry, most fruit and vegetables, wine, honey and olive oil. That is a fairly recent development for sheep, pigs, goats and poultry, applying only since April 2015.
The bottom line is that the substance of these regulations must be preserved as the bare minimum when we cease to be an EU member state; promoting “brand Britain” through our exports will become all the more important as we move towards the exit door. I also believe that the Government must act to remedy existing problems with these regulations once they have the power to do so independently. As the Environment, Food and Rural Affairs Committee was told last year during its “Farmgate prices” inquiry, EU rules allow for the national origin of meat to be given as the country where the last significant change in production took place and not where the animal spent all of its life. For me, that does not amount to a fair, common-sense definition of national origin.
Published in May last year, the Government’s response to the Committee’s report said that they were
“continuing to press at EU level for mandatory country of origin labelling for staple food products.”
The wide scope of action that that suggests is very welcome.
Alison Thewliss (Glasgow Central) (SNP)
I thank the hon. Gentleman for initiating this useful and informative debate, and I welcome the case he is making. Should infant formulas be added to the products that he suggests should have country of origin labelling? The ten-minute rule Bill that I presented on marketing of formula said that country of origin labelling might be useful in helping consumers to make an informed choice if it were put on the tins and made clear exactly where the formula came from.
Julian Sturdy
I entirely support that; it is another sensible suggestion of where we should consider country of origin labelling. Parents would look at that in great detail and want to make an informed choice for their children. It goes back to the point that consumers need information so that they can make a detailed, informed choice. On the point I was making, I hope that the efforts Ministers were planning to expend on the EU in that regard will now be channelled into examining the opportunities for the UK on this issue on a similar broad basis. I am sure that the Minister will look at this in detail.
I will focus the rest of my remarks on the difference between fresh meat, which, as I have said, is subject to mandatory country of origin labelling, and the wider range of processed meat products, which are not. That is the most striking example of the regulation needing urgent improvement. It should not always fall to a Yorkshireman to plead for plain-speaking and straightforwardness in this place; I know that the Minister will probably argue that the south-west does an equally good job of speaking straightforwardly—calling a spade a spade. However, the current divergence between country of origin rules for meat and processed meat products is a significant source of unfairness and confusion within the UK meat market.
The lack of mandatory labelling for processed meat products and our own Food Standards Agency guidelines mean that those products can legally be labelled as British or “made in Britain” if they are only processed in this country, even if they are made from non-British meat. It is important to bear it in mind that products not currently covered by mandatory country of origin labelling make up a huge share of total meat consumption, including pies, ready meals, ham, bacon and sausages. Crucially, those products are displayed side by side on supermarket shelves with fresh meat that is subject to mandatory country of origin labelling requirements. A national origin label on two very similar products sitting next to each other can in fact mean very different things, potentially misleading the consumer and disadvantaging both them and British agriculture.
There is a significant number of welcome voluntary schemes that encourage country of origin labelling of processed meat products, such as the Red Tractor label and the voluntary standards agreement agreed by the industry and DEFRA in November 2010, but the fact that they are voluntary obviously limits their effectiveness. The number of different labelling schemes, each with their own standards and applying to some producers but not others, risks confusing consumers and prevents a level playing field on which products can be judged according to one ultimate standard.
Current food standards guidelines suggest that the country of origin of principal meat ingredients should be declared, and that any information provided cannot be misleading. Sadly, that is not sufficient to prevent unclear or inaccurate labelling of processed meat products. For instance, a packet of two gammon steaks from one of our leading supermarkets can be labelled
“produced using pork from the UK”
on the front, while the back of the packet reveals the more complete information in small print—that it was
“produced in the UK using pork from the EU”.
Similarly, a spaghetti bolognese ready meal from another leading supermarket can bear the Scottish flag on the front to indicate that it contains Scottish beef, clearly implying that the meat in the product is 100% of UK origin. However, in small print on the back is the information,
“produced in the UK using Scottish beef and Italian, German and French pork”.
That is all hugely unfair to our producers, who have gone to great efforts to ensure that their produce is of the highest standard, which is rightly demanded in this country, and should not have to see their products labelled as being no different from imports from countries where standards are much lower. For instance, research has suggested that an estimated 70% of pork imports fall below UK standards. The classic example of that is sow stalls, which have been banned in the UK for 10 years but remain common practice in many other countries.
Rebecca Pow
My hon. Friend is making a good point. We are not self-sufficient in food in this country. If we get the labelling aligned correctly, does he think that it would give farmers, like those in my constituency of Taunton Deane in the south-west, more opportunities to produce and sell more?
Julian Sturdy
I think it will allow farmers to compete against imports on a fair pitch, as it were. That is very important, because at the moment I feel it is very skewed by the labelling. Whether in my hon. Friend’s patch, up in Yorkshire or anywhere within the UK, including Scotland, Northern Ireland or Wales, British agriculture produces products to some of the highest standards and the highest welfare standards in the world. That is not reflected fairly within food labelling at the moment, and we have to ensure that it is.
It seriously inhibits consumers’ choice if we do not get this right. We know that many consumers wish to buy British meat, in many cases because of the high quality and high animal welfare standards to which it is produced. Research suggests that 74% of people believe it is important that the meat they buy is of UK origin. That strengthens the point made by my hon. Friend the Member for Taunton Deane about what such labelling can do for UK agriculture. However, under the current regime, consumers are restricted in their ability to do so.
For meat and processed meat products more broadly, I urge the Minister seriously to consider establishing a clear single UK country of origin standard, with a single country of origin label on the packet meaning that the animal was born, raised and slaughtered in the country and making it clear that the location of the last substantial change to the product is not an adequate description of its origin.
I also believe that the Government should use their new freedom of action outside the EU to proceed with introducing mandatory country of origin labelling for dairy products wherever possible. The Minister has made clear his disagreement with the unwillingness of the European Commission to act on that issue, and I therefore hope that in making this call I am pushing at an open door.
The future prosperity of the food and farming sector and its ability to maintain and enhance its export performance will also depend on the promotion of traditional regional and speciality foods, which is another issue within food labelling. Given the time, I will not go into that, but it is worth putting it on record that that is an important sector within food labelling that we need to focus on.
Finally, I urge the Minister to ensure that the labelling standards I have described are preserved in future trade agreements with the EU and other countries, so that British agriculture is able to thrive in conditions of fair competition, with accurate disclosure of origin information to the consumer. Accurate, honest country of origin labelling in food is of great importance to the success of UK agriculture, the prosperity of rural communities, the rights of consumers and the competitiveness of our products in the world market. I look forward to seeing what measures the Minister can bring forward in this area as the Government develop the first independent UK farming policy for more than 40 years.
The Minister of State, Department for Environment, Food and Rural Affairs (George Eustice)
I begin by congratulating my hon. Friend the Member for York Outer (Julian Sturdy) on securing this very important debate. He is known for campaigning on these issues and, as he said, as a straight-talking Yorkshireman. In fact, I shall be visiting Yorkshire this Thursday and look forward to lots of straight talking about the future of agriculture policy.
This is a very important issue. UK consumers spend £200 billion on food, drink and catering services each year. Consumer confidence is key to the integrity of the supply chain, and that is more important in food than in anything else. As my hon. Friend pointed out, existing regulations are largely set out in the food information for consumers regulation, which dates from December 2014. It sets out in quite a bit of detail mandatory labelling requirements for the name of the food, the list of ingredients, ingredients causing potential allergy or intolerance, the quantity of specific ingredients or groups of ingredients, net quantity of the product, the use-by date, any special storage conditions, the name and address of the food business operator, the country of origin, instructions for use where required, alcoholic strength and nutrition declarations. That is a fairly comprehensive set of regulations. The UK helped to shape those regulations at UK level, but when we leave the EU we will take our position again on Codex, which is the UN body that tries to set standards internationally and is increasingly influential in this area.
On leaving the EU, there will be an opportunity to do things differently, to improve things and to introduce clearer labelling in some areas. However, it is also important that we have continuity; we do not want to throw the baby out with the bathwater. That is why in the first instance the great repeal Bill will put all our existing regulations pertaining to food labelling and all other aspects on a legal footing in UK domestic law. There will then be opportunities over time to revisit things.
While I appreciate that this was not a major focus for my hon. Friend, we are looking at whether we can have some kind of mutual recognition of existing protected food names. That will be important for European countries seeking recognition in the UK as well. We are looking at whether we could use trademark regulations to develop brands in other areas.
My hon. Friend the Member for Tiverton and Honiton (Neil Parish) mentioned Angus beef. There is another issue with Angus beef, which is that it is not always—or indeed, rarely—from a pedigree Angus animal; it is usually from one crossed with a dairy animal. We will have the opportunity, through trademark regulations and other intellectual property law, to develop brands for pedigree native beef breeds, for instance, which we are looking at.
I want to talk predominantly about country of origin labelling, which was the focus of my hon. Friend the Member for York Outer. As he pointed out, since April 2015 country of origin labelling has been required for fresh and frozen meat from pigs, sheep, goats and poultry. It has been required for fresh beef since 2003 and for certain fish products since 2000. As my hon. Friend knows, we have campaigned for the extension of mandatory country of origin labelling to cover some dairy products. The European Commission has always resisted that, arguing that it is too complex for processed products. Our view is that it might not be possible for all dairy products but would certainly be possible for some, such as butter and cheese, where it is relatively easy to identify country of origin. Once we leave the EU, there will be an opportunity to look at strengthening mandatory labelling in that area, if that were the view of the Government of the day.
My hon. Friend mentioned the fact that beef sometimes is not born, raised and slaughtered in the country of origin. My recollection of the regulations—I can double-check this—is that in the case of beef, for the label to state country of origin as UK the animal must be born, reared and slaughtered in the UK. For other meats, the animal must be reared and slaughtered in the UK. It is possible to say “slaughtered in the UK” if the animal is not born and reared here. The regulations cover this issue to some extent for fresh meat.
My hon. Friend also raised important issues about processed meats, which are more complex. A composite product such as a pizza might have vegetables on it from different parts of the country and might use flour from one country, meat from another or, indeed, meat from two countries. It is harder to put country of origin labelling on all processed meats.
There has been a growing tendency for other foods to be labelled voluntarily with their country of origin. For example, the vast majority of lightly processed meat products, such as bacon and sausages, already have country of origin labelling as part of a voluntary scheme, but it gets harder with some of the more complex products. I am always open to strengthening transparency for consumers. If there is a way of going further, beyond the issues we have highlighted previously in the case of dairy, we can look at that.
My hon. Friend mentioned method of production labelling. There are some very good voluntary schemes, such as the RSPCA Assured scheme, which recognises high standards of animal welfare, as well as the British Lion eggs and Red Tractor schemes. We are keen to encourage those further.
I want to touch on a couple of other points. My hon. Friend the Member for North Swindon (Justin Tomlinson) raised the issue of slightly dubious farm name brands used by supermarkets. That is a difficult area. While those cannot mislead, there are cases where, for instance, a brand celebrates a product of a particular standard. I have heard some people complain about the Duchy Organic label because the products are not always produced on Duchy farms; in fact, they rarely are. It nevertheless is an important organic standard that has recognition. This is a difficult area. Labels are not allowed to mislead people, but I accept that some labelling is in a slightly grey area.
My hon. Friend the Member for Taunton Deane (Rebecca Pow) talked about online shopping. We are discussing that with the National Farmers Union; it may be one way we can avoid voluntary principles. We have had a very good debate, and I will take on board these points.
Question put and agreed to.
Detention of Vulnerable Persons
(7 years, 9 months ago)
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Anne McLaughlin (Glasgow North East) (SNP)
I beg to move,
That this House has considered the detention of vulnerable persons.
I have brought this debate to the Chamber because the arguments about detaining people simply because of their immigration status are not over. I will argue that that is not necessary, is extremely damaging and is not cost-effective. I will also argue that unless the Government get on with examining the alternatives and implementing the bulk of the Shaw review recommendations with alacrity, I can only conclude that the use of immigration detention for vulnerable people is purely ideological. To make my arguments, I will explore the impact of detention, particularly on vulnerable people; say something about the alternatives to detention; and highlight some of the Shaw review recommendations that have not been implemented more than one year down the line.
I will say at this point that my experience of the Minister for Immigration, limited as it is, is that he has listened when I have had something to say and he has acted, so I come to this debate fairly sceptical but not completely cynical. I very much hope that today will signal a turning point.
I thank all the organisations that wrote to me and provided me with information. It did not make pleasant reading, but it is important to know what is going on. I pay tribute to all of them for the work that they do. They include Scottish Detainee Visitors, Detention Action, Medical Justice, the Scottish Refugee Council, the English Refugee Council, the Immigration Law Practitioners Association, Liberty, the United Nations High Commissioner for Refugees, Asylum Aid, the Helen Bamber Foundation, the Association of Visitors to Immigration Detainees, and the Detention Forum.
I am fortunate: I have never had to flee my home or my country and I have never been detained for anything, far less detained without having committed a crime. However, I know the damage that it does to a person’s physical and mental health to experience that. I know because of what I read and because of friends who have been through it. I will refer to two sets of friends of mine who have been in immigration detention.
Mr David Burrowes (Enfield, Southgate) (Con)
I congratulate the hon. Lady on securing a debate on a subject whose time has come again—many of us have been involved in debates on it in times gone by—but may I caution her on something? I welcome her scepticism: she is right to be sceptical, given the evidence that she will present to us. However, I would hope and expect my hon. Friend the Minister not to say that the reason for continued detention of vulnerable people is in any way ideological. Sadly, it could well be administrative. That is unacceptable too, particularly when the Government have said to Parliament that the presumption should be that those who are at risk are not detained.
Anne McLaughlin
I genuinely hope that the hon. Gentleman is right and the reason is not ideological, but we can only wait so long before we come to the conclusion that it is. Hopefully, though, it is not.
In case the Minister thinks that I am coming to him with worst-case scenarios, I will start with the best-case scenario and tell him about Romeo—that is not his name, but he is a bit of a Romeo, so I have decided to call him Romeo rather than using his real name.
Nobody is better equipped to deal with immigration detention than Romeo. He has a creative, flexible and problem-solving approach to life. He is confident, vibrant and philosophical, and deals with whatever life brings to him. However, this is what he told me about the time when he was detained. He had woken up early to pick up ingredients from a friend who was leaving this country to go back to her European country. She had baking ingredients and knew that he loved to bake. He came out of his door, and the next thing he knew he was handcuffed and shoved in a van and then in a detention centre.
Romeo said that trying to get in touch with the friend to tell her why he could not make the appointment was difficult. Trying to explain to somebody who does not come from the UK that he was in detention but had not committed any crime was quite distressing for him. He told me that he asked whether, if he was to be deported, he could go to his room and get his stuff, and he was told, “You’ll never see your room again.” There were two UK Border Agency officers there at the time. One said to him, “You sound Scottish; you sound British,” and the other said, “You’re not British and you never will be.” He said to me, “Even though I am that person who can cope with anything life throws at me, it was so hard to hear that from somebody.”
I will now go to my worst-case scenario—the worst experience that any of my friends have ever had. A friend of mine from Eritrea and her 10-year-old son were detained in Dungavel immigration removal centre. I want at this point to mention the work of Scottish Detainee Visitors. Its visitors visit people in Dungavel and have done so for many years. As it has pointed out to me, and as others will say today, Dungavel is a particularly difficult place to be detained, because of its isolation; it is 6 miles from the nearest public transport. I was in daily contact with the mother by phone, and the son said to her after a few days, “We can’t live like this, Mum. Please can we die?” And every day after that until they were released, he asked her, “Please, Mum. Please just let us die.” Can anybody imagine their own children thinking that, far less pleading with them to let them end their lives?
I know that we have reduced the number of children in detention, but we have not stopped it; we had 71 in detention last year. However, the point that I want to make is not about children in detention. Yes, we all agree that that is wrong, but the mother told me that it was so hard for her to respond to her son and tell him that there was something to live for and he had to keep on going, because she was not feeling it herself—she, too, wanted to end her life. The reason she did not was that she had gone through so much to save this child’s life, she was not going to allow them to end it there and then.
John Howell (Henley) (Con)
The hon. Lady is telling some really important stories that are bringing the points home to us, but I wonder to what extent she feels the situation would be significantly worse if the people involved had serious mental health problems, and whether the system is capable of dealing with that.
Anne McLaughlin
I will come on to say a little about that issue, and I thank the hon. Gentleman for raising it. One of the most significant issues is that the system is not capable of dealing with people who have mental health problems, and the agreement was that people with mental health problems would not be detained, but unfortunately that is still happening. As I said, I will come to that.
Tulip Siddiq (Hampstead and Kilburn) (Lab)
The hon. Lady is making a passionate speech about a very important issue that is close to my heart. She will be aware of my constituent, Nazanin Ratcliffe, a mother who has been imprisoned in Iran for a year and is suicidal. In April, it will be one year since she has spoken to her husband, and she barely ever sees her two-year-old daughter, Gabriella. Will the hon. Lady ask the Minister to make a point on that, because we need to bring Nazanin home, back to West Hampstead?
Anne McLaughlin
I echo that call and hope that the Minister will respond to it. The hon. Member for Hampstead and Kilburn (Tulip Siddiq) has fought long and hard for this woman who is fortunate to have her, but so unfortunate to be in the situation she is in—it is so wrong.
Mr Smith
The hon. Lady is being very generous. I congratulate her on the debate and agree with what my hon. Friend the Member for Hampstead and Kilburn (Tulip Siddiq) has just said. On medical conditions, does the hon. Lady agree that the issue is not simply mental health conditions? I would cite the example that I was told about of someone with an urgent arthritic condition, who, rather than being given medical treatment in Campsfield House IRC, was put on a bus to central Oxford, where a taxi driver who spoke his language got him to Asylum Welcome, and an ambulance had to be called. Do we not need urgent re-evaluation and attention to the medical guidance?
Anne McLaughlin
Absolutely. As I said, my personal experience of the Minister for Immigration is that he listens. He cannot be expected to know absolutely everything less than a year into the job. I hope that he will respond to that intervention and do as the right hon. Gentleman asks.
Immigration detention attacks and destroys the soul—it is soul-destroying. As many of the groups have told me—some of their members are here today—“If you are not particularly vulnerable when you enter detention, it makes you vulnerable.” And there are alternatives that work. That is the ridiculous thing. The Government agreed to look into the alternatives, but they have not done so yet, and I think they still need convincing. However, before I attempt to do that, let me look at what we all agree on: the recommendations—or some of the recommendations—of the Shaw review that the Government agreed to.
Most hon. Members will be aware that the review was published in January 2016. Its remit was to “review the appropriateness” of
“policies and practices concerning the welfare of those who have been placed in detention”.
Shaw begins his conclusion with a comment that hints at the frustration felt by many of the organisations that have worked on this issue over the years. He says:
“Most of those who have looked dispassionately at immigration detention have come to similar conclusions: there is too much detention; detention is not a particularly effective means of ensuring that those with no right to remain do in fact leave the UK; and many practices and processes associated with detention are in urgent need of reform.”
Mr Shaw’s 64 recommendations include a number that focus on vulnerable people. To their credit, the Government have made a bit of progress with some of the recommendations, but when dealing with a system as fundamentally flawed as the detention system, and working with people who are so vulnerable, there has to be both an urgency to the improvements and a recognition by Government that a handful of adjustments are just not enough.
I obviously do not have time to detail everything today—there were 64 recommendations—but I hope that other Members will talk about the particular issues for stateless people, pregnant women and transgender people, among others. Shaw called for the definition of vulnerable persons to be extended. He said that the presumption against detention should also apply to victims of rape and sexual violence, to those with post-traumatic stress disorder, to transsexual people and to those with learning difficulties, and he rightly includes people who have suffered female genital mutilation in those groups.
Many of the recommendations are said to be addressed by the introduction of the adults at risk policy, which is apparently intended to better identify and lead to the release of vulnerable people. But so far there is no indication that, despite those intentions, the policy is actually having that effect. Aspects of the policy are subject to litigation. Medical Justice and a number of other non-governmental organisations have raised concerns that instead of increasing protections for vulnerable people, the policy does the opposite—including by narrowing the definition of torture so that less vulnerable people will not be identified as torture survivors and protected. The policy states that survivors of sexual and gender-based violence should not be detained, but there is no proper mechanism for identifying them and no mechanism for monitoring whether they are being identified. Will the Minister agree today to introduce such mechanisms and, if so, when can we expect that to happen?
Recommendations 62 and 63 encourage the Home Office to further consider ways of strengthening the legal safeguards against excessive length of detention, and to investigate the development of alternatives to detention. Shaw, in turn, was influenced by the UN High Commissioner for Refugees, who said:
“Pragmatically, no empirical evidence is available to give credence to the assumption that the threat of being detained deters irregular migration, or more specifically, discourages persons from seeking asylum.”
However, Shaw did note a broad consensus on the damaging effects of both lengthy detention and the threat of it, stating:
“The indefinite nature of detention was almost universally raised as making people more vulnerable and for its impact on mental health. There was strong support for a time limit for detention, starting at 28 days.”
Paul Blomfield (Sheffield Central) (Lab)
The hon. Lady knows that I was the vice-chair of a cross-party investigation into immigration detention that included the hon. Members for Enfield, Southgate (Mr Burrowes) and for Bedford (Richard Fuller). There is a great deal of cross-party unity, which was reflected in a decision by the House of Commons on this specific issue of the impact of indefinite detention.
We heard evidence from people who said that such detention is worse than being in prison, because in prison people know when the sentence finishes. To take up the point made by the hon. Member for Henley (John Howell), that uncertainty and the indefinite nature are not only inappropriate for people with mental health challenges—but develop those challenges and create crises for people who have, in many cases, already suffered trauma.
Anne McLaughlin
Absolutely. It is very clear today that there is much cross-party consensus on this issue. On the length of time that people are held in detention, the Home Office’s own statistics show that migrants in detention are being held for longer since the publication of the review. That is astonishing. At the end of December 2015, the month before the Shaw review was published, 453 people had been detained for longer than four months. According to the Home Office, nine months later that number had gone up to 553.
The Minister for Immigration (Mr Robert Goodwill)
I am sure the hon. Lady is aware that many of those who are detained for longer than usual are foreign national offenders and are assessed to pose a risk to the public. There are about 1,300 foreign national offenders in immigration detention. Is she suggesting that those people should be released, even if they pose a risk to the public?
Anne McLaughlin
What I am suggesting is that this Government will always raise that point. They will always say that. I am talking about people who have committed no crime. The Minister wants to talk about people who are in immigration detention because they have a criminal conviction; I am going to assume that they were sentenced, served a prison sentence and should be treated the same as any other prisoner. If they are a danger, they should not be out of prison. If they are not a danger, they should not be in detention.
Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)
As one of the few people in the Chamber who was actually in the House when immigration detention as we know it was introduced, I have never forgotten that when we queried the lack of due process and safeguards we were told that people would only ever be in detention for a few months. The use of immigration detention has mushroomed, and the length of time has expanded, and that has shone a light on the lack of due process. We should never forget that none of these people, as matters stand, has committed a crime.
Anne McLaughlin
Absolutely. I could not agree more. I was not here at that time; I was a Member of the Scottish Parliament, I think, and very aware of the arguments being used.
I want to say a little about how we treat people with mental illness. Often they have an illness that did not exist or that lay dormant before they were detained, and the detention exacerbates it. I mentioned some of the organisations that have sent me information for today. One of them, Detention Action, helped Mishka to tell his story. This is what he said about being detained:
“I was detained with my twin brother. It was very difficult for us. We went in ok and we came out broken. The last three days before my brother was removed he tried to commit suicide two times. The first time, there was blood everywhere. The officers and nurses were so annoyed. They are thinking he is just trying to escape from removal. The nurse put a plaster on his wrists and took him to segregation.”
For goodness’ sake! Those are my words, not his. He continues:
“There he ripped a piece of metal off the wall to cut himself again. He was very, very vulnerable by the end. He was not the only one. There were many other people in bad states—mental and physical. There is more than one suicide attempt a day in detention now. All I know is that when suicide becomes normal—anywhere, ever—something has gone very, very wrong.”
Alison Thewliss (Glasgow Central) (SNP)
My hon. Friend is making a powerful and strong case in defence of her constituents and many others; I have constituents in this situation as well. Does she know that I tabled a written question last year to ask how many detainees were currently being monitored because they were a suicide risk? Is she surprised to learn that on 21 December 2016, 78 detainees were being monitored in line with care in detention assessment procedures?
Anne McLaughlin
Actually, the thing that surprises me about that—I am not sure whether this is my hon. Friend’s point—is that the number is so low. I am telling the Minister that 78 is not the number of people in these circumstances feeling suicidal and considering suicide.
Such people are human beings who the Government agree should not be put through this; yet they are being put through it and the British Government are doing it to them. Every time the Government are asked when a recommendation that they have agreed to will be implemented, the answer is “in due course.” Notwithstanding all I said about the Minister at the start, I do not want to hear “in due course” today. That is not good enough. The most soul-destroying thing about being in detention is the unlimited nature of it—not knowing when or whether you will be released; the most soul-destroying thing for campaigners, many of whom have been in detention or are still at risk of detention, is not knowing when the Government will do as they promised.
I want to look at some of the alternatives to detention. There is a strong moral case for community-based alternatives. However, I am often, if not always, on a different side of the argument from this Government when it comes to discussions based on morality and values, so I will make the arguments based purely on effectiveness of outcome and cost.
In this place, I have often accused the Tory Government of knowing the cost of everything and the value of nothing. Yet when it comes to immigration detention, it seems that money is no object. Why? Why do we use the most expensive system, particularly in these times of austerity? Why is there no money to support people in need—vulnerable young homeless people who now cannot claim housing benefit, for example—but an unlimited pot of cash to put already vulnerable people through a living hell in detention centres, given that the Government agree that that is what they are doing and that it can be catastrophically damaging to people? Evidence is increasing that working with people in the community, using a case management approach, works.
Mr Burrowes
The hon. Lady perhaps understates the costs. What about people whose stay is extended, so their time in detention is longer than legally required? The compensation bill is going up by millions of pounds. That is taxpayers’ money, which is being wasted on illegal, extended detention. Frankly, that is a scandal—it should go on effective, alternative ways of controlling people.
Anne McLaughlin
In a recent two-year period, the bill for compensation for people detained illegally was about £10 million. I pay tribute to the hon. Gentleman for all that he does and says—it cannot be easy for someone when their Government are involved—and for all his campaigning on behalf of people in these circumstances.
There are a number of established alternatives to detention, such as the Toronto Bail programme, which is centred on community-based release. Importantly, that model has achieved a 94% cost saving compared with detention, and a compliance rate of 95%. I will not go into all the other models, but Sweden has a case management welfare and rights-based approach, which works with the person who is seeking asylum. Is the Minister aware that in 2014 in Sweden, the voluntary rate of return was 76%, whereas here it was 46%? Does he realise that the longer a migrant is detained, the more likely it is that they will be released from detention and not returned to their country of origin? Does that not just make the exercise completely pointless? Would it not be better to strengthen the decision-making process in the first place, and would that not be cheaper? Well yes, it would.
Richard Fuller (Bedford) (Con)
I am delighted that the hon. Lady has secured this timely debate. She talks about foreign examples, but we do not need to look offshore to reinforce her point. A signal achievement of the coalition Government was that they stopped locking up children in immigration detention and introduced the family returns panel. Since that was introduced in 2011, the voluntary return proportion has grown from 51% in 2011-12, to 76% in 2012-14, to a voluntary return percentage of 97% in 2014-16. Does that not fully reinforce her point without our needing to look abroad?
Anne McLaughlin
Absolutely. I pay tribute to my colleague, the hon. Gentleman, who is also on the Government Benches and has been a strong campaigner on this issue. I urge the Minister please to look at the different examples, domestically and internationally, because they save money and are more effective.
Before the hon. Gentleman’s intervention, I was about to invite the Minister to guess how much we spend each year on the long-term detention of migrants who are ultimately released and should therefore never have been detained in a removal centre. Well, he does not have to guess; independent research from Matrix Evidence uncovered the fact that we waste £76 million on that every year. I am calling on the Minister to look into strengthening the decision-making process—not just to save money, but so that we stop causing unnecessary trauma to individuals who have done nothing wrong.
The reason why we use the current system is definitely not effectiveness of outcome, given the much higher success rates in Sweden and Canada, and definitely not cost-effectiveness, so I am interested to hear the Minister’s explanation. Perhaps he can complete the following sentence in 15 words or fewer: “Well yes, Anne, it is the most expensive option, but it is worth it because…”. I tried, but he would not like my finished sentence and I do not like it either, so I ask him in all sincerity: why, when there are less expensive, more effective systems, do we not go for them as opposed to the system that we have?
I shall finish with this point. Yesterday, Nicola Sturgeon announced plans—this is relevant, Mr Davies—for Scotland to have an independence referendum. Last Thursday the Select Committee on Scottish Affairs had a debate in Parliament during which the Scottish National party called for immigration powers to be devolved. Either of those scenarios—further devolution or independence—are options for Scotland, but I have no crystal ball. There may be absolutely no change, but we will have to wait for the people of Scotland to decide. There is a real chance that we—not just SNP MPs, but MPs representing Scotland—will be out of here in the next few years, but we might not and people might still be being detained in Scotland against our Government’s will.
However, even if Scotland becomes independent, that does not mean we do not care what happens in the rest of the UK. Far from it—my fervent hope is that whoever is in power in the rest of the UK will see that Scotland is running a far more welcoming, humane immigration system and will follow suit when they see for themselves that it works and is cost-effective. I urge the Minister not to wait until then, but to make this something that he is personally in charge of and will expedite, because people have been waiting for long enough.
In this debate, I have focused primarily on those seeking refugee status—rightly so, because they are likely to be the most vulnerable, given that they have had to flee their own countries. But an IRC is an immigration removal centre, which means that anyone who is classed as an immigrant can be detained there—and they are. I was interested to read about the increasing number of Europeans being detained for long periods. The rest of the UK is leaving Europe, but that does not have to be hostile. Is it not time to extend the hand of friendship to our European neighbours and the rest of the world, and could that not start with treating their citizens who come to live here with respect, dignity and humanity?
Several hon. Members rose—
Geraint Davies (in the Chair)
Order. If hon. Members keep their remarks down to around eight minutes, we should get everyone in. I call Mr David Burrowes.
Mr David Burrowes (Enfield, Southgate) (Con)
It is a pleasure to take part in this important debate, which gives the Minister a chance to get a taste of the cross-party concern that was amplified last year in the run-up to the Immigration Bill—now the Immigration Act 2016. Many hon. Members, from all parts of the House, made it clear that indefinite detention was unacceptable—that was the easy point to make—and that there needs to be progress, not least towards a statutory time limit. Through the passage of the Act, and through Stephen Shaw’s scrutiny and welcome report, it was accepted—some of us conceded—that the welcome recommendations, the broad thrust of which the Government accepted, could well lead to a reduction in the numbers being detained and for how long.
Stephen Shaw talked about the package of “adults at risk” policies, individual assessments for removal and reviews, and the welcome progress that was made on outlawing the detention not only of children, but of vulnerable people, such as pregnant women, unless there are exceptional, limited circumstances. We all recognise that that package might not be the only lever to deal with too many people being in detention for too long—there are also statutory time limits—but it might be successful. However, Stephen Shaw said he that he would revisit that tool if progress was not made. Time has now gone by and, sadly, we have not seen the steps that were promised to Parliament and Members, so it may need to be revisited. I say advisedly to the Minister that cross-party concern will grow, not least in terms of interest in the blunt instrument of a statutory time limit, unless we see further progress.
Paul Blomfield
The hon. Gentleman and I have worked closely on these issues, and I pay tribute to his work. He is right to highlight that the progress we appeared to be making seems to have stalled. However, does he agree that there are worrying signs that things may be going into reverse? The most recent report on an immigration detention centre was done by the chief inspector of prisons on Brook House, where the average length of detention has increased, rather than decreased. Does he share my concern that that is a worrying sign? Clearly, we hope that the Minister will listen to the cross-party concerns that the issue needs to be addressed.
Mr Burrowes
I agree. There are warning signs. We have seen the reports in the media and elsewhere on Yarl’s Wood and the scandals that have taken place. We do not want to be in that position. We want to ensure that the recommendations, which were broadly accepted, mean real results, but we are not seeing them.
In January last year, the then Minister committed in Parliament to safeguarding the most vulnerable, with a clear presumption that people who are at risk should not be detained. I want to talk about the victims of trafficking and the need for reviews and assessments relating to their removal, not least because Ministers have given assurances, as did the Prime Minister last July. She made it clear—rightly, given that she has championed the cause of tackling modern slavery—that the Home Office has taken the lead. The Home Secretary is leading the task force, bringing Whitehall together in regular meetings, in which I am sure the Minister is also involved, to ensure that we apply our full force in tackling the evils of modern slavery, so that we can, in the words of the Prime Minister on 30 July,
“get a real grip of this issue”,
and
“drive further progress in the battle against this cruel exploitation”.
The words of the Prime Minister are pertinent to today’s debate. She wrote:
“Vulnerable people who have travelled long distances believing they were heading for legitimate jobs are finding they have been duped, forced into hard labour, and then locked up and abused....These crimes must be stopped and the victims of modern slavery must go free.”
The victims of modern slavery must go free and not be in detention.
I will refer to an example given to me by Detention Action. It is about T, a trafficking survivor:
“Like many Vietnamese people in detention, he was trafficked to work in a cannabis farm.”
That was referenced by the Prime Minister.
“He has been left with long-lasting injuries and psychological trauma after being beaten by his traffickers. The Home Office accept that he is a torture survivor but have refused to release him. On the basis of limited information, the Home Office refuses to believe that he is a trafficking survivor. He has been detained for four months.”
Victims of modern slavery must go free.
I will refer to the Helen Bamber Foundation and a recent example this month about someone with a rule 35 report from a detention centre. The doctor noted extensive scarring that was in keeping with a history of torture. Sadly, though, there was a negative reasonable grounds decision that turned on the credibility of the applicant, as the trafficking claim was not raised when first questioned in the UK. We have made great strides in dealing with the issue of reporting referrals. Here is a clear example where no doubt the threats by the trafficker not to tell anyone of the exploitation at the time of initial questioning is something that is normal and not exceptional, but is not given any weight. There are also indicators that the individual had been re-trafficked after coming into contact with UK authorities initially.
I will draw on reports referred to by the Home Office. There are reasons why the claim of a torture survivor trafficking victim had not been properly maintained above issues around immigration. The vulnerability issue is the concern, but sadly it is weighed among immigration factors and the vulnerability concerns are downgraded. The Home Office report stated that entry into the UK took place
“in a clandestine manner”—
in other words, on the back of a lorry. That is not surprising for a trafficked victim:
“You have no close ties in the UK to ensure your compliance.”
Again, that is not surprising in terms of the indicators present. The individual had been trafficked. Here is an example from the Shaw report in relation to mental health:
“Whilst it is noted that you have encountered physical torture and are suffering poor mental health as a result of this, the doctor has not diagnosed any serious physical or mental health conditions that are likely to worsen within the detained environment during the duration necessary to effect your removal.”
Page 306 of the Shaw Review states:
“Together the literature, which spans a 25-year period and a number of legal systems, tells a consistent story of the harmful effects of detention on mental health.”
That is compounded in a victim of trafficking. What is going on here? We have the Shaw report referencing clear evidence of mental health aggravated by detention, not least among those who are victims of torture.
The report continues:
“When balancing your vulnerability against your negative immigration factors, the negative factors outweigh the risks.”
What is happening here to very vulnerable people? At the time of writing, despite the adults at risk policy, this individual has now been in detention for four months, with a further three and a half months being proposed to effect removal. It is not the will of Stephen Shaw, it is not the will of Parliament, and I do not believe it was the will of the Ministers and the Government during the passage of the Immigration Act 2016. We must do better.
I must press the Minister on his answer to my questions that followed up on the clear will of the Minister’s predecessor in response to the Shaw report. My question is about timescales for individual reviews and assessments for removal, which should take precedence over issues around detention. It is what immigration removal centres are all about: removal and ensuring that individuals are assessed for removal, which is there to supplement the adults at risk policy. There was a clear commitment that that would be in place by the end of the year.
The then Minister responded on 14 January by saying in response to the recommendation that
“the Home Office should examine its processes for carrying out detention reviews, the Government will implement a new approach to the case management of those detained, replacing the existing detention review process with a clear removal plan for all those in detention.”—[Official Report, 14 January 2016; Vol. 604, c. 28WS.]
The following month in the Select Committee on Home Affairs, the then Immigration Minister, now the Secretary of State for Northern Ireland, told me that the current system of detention review would be replaced by removal assessments by the end of the year. It has not happened. The current Minister responded to my question yesterday by saying that
“work continues on designing and implementing a more effective case management process to replace the existing method of reviewing detention. Case Progression Plans are intended to act as the single caseworking record for all individuals entering immigration detention. Wider rollout...is planned for later this year, subject to the findings from the evaluation of the pilot phase.”
Again, we must do better.
In conclusion, whether it is on that issue or publishing a plan for the whole of the estate that will be predicated on the Government’s commitment to reduce the numbers in detention, we must do better. At the very least, let us commit ourselves to follow through with what the Prime Minster said:
“the victims of modern slavery must go free.”
Jim Shannon (Strangford) (DUP)
I congratulate the hon. Member for Glasgow North East (Anne McLaughlin) on setting out the issues so well. May I say at the outset that I would be very pleased to see our Scottish hon. Members remaining as part of the United Kingdom? As I always say, we are better together in relation to the United Kingdom of Great Britain and Northern Ireland, so we do not want to see them go. They make a valuable contribution, and today’s debate is an example. I thank the hon. Lady for that, and I thank also the hon. Member for East Kilbride, Strathaven and Lesmahagow (Dr Cameron), who will shortly make an equally valuable contribution.
I am concerned about this issue. As my party’s spokesperson on human rights, I believe it is right and proper that this issue is raised and that the Department responds by saying how far the recommendations have been implemented. It is clear that change is needed. I was shocked to find that in 2015, the number of suicide attempts in UK detention centres averaged more than one every day, with 393 people trying to take their lives—a record high. If that is a record high, there has to be a change of direction or a change of attitude in how we stop that. The hon. Member for Glasgow Central (Alison Thewliss) referred in her intervention to some of the suicide attempts. I am sure it has much to do with the fact that people are not allowed to stay in the UK—it cannot simply be how they are treated in detention centres—and their dread of going back home. It is also clear that the recommendations in the Shaw report need to be implemented, which is why we are here to ensure that treatment does not exacerbate the problems that people already face.
I completely agree with the statement by our Prime Minster—she is our Prime Minster, whether or not we are in government with her—from when, in her former hat, she was Home Secretary. The fact is that we have asylum criteria for a reason. We have to have criteria to work to, and the Minister knows that. How the criteria work and affect people’s lives is the reason we are having this debate. We cannot sustain an influx of people from other nations. No country can do that—or, indeed, does.
We always have examples from people who work for us or from people who call in and regale us with their stories. My parliamentary aide went to South Africa with her entire family—some 20 of them in total—and they decided to spend a few days in Mozambique. The trouble that the family had to go to just to get a visa for three days was extreme and very costly. It was some £1,000 for the family to get the visa and documentation. The process is there for a reason. Although the hoops that the family had to go through to get access to their resort were extreme, they felt that the benefits outweighed the hassle. It is the same for our immigration process. The process is difficult, but it is so for a reason. We must protect our citizens first, and the immigration process does this.
Not everyone who wants to come here has a right to be here. That is a fact that must be accepted. The system and the process are there to ensure that the right people have the opportunity to come here. I support the Government’s ability to make that decision. However, it should also be accepted that people who come here but have to go home must be treated well. The hon. Member for Glasgow North East outlined that well.
The Prime Minister said in a written statement when she was Home Secretary:
“The Government believe that those with no right to be in the UK should return to their home country and we will help those who wish to leave voluntarily. However, when people refuse to do so, we will seek to enforce their removal, which may involve detaining people for a period of time. But the wellbeing of those in our care is always a high priority and we are committed to treating all detainees with dignity and respect.”—[Official Report, 9 February 2015; Vol. 592, c. 29WS.]
However, the suicide figures perhaps do not reflect that. I ask the Minister to take that on board.
Mr Alistair Carmichael (Orkney and Shetland) (LD)
The question of treating people with dignity is particularly important when it comes to the detention of children. Does the hon. Gentleman share my concern about the closure of the Cedars centre, which was not easy to set up or cheap to run but was about exactly that—treating people with dignity? Is he concerned that, unlike Cedars, the new arrangement has not had the active participation of Barnardo’s?
Jim Shannon
I wholeheartedly agree with the right hon. Gentleman, as I think does everyone in the Chamber. What he has described shows the issue we face: changes happen, but are they for the better? In the present case I believe they are not.
I would like to know how, in the Government’s view, dignity and respect have been upheld since the Prime Minister’s statement was made just over two years ago. I understand that the recommendations in part 4 of the Shaw report, which addressed the concept of vulnerability, have largely been accepted by the Government. However, there are examples, including the one outlined by the right hon. Member for Orkney and Shetland (Mr Carmichael), that do not show that acceptance in action. There was a recommendation that the presumption against detention be extended to include victims of rape and other sexual or gender-based violence, including female genital mutilation, as well as people with a diagnosis of PTSD or with mental health issues and, as other hon. Members have mentioned, transsexual people and people with learning disabilities. Those are clear and specific categories where there are issues that need to be addressed. The presumptive exclusion of pregnant women should be replaced by an absolute exclusion, and the phrase
“which cannot be satisfactorily managed in detention”
should be removed from the section of the guidance covering those suffering from serious mental illness.
It is always good to read the newspapers, although whether we believe them or not is another thing. However, a reputable newspaper that I read contained an article stating:
“In June last year, the Home Office published new guidance that says women on suicide watch in detention should never be watched by male guards. In July, it introduced a 72-hour time limit on the detention of pregnant women—a measure which I particularly welcomed as it was clear that detention was often harmful for pregnant women. And in September, the Home Office also published guidance which states that survivors of sexual and other-gender based violence should not be detained.”
If the Government are pressing ahead with such measures and protection for pregnant women, that is good news; if they are not providing them with protection, they should be. I tabled some questions on this matter some time ago, and I am keen to hear how the Minister responds to the debate. It is good that the Government action described in the newspaper report is happening, but more needs to be done. What more is scheduled to happen? I should like to hear the Minister’s thoughts on the protection of pregnant women in detention and whether the change to a 72-hour time limit has been effective. Is it working, and is it enough?
I have read reports suggesting other ways of dealing with asylum seekers, which we could explore, in countries such as Sweden. Sweden sets examples to the world of how to do many things. We can learn from each other. While we have the current system, we must ensure that procedures are followed and the Government send those who have no right to be here back home; but while they are here, their needs should be catered to in the most humane way. I know that that is the intention of the Minister and the Government but perhaps we need to see it more in action than in words. I offer support, but I ask that our procedures be carried out in a humane, compassionate and effective way.
Geraint Davies (in the Chair)
The third member of the Celtic fringe—other than me, of course—is Dr Lisa Cameron.
Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)
It is an absolute pleasure to serve under your chairmanship, Mr Davies, and I thank you for that welcome. I congratulate my hon. Friend the Member for Glasgow North East (Anne McLaughlin) on bringing the debate to the House and on an excellent speech, as well as other hon. Members, who spoke in a most informed manner.
Dungavel immigrant removal centre is in my constituency, so I have a particular interest in the debate and the issues. I have been several times to Dungavel. The current UK Government policy of detention is not the policy of the Scottish Government, but the dedication of the staff, who apply themselves to difficult work with extremely vulnerable individuals who are in some of the highest-risk times of their lives, is commendable. We may not believe that the people in question should be detained, but the staff work to the best of their ability in difficult circumstances.
Anne McLaughlin
I received an email this morning saying that at the weekend, when people went to make their presence felt outside Dungavel, they saw staff patrolling with what looked like police dogs. I wonder if my hon. Friend would ask the Minister to find out what that is about. I am sure it is not the idea of the staff. There must be a Home Office directive saying that that is a good way to look after people in detention.
Dr Cameron
That is certainly not something I witnessed when I visited Dungavel, but perhaps the Minister would like to comment.
It is recommended that the presumption against detention be extended to include victims of rape and sexual or gender-based violence, including FGM, people with a diagnosis of post-traumatic stress disorder, people with learning disabilities and other vulnerable groups. As to the exclusion of pregnant women, surely we must agree that their care cannot possibly be managed adequately within detention. The Shaw report also found that rule 35 of the detention centre rules, designed as a key safeguard for victims of torture or those whose health would be at risk from continued detention, failed to protect vulnerable people in detention. The report highlighted a fundamental lack of trust in medical staff and advised consideration of independent GPs or professionals.
I should like to address several issues in the time I have: assessment of those with PTSD, assessment of those with a learning disability, and the important issue of the detention of vulnerable and traumatised individuals alongside foreign national offenders—something that I believe poses a risk in itself. As a psychologist, I can say that assessment of post-traumatic stress disorder is complex and cannot be done as a snapshot. I went on occasion, in a previous life, to Dungavel to assess mental health, but there is a brief timespan.
Mr Goodwill
I want to reassure the hon. Lady that the worst foreign offenders are detained in the prison estate and not mixed with other detainees.
Dr Cameron
I thank the Minister for that response. I shall come on to the concerns that I have. The situation involves some detail on which we need further information.
The time afforded for clinical assessment is extremely brief—perhaps only an hour. Meeting clients in Dungavel, alongside an interpreter, makes it even more difficult, because more time is needed to get accuracy. In my experience, the time afforded has not been enough. Building rapport in clinical practice takes time. To expect professionals to do a full, thorough assessment within a snapshot of time is not realistic. It takes repeated appointments. Trust must be built. After all, it is expected that people will open up about some of the most traumatic incidents or experiences of their lives. That does not happen in a few appointments. Clinically, that approach is not good practice, and from the point of view of humaneness it could be re-traumatising. Post-traumatic stress disorder and its symptoms mean avoidance and suppression of emotion, so people are being asked to do something very difficult in the context of their disorder.
Another issue that I found was that the background information needed for a full diagnosis was often not available. Perhaps it has not travelled with the person, or not much is known about their background, meaning that even more careful consideration and lengthier assessment are merited. How many trained psychologists are working in detention centres, and what time and space are they afforded to complete mental health assessments? My concern is that people are slipping through the net; that PTSD is not being diagnosed, that mental illness is not being recognised and that vulnerable and unwell people are being detained when they should not be.
Individuals with learning disabilities are likely to be extremely vulnerable, and in my opinion they should not be detained at all. Assessment to detect individuals’ IQ and history of developmental delay and significant impairment in everyday functioning is even more complex than mental health assessment, and IQ tests are often not culturally transferable. Once again, information for such individuals is often lacking, although background information on development is necessary. It can take multiple sessions speaking to numerous people involved in someone’s care to avoid missing critical information.
Fiona Mactaggart (Slough) (Lab)
The hon. Lady is describing powerfully the clinical issues that affect the diagnosis of vulnerable people who are detained. Does she agree that there is an additional layer involving trust? People who are detained may see clinicians as representing the authorities, which creates an additional barrier that must be penetrated in order to make an effective diagnosis.
Dr Cameron
I thank the right hon. Lady for that excellent point. I agree; that has certainly been my clinical experience. It is obvious that someone undergoing a clinical assessment will wonder about the motive for and outcome of the assessment, which will affect their level of trust and ability to open up. Once again, it shows just how lengthy and detailed an assessment must be, and that it must be built up over time.
How many people in detention are currently being assessed for learning disability, how is that being undertaken and are appropriate resources available for professionals? Such individuals are very vulnerable. If someone is presumed to have a learning disability, they should not be detained, because of that vulnerability. If there is any question of that, are alternatives sought straight away?
Thirdly, I have a concern about detaining foreign national offenders who may be sexual or violent offenders alongside those who are already traumatised. Often, information is lacking. When I visited Dungavel, I was told that sometimes when people come from prison, their records do not follow. That poses a clear risk to staff, because they do not know how high risk the individual is, and to the people alongside them in detention. We must ensure that information follows the person in order for a proper risk assessment to be made.
There is a clear risk to people with post-traumatic stress disorder following torture, rape or other trauma if they are detained alongside sexual offenders. That should not happen, but I know from my visits that, although some risk management procedures are in place, it sometimes happens; people speak about having been assaulted or sexually assaulted in detention. The risk management measures must be firmed up. What risk assessment and management measures are standardised to ensure that people are not at risk of further abuse? People with mental illnesses, learning disabilities or post-traumatic stress disorders should not be detained, and certainly not alongside offenders, which can re-traumatise and re-victimise them while they are in our care.
Geraint Davies (in the Chair)
I call Richard Fuller to speak. I will call the Front-Bench speakers at half-past 3, so you have about six minutes.
Richard Fuller (Bedford) (Con)
Thank you very much, Mr Davies. It is a pleasure to serve under your chairmanship. I am delighted to have the opportunity, presented by the hon. Member for Glasgow North East (Anne McLaughlin) at this important time, to review progress on the detention of vulnerable persons and to welcome the Minister. He is in the middle of a process, which is probably the most difficult period in which to be questioned, but I know that he is made of stern stuff. As others have done, I would like to thank some groups in particular—Medical Justice, Women for Refugee Women and Liberty—which have been constant companions on the journey for reform.
We have heard a number of reasoned and thoughtful voices in this debate. I shall be neither of those things. I had to be dragged kicking and screaming away from voting against the Immigration Bill and every part of it that dealt with the detention of women, or indeed detention, in due regard for the efforts of the Government to recognise that a well-entrenched policy in the Home Office was in need of root and branch reform. The then Immigration Minister presented it skilfully, I am sure with the support of the then Home Secretary, who is now our Prime Minister. As my hon. Friend the Member for Enfield, Southgate (Mr Burrowes) mentioned, the Prime Minister has shown a sensitive interest in trafficking issues, many of which overlap with the issues that we are debating.
Here we are again. We have heard from members of the Scottish National party, the Liberal Democrats, the Democratic Unionist party, Labour and the Conservatives, in a cross-party consensus, arguing for the replacement of the default of detention with a case management system for those in this country with no right to remain, for the important reason, as the hon. Member for Glasgow North East said, that it is the most cost-effective and most just method of doing things.
The Shaw report, produced in January 2016, contains 64 recommendations. How many of those have been accepted, and how many have been implemented? I would like to ask the Minister how many victims of torture, rape and war crimes are currently in detention, but as we know, it is difficult for him to answer, because how do we differentiate a claim from a proven fact? He can get around that, but the man or woman in detention cannot, because the system in immigration detention is that if they cannot prove that they were a victim of rape, torture or war crimes, the claim has to be denied. That has led systematically to the detention of men and women who are vulnerable because of their physical history and their treatment, in a country that likes to call itself civilised.
With Stephen Shaw, we got a light that we could shine on Governments, of whatever colour, to say that this is not acceptable in a modern society. There are better alternatives, and we—this Government—have the courage to implement change, so that we will never again have to ask such questions about the detention of victims of torture, rape or war crimes. I do not want to ask those questions any more.
The Government have made some progress. They have drafted a detention services order on segregation—the most significant part of detention—but the draft order was deficient in many respects. It said that someone could be segregated for being a refractory detainee, defining “refractory” as “stubborn, unmanageable or disobedient”. I know many MPs who are stubborn, unmanageable or disobedient, but I would not say that they should be segregated.
Richard Fuller
I could well be. So why is that in the draft DSO? Why is it not phrased more tightly? There is not enough protection in the draft DSO against detention of more than 14 days, which was itself deemed unacceptable, but which the draft DSO said might be possible and could be applied for. No—we will not have that. We shall not have that, if the Government really mean business. The Government have really got to get to grips with the fact that they have to provide mental health support—the personnel there making the judgments—before they segregate anyone because of their mental health status.
I do not have enough time to go into more controversial topics about which I am slightly more passionate than the ones that I have mentioned. I will just say that the care progression plans that my hon. Friend the Minister outlined in his response to my hon. Friend the Member for Enfield, Southgate are the way in which this Government can demonstrate progress. So, can my hon. Friend the Minister please give us an assurance that he remains committed to those plans and that they will be implemented by the end of the year?
Gavin Newlands (Paisley and Renfrewshire North) (SNP)
It is a pleasure to serve under your chairmanship once again, Mr Davies. I congratulate my hon. Friend the Member for Glasgow North East (Anne McLaughlin) on securing this debate, particularly as she has campaigned for many years for the rights of the very people who the UK Government choose to detain. She made a powerful and at times emotional speech.
I also pay tribute to my hon. Friend the Member for East Kilbride, Strathaven and Lesmahagow (Dr Cameron), the hon. Member for Enfield, Southgate (Mr Burrowes), the hon. Member for Bedford (Richard Fuller), who asked some very pointed questions, and the hon. Member for Strangford (Jim Shannon), who used his Westminster Hall season ticket to give a very thoughtful speech this afternoon.
The Scottish National party has long opposed the UK Government’s approach to immigration detention, which is not only inhumane but ineffective and hugely expensive. It is inhumane because it allows the indefinite detention of vulnerable people without a time limit and children and pregnant women to be detained; it is ineffective because evidence confirms that the longer a person is detained, the less likely it is that their detention will result in removal; and it is expensive, as we are detaining far too many people at great cost to the taxpayer, many of whom are not removed in any event.
The SNP’s position on immigration detention is very straightforward: we oppose indefinite detention. We oppose an abhorrent policy that allows pregnant women and children to be detained in these environments; instead, we favour an alternative approach that treats people with respect and dignity, helping those in need but still enabling us to abide by our responsibilities. We also support the calls for immigration detention to be limited to 28 days and for it to be replaced with community-based solutions. We believe that detention should always be the last resort.
The UK is the only country in Europe that allows vulnerable people to be detained in prison-like detention centres for an indefinite period. The former director of Liberty, now Baroness Chakrabarti, has spoken about
“The scandal of limitless detention”.
She has explained how this inhumane practice was designed “unashamedly for administrative convenience” and said that it is
“one of the greatest stains on the UK’s human rights record…a colossal and pointless waste of both public funds and human life.”
The Home Office defends its inhumane approach to immigration detention by saying that detention can be used
“where there is a realistic prospect of removal within a reasonable period.”
However, that defence does not stand up to scrutiny. According to Government statistics, 7% of detainees have been detained for more than six months and in 2016 only 47% of those leaving detention in the UK were being removed from the UK. The figure for Dungavel detention centre is even more stark: a mere 23% of people leaving detention were being deported. However, those statistics do not reflect the true scale of detention in the UK; migrants detained in prisons by the Home Office rather than in immigration removal centres are arbitrarily excluded from them.
As we have already heard, in 2015, following a number of shocking stories that laid bare the toxic legacy of the UK Government’s present and past approach towards immigration detention, Stephen Shaw carried out a review of the welfare of vulnerable people who had been forcefully detained by the UK Government. My colleagues and others have spoken about this issue in great detail, but it is worth noting some of the Shaw report’s findings, which confirmed that the UK detained too many people and that detention was not an effective approach to removing people who do not have the appropriate right to live here.
The Government have appeared to accept many of Shaw’s recommendations; it is an indictment of them that, more than a year on from the report, the number of people spending more than two months in detention has actually increased. More than half the detainees across the UK and more than three quarters of those in Dungavel were released back into the community. If any other Government service or Department had that rate of failure, there would be demands for an urgent inquiry, to establish why so many people were being incorrectly detained and why so much public money was being wasted.
Those who defend the detention of innocent people in these prison-like environments suggest that the public generally support this policy. I can state firmly and with some authority that that is not the case in my constituency of Paisley and Renfrewshire North. Members might remember that, in an attempt to close Dungavel, the UK Government submitted a planning application to Renfrewshire Council for a short-term immigration detention centre to be built near Glasgow airport. That application was soundly and firmly rejected in a rare cross-party and cross-sector political and civic show of unity. Renfrewshire wanted no part in the UK Government’s inhumane, ineffective and expensive approach to immigration detention.
The Minister’s desire to build a short-stay detention centre in my constituency was put forward only to make it easier to deport vulnerable individuals from their homes. That shameful approach would have resulted in individuals being moved hundreds of miles away from their homes, their families and their legal advisers. Again, the application for the centre was put forward with little concern for the rights of asylum seekers.
On that point, I have recently contacted the Minister about one of my constituents, Jorge Kidane, who has been moved hundreds of miles away from his family to Brook House immigration removal centre in London, where he has been for seven months. My constituent is a Spanish national but has lived in Paisley for 16 years and wants to move back to Dungavel to be closer to his friends and family. I would be grateful if the Minister could treat this case as a matter of urgency, because Mr Kidane’s mental health is deteriorating severely.
I return to the issue of the detention centres themselves. In the response to me confirming that the UK Government had decided not to appeal the refusal of planning permission for a new centre in Renfrewshire, the Minister helpfully stated that the UK Government were reviewing the detention policy being used in Scotland. At first glance, that seemed a positive move and something that the SNP have long called for. We do not believe that the UK Government’s approach to immigration works for Scotland. We have continually called for immigration to be devolved, to allow Scotland to deliver a more flexible and humane immigration system that meets our own needs.
However, that review will be carried out away from the public eye, it will not consult widely with the public or experts, and its findings will not be published. The fact that the UK Government plan to review immigration detention away from the public gaze is telling, because the effectiveness of their approach is not and cannot be supported by evidence in any way whatever. The Government approach is flawed and ineffective. They should consult widely, listen to the views that have already been expressed in this place and beyond, and adopt a fairer and more humane approach to immigration detention—particularly the detention of some of the most vulnerable people in society.
As my hon. Friend the Member for Glasgow North East has said, Scottish Detainee Visitors carries out invaluable work. SDV staff have met people in detention who have serious physical health issues, including some people with scars that strongly support their claim to have been tortured. SDV staff have also met people in detention who are suffering from mental ill-health, including people with pre-existing serious mental health conditions, such as schizophrenia, and people whose mental health has deteriorated as a result of their indefinite detention.
The latest inspection report on Dungavel by Her Majesty’s inspectorate of prisons highlighted concerns about the detention of vulnerable people, including a torture survivor and a women with a serious health condition. There are 14 bed spaces for women in Dungavel, compared with 235 bed spaces for men. In a film made by SDV, one woman who had been detained in Dungavel described her experience there as being like that of
“a chicken surrounded by dogs”.
Over the years that SDV has been visiting detainees, it has not been unusual for there to be just one or two women detained at the Dungavel centre. That is an isolating and potentially frightening experience, particularly in light of research by Women for Refugee Women showing that many detained women have historically suffered from gender-based violence.
The most recent inspection report on Dungavel noted that
“there were inevitable risks associated with holding women in a predominantly male population”
and that there were no specific policies focusing on this issue. That report recommended that
“a specific safer custody and safeguarding policy should be developed for women.”
I definitely support that call.
Regarding legal issues, wherever detained people are held, they are subject to frequent and arbitrary moves around the detention estate. Those moves are disruptive and disorientating for anyone who has been detained, but when the move is between Dungavel and centres in England the consequences can be particularly serious because of the differences between the legal systems in England and Scotland. A move to England often takes place just before an attempt is made to remove someone. It may not then be possible for a Scottish solicitor to make representations on a person’s behalf in England, and there may not be time to find an English solicitor to challenge a possibly unlawful removal.
As a country, we are better—much better—than the immigration policies that we have in place. Those policies do not stand up to scrutiny and are a blight on our human rights record. The UK Government should and have to use their power to reject this failed approach and replace it with one that treats people with respect and dignity.
Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)
It is a pleasure to serve under your chairmanship, Mr Davies. I congratulate the hon. Member for Glasgow North East (Anne McLaughlin) on securing this really important debate on a subject that does not get enough public scrutiny.
In 1998, the Labour Government—my Labour Government—published a White Paper with the title “Fairer, Faster and Firmer—A Modern Approach to Immigration and Asylum”. That Labour Government had many great achievements to their credit but this White Paper, and the legislation and the actions pursuant to it, was not one of our finer moments. It was that White Paper, and the legislation that followed, that led to a flurry of new detention centres being opened, mostly under the private finance initiative—Oakington, Yarl’s Wood, Dungavel and Harmondsworth. That is how we went from fewer than 50 immigration detainees in 1988, mostly detained within the airports where they had come in, to the current figure of 3,000, with the number of people detained at one time or another during the year now exceeding 30,000.
It is important to remind the House that we were told initially that we should not worry about due process, human rights and fairness because the people would be held for only a few months, but there is now very little due process around immigration. That is why we are faced with exploding numbers and a situation that is hard to defend.
Stephen Shaw was asked to report on the detention of vulnerable persons, and he recommended a series of exemptions for vulnerable immigration detainees, including, as we have heard, for victims of rape and other sexual or gender-based violence such as female genital mutilation; for those with a diagnosis of post-traumatic stress disorder; for transsexual people; and for those with learning difficulties. He also called for a presumptive exclusion of pregnant women to be replaced by an absolute exclusion, and for the words, “which cannot be satisfactorily managed in detention” to be removed from the section of the guidance covering those suffering from serious mental illness.
I am interested in hearing from the Minister how far advanced we are in putting in place those exemptions recommended by Stephen Shaw, who the Government themselves asked to report on the detention of vulnerable persons.
We have seen the explosion in numbers. The hon. Member for Glasgow North East asked the question more than once: given that it is so expensive and there are so many human rights issues involved, why do we not examine cheaper and more effective methods of managing immigration detention, possibly in the community? I have followed this issue for my entire career as a Member of Parliament and I am afraid that, for me, the reason the Home Office seeks to cling to the notion of immigration detention is that it is seen as a deterrent. There is always a debate in immigration policy between push factors and pull factors, and the notion, certainly at the time, was that if individuals were detained in this way—quietly, contrary to any due process and with no consideration of their human rights—that would somehow deter people from seeking to come here as immigrants and asylum seekers. Of course, that has not proved to be the case.
The hon. Member for Glasgow North East also talked about cost. The annual cost for one person is £34,000 and the total annual cost of detention is approximately £120 million. It is hard to believe that we could not spend that money on dealing with whatever immigration detention challenges we face more humanely, and in a way that reflected better on us as a country.
I have done a certain amount of work with Bail for Immigration Detainees and it has briefed me on some cases it has dealt with recently. Last week it won bail for a client who had spent 15 months in detention after serving a six-week prison sentence. How can that be proportionate? It also had a client held in detention in prison for almost a year, despite mental health problems and an outstanding appeal; and a male client, the sole carer of a child, who had a serious health condition and who was released on bail after nine months in detention. Another client spent 27 months in detention despite the fact that it would not be possible to remove them anyway and, finally, a client was released in January after spending two and a half years in detention, despite suffering from schizophrenia and, again, despite not being removable. Those cases are unacceptable, and I think that Members on both sides of the House want to hear what progress the Government are making towards living up to what the Shaw inquiry said.
Stephen Shaw also stated that there is little or no correlation between the number being held and those later deported, and that other methods, such as electronic tags, should be considered. He talked about mental health, which right hon. and hon. Members have spoken movingly about, and he also mentioned the number of cases in which the Home Office has breached article 3 of the European convention on human rights in respect of detainees.
I have always taken an interest in detention because of having been in Parliament when there was the explosion of detention that we now see. I am perturbed that, although I have been asking since November to visit Yarl’s Wood detention centre, we have yet to have a reply from Ministers. I remind the Minister, in case it has slipped his mind, that the chief inspector of prisons described Yarl’s Wood as a place of national concern. It was burned down three months after it was opened and there are current accusations of abuse, poor healthcare and inappropriate sexual contact. I put it to the Minister, therefore, that if four months after I first asked to visit he is not able to respond, people might ask what he has to hide.
In common with Members of all parties who have spoken in the Chamber today, I think it is time to address the long-running concerns about immigration detention—concerns that go back to the measures introduced in the ’90s by a Labour Government. I have talked about the role of the Labour Government because I do not approach the matter from a party political perspective. I have visited Campsfield, Oakington and Yarl’s Wood and, with the help of the Minister, I will visit Yarl’s Wood again. The conditions in which these people are held is a shame for this country. If people have a criminal record and should be deported at the end of their sentence, it is for the Home Office to organise itself so that they can be deported directly from prison. People should not be deprived of their liberty, with no due process, because the Home Office is chaotic in how it deals with people who have a recommendation of deportation when sentenced.
In common with other speakers this afternoon, I think we need to see an end to indefinite detention. I am glad that the numbers of detained children have fallen, but there are still 71 children entering detention, and that is 71 too many. Despite the fact that this subject does not excite the attention of the tabloid press and that Ministers might think there are not many votes in making immigration detention fairer and more humane, this is a long-running cause for concern. I hope that, decades after we introduced immigration detention at this level and on this scale, the Government will move to bring about some of the changes recommended by Stephen Shaw.
Geraint Davies (in the Chair)
Minister, you may wish to allow a minute at the end for Anne McLaughlin to wind up.
The Minister for Immigration (Mr Robert Goodwill)
I shall be delighted to allow the hon. Member for Glasgow North East (Anne McLaughlin) a minute or so at the end. It is a pleasure to serve under your chairmanship, Mr Davies, and I congratulate the hon. Member for Glasgow North East on securing the debate.
I welcome the opportunity to set out the Government’s position on these matters and to address the points raised by right hon. and hon. Members. Where a specific case has been mentioned or there has been a request for statistics, it may be better if I write to the Members concerned, not because I cannot give them that information but because time is restricted.
Detention and removal are an essential part of an effective immigration control system, but it is vital that they are carried out with dignity and respect. Indeed, I have visited a number of detention centres myself, including Yarl’s Wood and, recently, one in Belgium. The Government there face similar challenges and have similar facilities to the ones in the UK. We expect those who have no right to remain in the UK to leave the UK voluntarily, and we have programmes in place to support voluntary return. In many of the cases that have been discussed, people will have had the opportunity of an assisted return. There are financial packages and the airfare is picked up by the British taxpayer.
When people with no right to be here refuse to leave of their own volition, it is absolutely right that we take steps to enforce their removal. In those cases, detention may be necessary as part of that process. However, there is always a presumption of liberty for an individual, and the decision to detain any person under immigration powers is never taken lightly. Our policy already makes it clear that detention must be used sparingly and for the shortest period necessary. We are certainly not driven by any ideological motives, as was alleged at the beginning of the debate.
We take the welfare of detainees very seriously. That is why in February 2015, the then Home Secretary commissioned Stephen Shaw to carry out an independent review of the welfare of vulnerable people in the detention system. Mr Shaw’s report was published in January 2016, alongside the Government’s response. In our response, we accepted the broad thrust of Mr Shaw’s recommendations and set out three key reforms. First, a new ‘adults at risk’ concept was introduced into decision making around detention, with a clear presumption that vulnerable people at risk of particular harm should not be detained, building on the existing framework. The second reform was the detailed mental health needs assessment in immigration removal centres, along with a joint mental health action plan developed with the Department of Health and the NHS. Although the action plan applies to England, we will work with colleagues in Scotland and Northern Ireland to share information and best practice on the provision of mental health services in the immigration detention estate. The final reform was a new approach to the case management of those detained.
Taking those reforms in reverse order, work has been ongoing to design a more effective case management process to replace the existing procedure for reviewing detention. Case progression plans take a more proactive approach to the monitoring and review of ongoing detention, with a focus on removal or, if appropriate, release. They are being piloted across the Home Office, and the pilot will then be subject to evaluation. As well as introducing case progression plans for individual detainees in February 2017, we also introduced case progression panels, which provide an increased level of oversight of cases within the detention estate. Although internal, the panels operate independently of the officials working on detention operations and aim to reduce the number of long-term detainees.
Turning to mental health, the Government published a joint Department of Health, NHS and Home Office mental health action plan on 1 December. The plan will improve our understanding of detainees’ mental healthcare needs so that the right interventions are available and we can manage effectively the removal of such individuals from the UK, or their transfer within the detention estate or back into the community. In addition, a more detailed mental health needs assessment will be carried out in immigration removal centres, using the expertise of the Centre for Mental Health. That was published on 9 January 2017. NHS commissioners will use that assessment to consider and revisit current provision to ensure that healthcare needs are being met appropriately.
I will expand a little on mental health, which was raised during the debate. Detainees are seen by healthcare staff within two hours of arrival and often have an appointment with a medical practitioner within 24 hours. Clinical pathways into other healthcare services, such as mental healthcare services, are initiated at that point, depending on the outcomes of the reception scheme. We take health needs seriously, particularly mental health.
The final element of the Government’s response to Stephen Shaw’s review was the new “Adults at risk in immigration detention” policy, which was implemented on 12 September 2016. The policy recognises the dynamic nature of vulnerability and strengthens the existing presumption against the detention of those who are particularly vulnerable to harm. The intention is that fewer vulnerable people will be detained and that, where detention is necessary, it will be for a shorter time. The adults at risk policy is based on a case-by-case assessment of the appropriateness of detention, based on the nature and evidence of vulnerability available in each individual’s case. That evidence of vulnerability is assessed against any immigration control factors that apply in the individual’s case, such as the likely speed of removal and any public protection concerns. That is particularly important where we have foreign national offenders.
Individuals are detained only if the immigration considerations in their case outweigh the vulnerability considerations. The policy recognises a broader range of individuals as vulnerable than the previous policy, and we expect the policy to have the greatest impact in the cases of individuals who are most at risk, including—we heard some of these examples during the debate—victims of sexual or gender-based violence such as FGM, transsexual individuals, individuals suffering from learning difficulties and individuals suffering from post-traumatic stress disorder. All those groups are explicitly regarded as vulnerable in the context of the policy, in line with Mr Shaw’s recommendations.
The adults at risk policy has a statutory basis by virtue of the Immigration Act 2016. It is worth noting that through that Act we have placed a 72-hour time limit on the detention of pregnant women for removal or deportation. With ministerial authorisation, that can be extended up to an absolute maximum of one week in total. We also made it clear in the Act that pregnant women would be detained only if they could be removed from the UK shortly or if there were exceptional circumstances that justified the detention. In addition, we have placed a duty on those making detention decisions in respect of pregnant women to have regard to the woman’s welfare. We have asked Stephen Shaw to carry out a follow-up review later this year to assess the implementation of all the recommendations from his previous report.
Equally important to our strategy for detention is the need to keep our detention estate under constant review to ensure that we have the right resources in the right places and that we are providing value for money. The announcement of our intention to close Dungavel immigration removal centre was part of our wider estate planning. The closure was, however, dependent on the opening of a new short-term holding facility in Scotland. It was disappointing therefore that the planning application for that facility near Glasgow airport was rejected by Renfrewshire Council. Dungavel will therefore remain open for the foreseeable future, and we will continue to work with the centre service provider to ensure that Dungavel continues to receive positive reports from Her Majesty’s chief inspector of prisons.
One of the points raised in the debate was the protection of vulnerable families. The Government ended the routine detention of children for immigration purposes in 2010 by fundamentally changing the system to ensure that the welfare of the child was at the heart of every decision we made. That will remain the case at the new pre-departure accommodation. Pre-departure accommodation remains an essential component of the family returns process. The decision to accommodate families at a PDA is taken only after they have exhausted all legal challenges to their departure and have refused to comply with other options for return, and only after advice has been obtained from the independent family returns panel. Children with families can be accommodated for 72 hours prior to departure and no longer, without my personal authorisation.
A number of Members made the allegation that we are not doing better and are slipping backwards. I reassure Members that the Home Secretary and I are personally committed to ensuring that every individual in detention is treated with dignity and detained for the minimum time possible. The welfare of vulnerable people is particularly important to me, and Members can be assured that I am determined to see through the reforms started by my predecessors. I have invited Mr Shaw to return and review his policy and the work later in the year.
One particular point was made about the victims of trafficking. Home Office staff working in all immigration removal centres, including Yarl’s Wood, have been trained as first responders to identify signs that individuals may be victims of trafficking or slavery. Where an individual is identified as a potential victim, they are referred to the national referral mechanism for assessment. If the NRM takes a positive decision that there are reasonable grounds, the individual will normally be granted temporary release for a 45-day recovery and reflection period, unless detention has been maintained on the grounds of public order.
In conclusion, I hope that I have expressed the seriousness with which the Government take the welfare of those detained. The measures we have put in place, including the adults at risk policy, the statutory protections for pregnant women, the improvements to the approach to caseworking and the mental health action plan, represent a comprehensive package of safeguards for all vulnerable people in the immigration system who are detained or who are liable to detention, especially the most vulnerable.
Anne McLaughlin
I feel quite depressed now, because a number of questions have not been answered, although I accept that the Minister said he would write to us. I think I will write to him and remind him of some of those questions. One of the fundamental things he has not addressed is the gap between stated policy and practice. Policies are not being carried out in practice, and we have given numerous examples of that.
Will the Minister have a meeting with me and some of these groups, which have a lot of experience of detention and a lot of valuable information about the alternatives? He has not answered why we are not using all the alternatives that are far cheaper and far more effective. Why are we not looking at following those? Will he agree to that meeting? He is very good at agreeing to meet me, and he has responded before. Will he please give me half an hour of his time to sit down with some people who know exactly what they are talking about so that they can try to convince him a little bit more? It will save us money in the end and lead to a far better outcome.
Question put and agreed to.
Resolved,
That this House has considered the detention of vulnerable persons.
Primary Care: North Essex
(7 years, 9 months ago)
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Mr Philip Hollobone (in the Chair)
Order. Would those who are not staying for the debate please leave quickly and quietly? Television sets are being switched on all over Essex to hear the hon. Member for Clacton (Mr Carswell) move the motion and start his debate. I call Mr Douglas Carswell.
Mr Douglas Carswell (Clacton) (UKIP)
I beg to move,
That this House has considered primary care in North Essex.
I am grateful for the opportunity to have this debate. We face a serious problem of primary care provision in our corner of Essex. To put it bluntly, there are not enough GPs. In my part of Essex, there are three local GP surgeries, which are not taking on any new patients at all. Those fortunate enough to be registered with a surgery often struggle to get an appointment.
Here are some of my constituents’ experiences, pulled out from my postbag in the past three weeks, to give a flavour of what they are having to put up with. An elderly lady from Little Clacton wrote to me a couple of weeks ago:
“On attending the practice, I realised that there was an average of three weeks waiting time to see a GP. … When I did finally get seen, the practice nurse said, and I quote, ‘You have to be at death’s door to get an urgent appointment on the NHS now.’”
This is a woman who has spent decades paying into the system, unable to see a doctor for three weeks.
Then there is a lovely lady from Kirby near Frinton who emailed me, saying:
“I’m writing to say how abysmal the doctor’s surgery is now. I waited two weeks for an appointment, only to be told to go to a different surgery if I wasn’t any better in two weeks.”
There is not much sign of customer service there, is there?
Finally, a man from Clacton wrote:
“I am my mother’s carer. I’m not a doctor. I just do my best and feel abandoned by my medical practice. I am having great trouble making appointments for my mother to see a doctor so that we can control her pain.”
Those are not isolated cases. My postbag is full of examples—it is fair to say that something is badly wrong with primary care in our part of Essex. What concerns me is that it was possible to see the problem coming. Back in September 2013, I led a delegation of GPs to see the Health Secretary to flag it up, precisely because GPs said the problems were going to happen.
To be fair to Ministers, we in this room all know—I hope people outside know it too—how disastrous the 2004 GP contracts were. They were certainly disastrous for those who are meant to be provided with primary care—but that is now more than a decade ago. We also recognise that a Minister cannot, as I think Nye Bevan put it, be held responsible for the “sound of every dropped bedpan” in every NHS surgery and waiting room. In fairness, I do not think we can blame Ministers for the failure of individual surgeries to get their appointment systems sorted out. But the question is, who does take responsibility? Who will answer to my constituents for these failings?
It is clear there has been a failure to provide the level of primary care that is needed in our part of Essex. What is less clear is who we hold to account. We have an alphabet soup of different agencies and quangos in charge, but none of them seem to be properly responsible. There is something called the CCG—the clinical commissioning group. It allocates the money and the patient is then expected to follow. The technocrats commission and the patient is expected to follow. Then there is the CQC—the Care Quality Commission. It inspects the GP surgeries. Would it not be better if surgeries had to satisfy customers and not simply comply with CQC assessments? Then, of course, there is NHS England, and in our part of Essex, something called ACE—Anglian Community Enterprise—which provides certain primary care services.
I have raised concerns with all those different branches of NHS officialdom on behalf of constituents and I have done so repeatedly. Promises are invariably made. I am told that we will get more GPs, that new contracts and a new kind of contract will be sorted out—always tomorrow. Not much ever actually seems to change on the ground.
Sometimes I am told, or it is implied—they do not dare tell me this any more because I react very strongly to it—that all of this is to be expected. There is, they say, an elderly population in our part of Essex. The profile of the patient group, I was once told, means that there is all this extra pressure.
Those sentiments are excuses for failure; they are not credible reasons. We should not be in the business of blaming people for being elderly. After all, if someone is elderly, it means they have paid more into the system. In what other walk of life or area of activity is a surfeit of customers regarded as a problem? In Clacton, it is possible—I speak as a father—to go shopping for the family 24 hours a day, seven days a week, so why is it not possible to see a GP on a Saturday if a child is ill?
At the root of the problem is a system of state rationing—it is probably one of the last vestiges of the mid-20th century system of state rationing—in which the patient is expected to stand in line and wait. The patient is made to follow the money. We need a system of primary care in which the money—for a taxpayer-funded service, free at the point of access—follows the patient.
Ministers are absolutely right to want to see surgeries open on a Saturday, at weekends and in the evenings. Heaven forbid, if we really had a system of primary care that responded to my constituents’ needs, there might even be GP surgeries in railway stations, where quite a large number of my constituents tend to congregate in the early morning and late evening. If we are to have a more accessible, customer-focused service, it means making the patient king. It is not something that can be done by top-down design or by ministerial decree. Good customer service comes from the need to please customers, not from on high.
GPs tell me that the burden they face could be alleviated in part if more people were willing to use and made better use of pharmacists. There is a lot of truth in that. Pharmacists are highly qualified and often very experienced, and we are right to look into that. I say this in the week when we have finally passed the legislation to get us out of the EU, but perhaps we could learn from some of our European neighbours who seem much better at making good use of pharmacists, particularly Italy and France. I gather that in Germany people do not have to depend on the equivalent of a GP acting as a gatekeeper in the way that we do in this country. I would be very grateful if the Minister could elaborate and talk about not just what we can do to alleviate the problems in our part of Essex but the far-reaching reform that is needed if we are to make sure that people who have spent all those years paying into the system can be seen by a doctor when they need to.
Will Quince (Colchester) (Con)
I recognise the issues that my hon. Friend rightly raises. Does he agree that a direct result is the considerable pressure placed on the general hospital in Colchester, which serves his constituents and mine, and that the foolhardy decision to consult on the closure of minor injuries units and the walk-in centre in Colchester should be dropped immediately, because it is such a ridiculous idea? It will just put additional pressure on Colchester general hospital.
Mr Carswell
My hon. Friend, as so often, is absolutely spot on. His judgment is impeccable. The failure to provide people with the primary care they need when they need it means that more people then tend to go to A&E departments. The people who run the ambulance service tell me that that then causes a bottleneck in A&E, which has a knock-on effect on ambulance response times. Many of the problems we are grappling with are a consequence of the failure to provide accessible, customer-focused primary care where it is needed.
The consultation on the minor injuries unit and walk-in centre is irresponsible. I share the view that it would clearly be absurd to shut that facility. A lot of angst and worry could be addressed if the option was ruled out now, and I hope it is.
Mr Bernard Jenkin (Harwich and North Essex) (Con)
I am most grateful to the hon. Gentleman for inviting us to take part in his debate, and I commend him for securing it. We are now in the throes of the so-called sustainability and transformation plans, which are being constructed on the acknowledgment, confirmed by the Boston Consulting Group, that there has been underinvestment in primary care in Essex for 20 or 30 years. If the STPs are to address the demand on the primary care units and deal with the shortage of GP facilities, there has got to be a programme, supported by Ministers, of investment in primary care in Essex so that the GPs can do far more for their patients without sending them off to hospital.
Mr Carswell
The hon. Gentleman is absolutely spot on. This is a cumulative problem that has been allowed to get worse over decades—perhaps a generation or more. I am often struck by how some of the GP surgeries in my constituency are located in what started out as residential houses built in the 1930s. There has simply not been the investment that was needed over a long period of time. That is also part of the problem. To be fair to GPs, if we do not provide attractive surroundings and surgeries, people are not going to want to work in those 1930s houses. If anyone in the district council is listening, I urge them to take that into account when talking about new planning for the area. Some top-quality, first-rate surgeries in which GPs are happy to work would go some way to addressing the problem.
I am incredibly grateful to the Minister for coming along to respond, and to the hon. Members for Harwich and North Essex (Mr Jenkin) and for Colchester (Will Quince), who are committed to this issue and have done a lot of work for their constituents. I hope to hear from the Minister not only about how we can get more GPs in our area but about the reforms we need to change the way people obtain primary care, so that they are no longer supplicants standing in a queue to receive care on the system’s terms but valued patients who get the care they need when they need it.
The Parliamentary Under-Secretary of State for Health (David Mowat)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate the hon. Member for Clacton (Mr Carswell) both on obtaining the debate and on the lucid way he put forward his case. I thank my hon. Friends the Members for Colchester (Will Quince) and for Harwich and North Essex (Mr Jenkin) for their points, which I will try to answer.
There is an issue with the number of GPs in the CCG in that part of north Essex. I will talk a little about why that is the case and what we can do about it. It is very hard to make progress on a number of the issues that were raised without fixing that problem. We are short of GPs across the country, but we are particularly short in the North East Essex CCG. Let me give some numbers for context. There are 40 GP practices and a little over 210 GPs within the CCG, which covers 330,000 people. The CCG estimates that it is 28 GPs short. I spoke to it this afternoon, and I was told that if any GP wants to get a job in Clacton, it will not be a difficult process. Indeed, the figures for Clacton and the coast are marginally worse than those I have just given.
That is somewhat mitigated by the fact that the CCG has more nurses than the UK average. That might well be to do with the walk-in centres and minor injury units, which are nurse-orientated. I will come on to talk about how we can work in a slightly different way—this was implied by the remarks of the hon. Member for Clacton—by making use of other disciplines, such as pharmacists, physios, allied health professionals of different sorts and mental health professionals. The CCG now has 10 full-time pharmacists, and there is a plan to increase that number considerably between now and 2020. Frankly, it is easier to recruit pharmacists than GPs, but we need GPs too.
I will spend a little time talking about the reasons for that. I spoke to the CCG about them in some detail today. As the hon. Gentleman mentioned, Clacton has an older population, which causes problems, and there may be contractual issues relating to that, although the GP contract allows extra money for areas of deprivation and those with ageing populations. There are no training GP practices in Clacton, which puts it at a disadvantage, as GPs are likely less to go there as part of their training and then stay. It is also true that Clacton has a higher than average age demographic of GPs, so there is a higher tendency for them to retire, which exacerbates the situation. I concede that there is a problem, and I will talk about some of the things being doing about it. The hon. Gentleman used the phrase “jam tomorrow”, and I am afraid that some of it might sound a bit like that.
I want to draw attention to some of the things that the CCG in north Essex does well. We often talk about issues to do with locations—bricks and mortar—whether minor injury units or hospitals, but all MPs, including me, should properly evaluate our CCGs on the full set of published metrics. We have done an awful lot on transparency. I will just mention some of the things that the CCG does well. The hon. Gentleman’s CCG is well above the national average for cancer diagnosis in stage 1, for dementia care planning, for organising health checks for patients with learning disabilities, and for organising care packages for people with mental health episodes. I say that to put its issues in context. It is clearly true that there are difficulties with access and, to a lesser extent, with getting on lists in the first place.
The hon. Gentleman rightly made the point that we should be following the patient. We do a lot of work across the NHS and with every CCG to poll patients to ascertain how satisfied they are with the level of service they have received. North East Essex CCG received something like 82% patient satisfaction—lower than the national average. It is thought that the figures for Clacton are likely to be lower than the CCG average as a whole, so I will not hide behind that number.
In terms of what we are going to do about it, I will start by talking about some national initiatives—the comment about STPs related to that—and the need to invest more in primary care. There are two national initiatives that I want to mention. First, there is the GP five-year forward view. I know it sounds like jargon, but it redresses the persistent underinvestment in primary care over the past decade or so. Between now and 2020, there will be a 14% real increase in primary care across the country, which will manifest itself in the workforce and in different ways of working. That is real money; it is accepted by the British Medical Association’s general practitioners committee. It is very welcome, and frankly it has been a long time coming.
If we were designing an NHS today, with the sort of patient environment we have now, we would not design it around acute hospitals, as was done in 1948. We would design it much more around long-term conditions—diabetes, dementia, heart disease and so forth—which account for 70% of the NHS’s total cost and mean that much more can be done in the community. That is our very clear direction of travel.
Will Quince
Although I very much welcome those plans and the steps the Minister is hoping to take in relation to primary care, there is still very serious pressure on Colchester general hospital. I welcome last week’s Budget announcement of £100 million for triage services in accident and emergency units. Will the Minister give serious consideration to making Colchester general hospital a pilot for that, which would help to alleviate some of that pressure?
David Mowat
My hon. Friend may be relieved to hear that Colchester general hospital is not in my portfolio, but I will speak to my ministerial colleagues about it being a pilot and write to him.
Mr Jenkin
A moment ago the Minister mentioned some extra money for primary care. Who is responsible for investing that money? Does it come from NHS England and not from the CCG? How do we influence how that money is spent, so that there is some accountability in the process?
David Mowat
All money goes into the health service through NHS England, which used to be called the NHS Commissioning Board. The money is then given to the CCGs around the country to spend. In terms of a funding formula and so on, there are some specific primary care initiatives, including infrastructure-based ones for new premises and things of that type, and specific ones, which I am about to talk about, such as recruiting more GPs. We absolutely need more GPs, not only in Essex but across the country, although we do need them in particular in parts of Essex. The responsibility for that lies with NHS England, through the CCG. It is the CCG that has the accountability—to answer the earlier question, “Who do we blame for this situation?”—and I want to make that quite clear.
As for what all that means, we have workforce issues in primary care, and the Government and NHS England are committed to having 5,000 more doctors working in primary care by 2020, which should mean more availability and vacant jobs in Clacton being filled. We are determined to meet that commitment with progress made this year, with more medical students going into GP training than has ever been the case before in the history of the NHS—just over 3,000 of them. The hon. Member for Clacton was right to talk about pharmacists, and we also need to make progress with them. We aim to have 2,000 pharmacists working in primary care by 2020, as well as 3,000 mental health therapists.
All of that matters, but in addition we have to allow people to work in a different way from how they have up to now, and some of that is happening across the CCG in Essex. Broadly speaking, however, we find that a GP hub of 30,000 to 40,000 patients enables more scale. That would let us employ physios, pharmacists, mental health therapists and, indeed, social workers—in terms of the relationship with hospitals and the transfer of patients—and to have longer opening hours. I therefore completely accept the hon. Gentleman’s points about working and being open on a Saturday. We are determined to achieve that by 2020, although we are starting from a difficult position in Essex, given the lack of GPs generally. Only by collaboration and working across practices will we make progress. The model of a single GP practice—and such practices still exist—is self-evidently not viable and does not allow us to do some of the things that we need to in primary care, such as employing pharmacists and other such disciplines.
Those are my general comments, but I completely agree that unless all that lands in Essex, it is just words. Judge and jury on it will be the extent to which we are successful in landing some of that stuff in Essex. To address the specific issues, I will now talk about a number of things that have gone on in the hon. Gentleman’s local CCG. Of the nine practices in Clacton, a number have been closed to new patients, as he said. I am informed that the East Lynne practice, the Ranworth practice and the St James practice all closed to new patients in 2015, but two of those are now completely opened. The other has temporarily closed again but is expected to reopen soon. On the statistic he cited at the start, my understanding is that only one practice in Clacton now has no immediate opening in its list. The CCG has worked hard on that.
There are clearly specific issues with getting people with a GP background to move into the area. The CCG has put in place a workforce plan to address matters of recruitment and retention of GPs principally, but also of pharmacists, nurses and allied health professionals. Again, the judging of that will be in something actually happening and the vacancies in Clacton being filled. The plan exists and is being managed, and I understand that the CCG expects to make progress with it.
The practices in the CCG have come together in three collaborative groups, covering about 80% of the total number of patients seen, although the patient who sees the same GPs from the same practice and goes to the same clinic might not realise that. GPs are working collaboratively in a way that should enable better leverage of their time—I return to that point made in connection with pharmacists. We have to get away from every patient’s principal contact in the primary care system having to be a GP, rather than other professionals who could help a great deal. For example, I was recently in a practice where a pharmacist was conducting a diabetes clinic. Diabetes clinics are routine, happening perhaps every month or so, with a set of standard questions to be asked, and there is absolutely no reason why they need to be conducted by a GP, as opposed to a pharmacist. That applies in Essex, too.
I draw the attention of hon. Members from Essex to a couple of grants lately given to practices in their area. A £46,000 resilience funding grant has gone to the Clacton GP Alliance and, in a specific effort, almost £400,000 of capital funding to three GP practices that are coming together I think in Clacton hospital. The CCG understands that the standard of premises and infrastructure in Clacton is generally weaker than in other parts of the country—certainly weaker than is needed to attract the sort of talent necessary.
I have a “jam tomorrow” point to make, but it is worth putting it on the record. There is a plan to have a medical school in Essex, in Chelmsford, I think in 2018. That will obviously help, because people who train as doctors in that part of Essex will be more likely to live there, enjoy living there and, in time, make their careers and lives there. We have found that to be so in other parts of the country; I hope it works for Essex.
In connection with the minor injuries and walk-in centres, I want to speak briefly about the consultation. Members have pointed out that it would be absolutely ridiculous if, by closing those centres or doing anything to affect patient flows, more patients were to go to Colchester hospital. That is self-evidently true, and the CCG believes so too. Interested Members will know that the consultation, which set out four options, has received more than 3,500 replies. In all fairness, I do not believe that the CCG was consulting in order to close; it was consulting because contracts were up, and it wanted to look at the options and how to do better. One view given to me was it was more confusing than it ought to be for patients to know where they ought to be.
I cannot say anything today about the outcome of the consultation, other than that the CCG board will consider the recommendations received in the 3,500 responses and the various other pressures that have been discussed today. Frankly, people in the CCG will also be listening to our debate today. I would be surprised if closure of the centres was top of the list, given the other pressures on GP practices, the hospital and so on. The decision will be made by the CCG at the board meeting on 30 May.
I will finish as I started, by saying that there is a problem with the number of GPs in Clacton and North Essex. The problem is understood and action is being taken that I hope does not all amount to “jam tomorrow”, to use the phrase of the hon. Member for Clacton. Although progress has been made in getting lists open and so on, clearly a lot more needs to be done. I am happy to continue to meet the hon. Gentleman in the months ahead if we are not making progress and getting things better.
Question put and agreed to.
Dog Fouling
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Mrs Anne Main (St Albans) (Con)
I beg to move,
That this House has considered dog fouling.
The aim of this debate is to raise awareness of the ongoing problem of dog fouling, specifically in woodland and rural areas. I am a dog owner and a dog lover, and I must declare an interest: I sponsor a dog through Dogs Trust, the UK’s largest dog welfare charity, which runs initiatives throughout the country to encourage more responsibility among dog owners. Such efforts to encourage responsible dog ownership are welcome, but we need to do so much more. This debate is not about dogs or demonising dog owners; it is about the actions of irresponsible or ignorant dog owners and the environmental blight caused by dog poo that is dealt with inappropriately.
The Department for Environment, Food and Rural Affairs discontinued the collection of figures on the number of fixed penalty notices issued for dog fouling in 2010, as it was viewed as an unnecessary burden on local authorities. I agree—it would be enormously burdensome to keep collecting those data. The most recent figures show that 2,082 fixed penalty notices were issued in 2009. I gave the Minister some pictures before the debate to illustrate the extent of the bagged dog fouling problem. I suggest that those figures do not show the true extent of the problem.
Experience and anecdotal accounts from across the country show that this really is a big problem. It affects tourism, local authorities, private landowners, forestry commissions and farmers, as well as the public at large. I will refer later to the challenges that farmers face as a result of fouling on their farmland, as they have particular concerns about livestock safety, but the two key strands to my argument are the burgeoning nationwide problem of the inappropriate disposal of dog poo bags and how we can encourage the correct disposal of dog poo.
There is no one-size-fits-all solution to this problem. Solutions need to be appropriate to the surroundings, well publicised and simple to execute. There is no doubt that dog fouling is an antisocial and environmentally damaging problem. It blights parks, forests and farmland as well as fields and verges. To compound the problem, we have seen the rise of the phenomenon of the ghastly dog poo bauble. Walkers, cyclists and families out with small children are greeted by lumps of dog faeces wrapped in pink, blue, black and even apricot-coloured plastic dangling from trees or bushes, or decoratively tied to people’s fences. Deer ingest the bags, children may handle the packages and cyclists have even ridden headlong into bags dangling from low-hanging branches. It is disgusting. Some dog walkers use sandwich bags, freezer bags or even supermarket carrier bags to scoop up the poo before lobbing it off into the environment, where it festers, causing blight for years.
I accept that many bags are biodegradable, but even if they are marketed as such, they still hang around for a very long time. According to the BBC’s Focus magazine, it can take six months or longer for even degradable dog poo bags to decompose. Although that is a marked improvement on the 500 years that scientists think it takes for a normal supermarket plastic bag to decompose, they are still a prolonged blight on the countryside landscape.
Initially, I thought that this foul practice of lobbing poo in bags into hedges and trees might be limited to a few irresponsible owners, but a quick trawl of social media and news archives shows that the problem is rampant and growing across Britain. It is estimated that local authorities receive upwards of 70,000 complaints a year about dog fouling, which is no small number. Local newspapers are filled with reports of the problems that it can cause, and Twitter is alive with concerns raised by people about the impact that dog fouling, particularly bagged dog fouling, has on their area.
Is it just me, Mr Hollobone? I do not understand the mentality of the person who enjoys walking on a beautiful woodland trail and goes to the trouble of purchasing and carrying a dog poo bag, picking up the often smelly deposit and even carrying it for a short distance, but then takes the opportunity to lob the carefully wrapped package up into the trees. I just do not understand it, but believe me, a quick look on the internet shows that that happens thousands of times every day.
Dog walking is one of life’s pleasures. Long rambles in the fresh air are good for dogs and their owners. Dogs Trust and many other groups strongly oppose blanket bans on dog walking in parks, beaches or countryside areas. I agree with them that that would be a great loss to communities of people who meet in those areas with their dogs and would directly punish the vast majority of dogs and their law-abiding owners just because of a select few offenders.
There are approximately 9 million pet dogs in the UK. One in four households in the UK has a pet dog, and they produce 1,000 tonnes of poo a day, or 365,000 tonnes a year. That is the weight of the Empire State building in New York or, to bring the problem closer to home, 5.6 times the weight of St Paul’s cathedral in dog excrement every year. We have a huge, smelly problem, and dog poo baubles are a relatively new and disgusting phenomenon. Online posts from Slough, Dartmoor, Rhondda, Glasgow and Kent, to name but a few places, show that this is a countrywide issue that we really need to tackle.
Keep Britain Tidy’s 2014-15 local environmental quality survey of England addressed both dog fouling and bagged dog fouling. Statistics that it gathered prove that dog walkers are far more likely to collect and dispose of dog poo when it is light and they feel they are being watched. In the light of that, Keep Britain Tidy started a “We’re watching you” campaign, which featured a pair of eyes that glowed in the dark and was designed to reinforce the message: “If you let your dog foul in an urban or rural area, someone may be watching you.” Often, of course, they are not. That campaign, which was trialled in 17 local authorities in 2014, led to a 46% reduction in recorded fouling and bagged fouling, but too often, the dog poo bauble is lobbed into the trees, away from sight.
It is argued that people should simply “bag it and bin it”. Would that it were that simple. Human nature often leads people to take an easy way out. Carrying a bag of poo for several hours on a family walk is often seen as an unattractive prospect, so, having been picked up, the poo gets lobbed into the bushes. We need to ensure that there are dog poo bins in appropriate locations, but that is only part of the solution.
The strategic placement of bins in rural parks and countryside dog walking hotspots is a key aid to prevent people from incorrectly disposing of dog poo bags. The National Trust is trying to address this issue on its sites by placing dog poo bins in the immediate area of car parks. Its studies show that, on leaving a vehicle, the vast majority of dogs relieve themselves within 50 metres of the vehicle. Having maps in car parks for country walk areas showing the placement of bins would also encourage more people to bag and bin poo, as they may know that the next bin is only a short distance away.
But that scheme cannot tackle the problem of bagged dog fouling in less populated woodland and countryside environments—open wild spaces where locating a bin would be impractical or even detrimental to the natural landscape. Lawrence Trowbridger, lead ranger at the National Trust’s Ashridge estate, said in an interview in 2015 that the solution was not just about introducing more bins but about
“challenging the mindset of the dog walker”.
I completely agree, so how do we change that mindset? How do we educate the public and steer them into good countryside practice?
I have a few suggestions, which I hope the Minister will look at. I believe that we need much better signage in areas such as country parks and forests to show where bins are located, so that people know how far they are from bins and whether bins are available past a certain point. Dog poo counts as waste refuse—not everyone is aware of that—so all waste bins, wherever they are located, should carry a logo showing that it is appropriate to put bagged dog poo in them.
For dog walkers further on in their walk and in a “no bin” area—an area of natural habitat—the sign at the entrance to the walk should show them that they ought to use the “stick and flick” approach, which the Forestry Commission advocates on its website, or cover the poo with leaves or vegetation. Having tried to stick and flick a pseudo-poo—it happened to be chocolate éclair, which did not flick at all well—on the Jeremy Vine show, I can say that that is actually quite an effective way of doing things. We need clear, easy-to-recognise graphics in parks, woodland areas and laybys close to footpaths to suggest those methods of disposal.
Jim Fitzpatrick (Poplar and Limehouse) (Lab)
I recognise that there is a problem here. Organisations from the National Farmers Union to Keep Britain Tidy, which the hon. Lady referenced, strongly support “bag it and bin it”. Anything that detracts from that could cause confusion and undermine the essence of the issue, which is that we want dog owners to act responsibly, in the way that she describes. Does she think that we can have both messages?
Mrs Main
I have done quite a lot of radio interviews on this today, and that is the tension. That is why signage is important. We should have easily recognisable graphics, because then people could see that there is somewhere to put the poo bags and that the poo will be collected. There is no point in bagging poo and then hunting in vain for a bin. That is when it gets lobbed.
We have to work with human nature. “Bag it and bin it” is one thing, but although that is the ideal solution, it is not the only one. I would like to expand on that. We need to look at Natural England’s “Countryside Code”, which is authorised by the Government to enhance comments on dog poo in the various situations that walkers find themselves in. The hon. Gentleman is quite right: that code says
“always clean up after your dog and get rid of the mess responsibly—‘bag it and bin it’.”
That is a simple message. Unfortunately, as I showed the Minister before the debate—I am happy to show other people—that simple message is clearly not working. It works a lot of the time, but if someone picks up their dog poo bag, feels that they do not know what to do with it and then lobs it, that is a far worse scenario. Deer and cattle are ingesting the plastic bags. We must tackle that.
Part of the issue is about education. Dogs Trust is working with a pet provider, running education classes for brownies, guides, scouts and so on to try to educate the dog owners of the future. This is a relatively new phenomenon: we did not use to have dog poo bags.
Richard Arkless (Dumfries and Galloway) (SNP)
The hon. Lady is making a compelling case. I have attended walk-arounds with dog wardens in my constituency and they say that part of the process required is to educate not only dog owners and walkers but the general public, because the dog wardens cannot take action unless they see walkers depositing where they should not. Does she agree that part of the education process needs to be on the public, who could give information, to help the public help themselves?
Mrs Main
I do. That is why I said that the approach of saying, “There are eyes watching you” does work. However, if someone is out walking their dog, do they want the grief of watching a person’s dog foul, going to find a ranger—assuming they know where he is—and having the argument about whether it was that dog, given that the owner has walked off by that point? The situation is difficult, which is why we need a multi-strand approach.
I am not coming up with answers, but some suggestions: better signage, better placed bins, and a country code that says, “If you are here, this may be the appropriate thing to do. But if there are no bins, it would be inappropriate to bag.” We should get a set of graphics, which should be printed on dog poo bags to reinforce the message. There should be a dog poo bag code of disposal, a bit like for packets of cigarettes.
Dog poo bags are what plastic bags were yesterday. Given the number of pets in this country, I suggest that dog poo bags are as big an environmental problem as we had with people using disposable plastic bags from supermarkets. People use sandwich bags and all sorts, which flutter into waterways and float down into drains. We need to tackle that now and get a grip on it.
I would look at “The Countryside Code”. On farmland, I completely accept, as the hon. Member for Poplar and Limehouse (Jim Fitzpatrick) said, that the NFU is opposed to dog poo being left in rural areas because of the risk posed to the health of cattle and sheep, which may eat the poo. We are back to the educative approach: the NFU has called for posters to be displayed in farmland areas to raise awareness of the problem and for a change to the “Scottish Outdoor Access Code”—I know this is a devolved matter, but it is worth looking at that—to explain the risks posed to cattle more clearly.
The NFU said that there has been an increase in cases of the disease Neospora, which can be spread by dogs that have eaten infected material from cattle, such as placentas from newly calved cows, and then through dog faeces. The parasite survives for several months and can contaminate the pasture and water supplies. I suggest that while that may have increased, that is one part of the entire problem that needs to be taken into account in the broad brush approach.
Of course, not all farmland has livestock on it, so we need to work with landowners to come up with signage to reflect the local disposal need. Improved signage should appear in lay-bys close to footpaths that cross farmland. People park up in lay-bys and ramble across farmland, where there will not be any bins, guidance or signage. Perhaps where the sign for the parking lay-by is could be an appropriate point to have a small graphic showing dog walkers how to deal with dog poo.
Finally, I know there have been suggestions about DNA testing. That theory has gained a lot of coverage in the media, being viewed by some as a silver bullet to the problems of dog fouling. However, to operate a successful DNA scheme, we would need all dog owners to volunteer to register their dog on a database. Then, using DNA technology, we would be able to trace exactly which dog had committed an offence.
There are fundamental flaws to that initiative at the present time. The major groups involved are not supportive and the scheme would come at considerable cost to local authorities in creating and filling a DNA register as well as carrying out the tests on the offending poo. As I said, we have abandoned the registering of dog fouling incidents; that process would be hugely costly and would not tackle the problem. We would need armies of people to police it. Improved signage should appear in lay-bys and close to footpaths—that would be more helpful. We have to get the public educated so that they feel that not dealing properly with dog fouling is as antisocial as smoking in public places.
I also see an issue in that the type of person who would allow their dog to foul would not register their dog on a DNA register anyway. We therefore need to tackle this problem with awareness and education. The Government have recently announced that they will come up with a new litter strategy. Since dog poo counts as refuse, it would be excellent if the work could incorporate that.
I have been told that I need to tell the Minister that he needs a PPS—a pragmatic poo strategy. I suggest that a pragmatic poo strategy would recognise both the failings of human nature and the need to enjoy the family walk and do the right thing. I look forward to hearing his comments. Hopefully, when he comes up with his new litter strategy, there will be input from landowners, councils, dog walkers, dogs trusts, forestry commissions and all those bodies who experience this problem and seek to encourage the public not to keep creating a mountain of refuse in our wildlife areas.
Mr Philip Hollobone (in the Chair)
The debate can last until 5.30 pm. I call Teresa Pearce.
Teresa Pearce (Erith and Thamesmead) (Lab)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I thank the hon. Member for St Albans (Mrs Main) for bringing the debate. It might not seem the most glamourous or exciting of topics, but keeping our communities clean and pleasant is a key part of local government’s remit. Ensuring that our streets, parks, playgrounds and open spaces are free from ugly, unhygienic dog mess is really important.
Dog mess is a source of nuisance to residents and an eyesore on many streets, from high streets in towns and city centres to country paths and village lanes. Roads littered with dog mess damage civic pride and tarnish the image of an area. It is unpleasant in both sight and smell, it is unhygienic, it spreads disease and it becomes a costly problem for local authorities to tackle. In fact, councils spend about £1 billion a year dealing with littering, including dog waste. Furthermore, dog owners who break the law on dog fouling and refuse to clean up after their dogs put the health of others at risk, particularly children.
It is children who are most at risk of contact with dog excrement, which can cause toxo—I cannot say the word.
Teresa Pearce
That’s it—I thank the hon. Lady for her intervention. It is a nasty infection that can lead to dizziness, nausea, asthma and even blindness and seizures.
It is not surprising that 47% of people in the UK think that dog fouling is one of the most annoying things they experience in public places. I recently met a group of cyclists who told me that one of the worst things they encounter, when cycling through country lanes, are these “baubles”, which the hon. Lady referred to, hanging from trees, which hit them in the face as they are riding and trying to enjoy the countryside. The public rank dog fouling as even more annoying than general littering, pollution, traffic and smoking. According to Keep Britain Tidy, dog fouling is
“a major concern to members of the public”.
A survey that it undertook of more than 10,000 sites found dog mess left in 7% of places. As such, it is a major issue for local authorities.
We seem to have got the “bag it and bin it” message out in towns, but there needs to be a different message in the countryside. In particular, it is important to keep local parks free from dog mess. Parks and green spaces play a crucial role in the health of our communities, including the mental health and general wellbeing of our residents. Parks provide spaces for exercise, cultural events, picnics, walks and everyday contact with the natural environment, which is proven to have a positive impact on mental health—particularly in towns and cities, where people’s lives are increasingly confined to home, work and commuting between the two.
Parks and open spaces are crucial to improving health and happiness in a society with increasing levels of obesity and disorders such as depression and anxiety. In that context, it is disappointing that parks and green spaces are facing unprecedented budgetary cuts that threaten their future existence. More than 90% of park managers expect decreased funding this year, while 97% of street cleaning services expect decreased funding over the next five years. That reduction will amount to more than 20% of their funding, which will have an impact on the presence of dog mess on our streets and in our parks.
The hon. Member for St Albans mentioned earlier that DEFRA no longer collects figures regarding dog mess. I agree with her that doing so might be an unnecessary burden; however, BBC figures show that 103 of 302 local authorities surveyed did not issue any fines for dog fouling at all in 2014-15. Enforcement is quite difficult. As was explained, it has to be witnessed and somebody has to report it. It is almost impossible: somebody would need to be very lucky to be in the right place at the right time.
Teresa Pearce
I completely agree. There are particularly bad dog owners in some parks quite near where I live. To be quite honest, one would not want to confront them—or the dog—on any issue, because they are quite aggressive people. I did a very unscientific survey among my friends earlier today. I asked if they understood what bin to put dog mess in, and a huge proportion thought it could only be put in the dog mess bin, which is not correct. These are regular dog walkers, yet they did not know that, so education is really important.
Many local authorities are using behaviour-change approaches to reduce dog fouling, but we need to make sure they are using the right message. As I said, “bag it and bin it” may be the right message in towns, but in the countryside it may be completely the wrong message and could actually cause further problems. I was particularly interested in the hon. Lady’s experiment with the chocolate éclair—I might see if I can find it on YouTube.
Mrs Main
I can tell the hon. Lady that she can do that. They also put down a can of chilli sauce and a bread roll soaked in water. They gave me a flimsy stick to try to demonstrate stick and flick, but it was not really the best representation of the way to do it, according to the Forestry Commission. The video is online.
Teresa Pearce
I thank the hon. Lady for the clarification. Local authorities have been campaigning with public sector bodies such as Keep Britain Tidy and third sector organisations such as Dogs Trust on the issue of dog fouling. Keep Britain Tidy’s 2010 campaign, “There’s no such thing as the dog poo fairy”, led to some communities seeing a 90% decrease in dog mess. The Dogs Trust’s “The Big Scoop” campaign involves posters, installations in parks and dispensers of free dog poo bags—although as we have heard, that might not be the answer in some areas.
In 2012, West Dunbartonshire Council armed its local clean-up workers with cans of bright spray paint to tag abandoned dog waste in a highly visible colour scheme to shame guilty dog owners and notify pedestrians that the dog waste was there. Leeds City Council’s litter and dog fouling campaign includes a reward scheme for people seen by enforcement officers using litter bins, and Manchester City Council ran a campaign with posters reinforcing responsibility for littering. However, dealing with these issues is expensive, and local authority budgets are restricted at this time, so we need to change behaviours. I was a dog owner for many years; unfortunately we lost our little Jack Russell, Mrs Biggles, last year. I would never have dreamt of bagging and not binning. If I could not bin, I would take it home. However, I was not on a long country walk, which is a different circumstance altogether; I was always relatively near where I live.
Unless there is continued investment in campaigns to deter dog owners from shirking their responsibilities, we will see regression in a culture that has actually been steadily improving for years. Lack of bins, particularly on public footpaths through the countryside, can also prevent dog owners from collecting dog mess. However, it is not only the lack of bins; it is about disposing of the dog mess properly. It is incomprehensible that anybody could think it was okay to bag and then just throw or flick. It is the equivalent of someone throwing a fast food bag out of the car as they drive along. It is basically pushing the responsibility for clearing it up on to somebody else. I was particularly struck by the reference to plastic shopping bags and how this is becoming a similar issue. One of my local councils recently suggested that it could increase its income by putting advertising on dog poo bags, because so many are sold. I am not quite sure whether that is a good idea or not—it is innovative, if nothing else.
Dog mess is the most unacceptable and offensive type of litter on our streets, and dog fouling is one of the most annoying and avoidable issues that concerns the public. However, the problem will not disappear on its own. An estimated 8 million dogs produce more than 1,000 tonnes of mess every day in the UK alone. Nearly a quarter of British people find dog mess in their local city, town or village at least once a day, and almost three quarters of people experience that on a weekly basis. We need to educate dog owners. The “bag it and bin it” message seems to have been successful, but this new phenomenon needs tackling. The hon. Lady said that she is not coming up with the answer today, but she is identifying and publicising the problem, which is the first step in finding an answer. I look forward to the Minister’s response.
Mr Philip Hollobone (in the Chair)
At the end of Minister’s response, Anne Main will have the opportunity to sum up the debate.
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Marcus Jones)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I thank my hon. Friend the Member for St Albans (Mrs Main) for securing this important debate. It is easy to make light of this subject; many puns, jokes and all of those sorts of things come to mind. I reassure my hon. Friend that I will not venture down that path, because this is an extremely important and serious issue—not only for my hon. Friend’s constituents, but for our constituents right across the country.
Our manifesto included a clear commitment to be the first Government to leave the environment in a better state than we found it. While Government policy on local environmental quality issues, including litter and dog fouling, is led by the Department for Environment, Food and Rural Affairs, I assure my hon. Friend that DEFRA works very closely with my Department on these issues, and I certainly take a keen personal interest in them as well.
This country is often described as a nation of animal lovers: with a population of more than 8.5 million dogs—one dog for every seven people—we can certainly say that we love our dogs. We know that owning a dog brings companionship. According to some studies it can also bring certain health benefits, such as the lowering of blood pressure and overall stress levels. Of course, when someone exercises their dog, they are exercising themselves.
Having a clean environment in which to live, work and exercise, including exercising our pets, is of great importance. There is certainly evidence that a poor-quality local environment affected by problems such as litter, dog fouling and graffiti can restrict that area’s economic growth, reduce property prices and increase people’s fear of crime. That, in turn, discourages people from going outside, exercising and being an active part of their local community.
As we all know, with dog ownership comes significant responsibility. All dog owners are required by law to provide for the welfare needs of their animals, and they must ensure that their dogs are under proper control at all times. That includes dealing with the inevitable consequences of owning a dog, including cleaning up after them. One estimate puts the amount of dog faeces produced daily in England at more than 1,000 tonnes. Littering and dog fouling are, without question, deeply antisocial actions that pose a significant risk to human health and animal welfare.
For local authorities, maintaining a clean local environment is a significant financial issue. It costs councils hundreds of millions of pounds every year to clean up litter, including removing dog waste from our streets and public streets. Local authorities should not have to do that. Dog fouling is an avoidable problem. We have to acknowledge, as my hon. Friend the Member for St Albans did, that most dog owners are very careful; they clean up after their pets and are responsible people. That said, we must do more to take on the small minority who think it is right and appropriate to leave the mess that my hon. Friend described and has provided me with pictures of, from situations across the country. We must hold those people to account.
This is a significant issue, but we must look at the overall context. The latest local environmental quality survey of England found that fewer than 10% of sites surveyed were affected by dog fouling or bagged dog faeces in 2014-15. The few irresponsible dog owners who do not clean up and leave an unsightly, unhygienic mess rather spoil the environment for all other users.
Research has found that dog fouling is perceived by more than two thirds of people to be the most offensive type of litter. I certainly agree with them. Recently, on the day of the Great British Spring Clean, I went out on several occasions in my constituency with teams to pick up litter, and I can identify with what my hon. Friend said. I found myself on a riverbank collecting litter, a significant amount of which was caused by this very problem—people doing the right thing and bagging up their dog faeces but then, for some inexplicable reason, thinking it is right to either put it down on the grass or throw it into the hedge. That seems remarkable, and particularly so in the location involved, because there was a dedicated dog fouling bin within a matter of 100 metres. My hon. Friend is raising an issue that is extremely pertinent right across the country.
Mrs Main
I thank the Minister for sharing that personal experience with us. Councils have said that their operatives are having to climb into trees to cut these bags down and are coming across decomposing poo. That is bad for the health of the council operatives and a more costly way to collect. It is a litter and refuse problem tied together, which is really the worst combination.
Mr Jones
I completely agree. This is a completely unacceptable practice that causes a huge problem to local authorities, which are left with the prospect of having to sort out the issue left behind by the very people who pay the council tax. We might think that those people look at their council tax bill and ask, “Do I want to spend part of my council tax on a problem that I am creating?” There is a real issue in terms of education, which I will come on to in a moment.
Having said that, it is still in local authorities’ interests to invest in maintaining a clean and welcoming environment, to improve wellbeing and attract inward investment. A number of councils and other organisations are looking at innovative solutions, examples of which have been given today. We know that signage can have an impact. Examples such as Keep Britain Tidy’s successful poster campaign on dog fouling—my hon. Friend mentioned the demon eyes on the poster, watching us—have had a positive outcome in the areas where they have been used.
As my hon. Friend mentioned, the Forestry Commission is encouraging people to use the stick and flick method in the forest, moving the waste away from the path into the undergrowth, where it can be naturally broken down. There were also recent articles about provision of poo bag dispensers in an Aberdeen community and areas in Stoke where they are trialling a fine of £100, using a public spaces protection order, if dog walkers fail to carry poo bags. I acknowledge what has been said in relation to enforcement. That comes with its challenges, and therefore alongside any enforcement activity there must be significant education, so that people finally realise this is not an acceptable practice.
Different methods work in different places. The stick and flick method certainly may work where the Forestry Commission advocates it, but as my hon. Friend said, the Forestry Commission does not advise that practice near car parks or other sensitive areas. It may also not be acceptable in urban parks and areas where there are housing developments.
My hon. Friend talked about signage and a number of other initiatives that could be used, such as more information on waste bins and the manufacturing of the bags. The hon. Member for Erith and Thamesmead (Teresa Pearce) made an important point about advertising. The packaging that bags come in could be used as a way of informing dog owners of the right thing to do. Those are things we will look at.
We have a litter strategy, which will be published. We do not just want that strategy to be a document that sits on the shelf, gathering dust and not doing the job we intend it to. We will have a number of working groups, including organisations involved in providing bins, manufacturers of packaging and so on. We fully intend, through those working groups, to look at some of the individual challenges and see if we can come up with solutions. I am certainly keen to hear more from my hon. Friend—or indeed, any other hon. Member in this House—if she comes across any ideas that we may be able to take on to deal with this important issue.
There is no excuse for dog fouling. Some dog walkers seem to think it is acceptable to leave their mess behind. They think someone will pick the bag up or, in the worst case scenario, they are just completely ignorant and do not think they need to deal with it, because someone else will pick up the tab. We should be clear that this is disgusting, antisocial, dangerous to human health and dangerous to animals and other wildlife. We should, at every turn, encourage people to act responsibly and follow the vast majority of dog owners who do the right thing by picking up after their dogs and, if there is no bin, taking the bag home.
Mrs Main
I thank the Minister for those very helpful comments. I suggest broadening the approach to include, for example, pet food manufacturers and vets. Clear guidance should be printed on everything—a bit like tobacco warnings—and there should be more use of advertising. As the hon. Member for Erith and Thamesmead (Teresa Pearce), who speaks for the Opposition, said, people are not aware that they can use ordinary bins. There needs to be signage on ordinary bins to show that they can be used for dog poo waste. There should be a graphic on all these things.
I have explained what we need to be doing. It is really important that we get feed-in from countryside landowners, farmers and, as I said, vets and pet food manufacturers. Let us exploit the good will that is out there for those of us who love our pets. I would not mind reading on the side of my dog food tin about how to dispose of dog poop. We should all have that information. It should become a matter of course for this practice not to be tolerated. As the hon. Lady said, it is exactly like jettisoning stuff out of a car window. That used to happen such a lot, and it still does happen, but not as much.
Let me close with the poem that the Forestry Commission likes everyone to read:
“If your dog should do a plop, take a while and make a stop, just find a stick and flick it wide into the undergrowth at the side.
If your dog should do a do, you don’t want it on your shoe, find a stick, pick a spot, flick into the bushes so it can rot.
If your dog should do a poo, this is what you should do, just find a stick and flick it wide into the undergrowth at the side.
If your dog should make a mess there really is no need to stress. Find a stick, pick a spot, flick into the bushes so it can rot.”
With that, I rest my case, Mr Hollobone.
Question put and agreed to.
Resolved,
That this House has considered dog fouling.
Written Statements
(7 years, 9 months ago)
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EU-US Umbrella Agreement
(7 years, 9 months ago)
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The Minister for Digital and Culture (Matt Hancock)
The Department for Culture, Media and Sports (DCMS) is responsible for the Government’s participation in European negotiations on the EU-US Umbrella agreement, which is a comprehensive data protection framework for criminal law enforcement co-operation. A scrutiny override occurred when the UK voted in favour of the conclusion on the agreement before the European Scrutiny Committee could complete the process of scrutiny on the agreement. The proposal was:
Proposed Council Conclusion on the conclusion, on behalf of the European Union, of an agreement between the United States of America and the European Union on the protection of personal information relating to the prevention, investigation, detection and prosecution of criminal offences (8491/16).
The UK voted in favour of the conclusion on the Umbrella agreement. This triggered an override, which was induced by the deadline being brought forward to ensure the conclusion was concluded in time for the EU-US Justice and Home Affairs Ministerial summit in Washington DC on 6 December. With the accelerated timetable and the timing of the scrutiny Committee meetings, it meant that they could not consider our update in advance of their meeting and so the appropriate parliamentary scrutiny procedure was not possible on this occasion.
[HCWS533]
Water Supplies
(7 years, 9 months ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Dr Thérèse Coffey)
I am pleased to announce to the House that today I am consulting on a new strategic policy statement for Ofwat, the economic regulator for the water sector.
Securing a fair deal for everyone is at the core of Ofwat’s role. Research by the Consumer Council for Water in 2015 revealed that 12% of customers said they were struggling to pay their water bills. This Government will set a strategic objective for Ofwat to challenge the water sector to go further to identify and meet the needs of customers who are struggling to afford their charges.
The Government will also set Ofwat a strategic objective to challenge the water sector to plan and invest to meet the needs of current and future customers, in a way which offers best value for money over the long term. By the 2050s England is projected to face a water deficit of 8-22% of total water demand. We need to take action now to ensure we can meet our future water needs in an affordable way.
I am therefore pleased to inform the House that the Government will prepare a national policy statement. This will facilitate development consent for water resources, which currently must be sought from a range of authorities and can involve delays and uncertainty.
The Government will also be directing water companies to quantify their level of resilience and consult on proposed future options that they are exploring to meet their long-term needs. In line with new research from Water UK, we expect the industry to take a balanced approach to meeting these needs, including new supply solutions, demand management and increased water transfers.
The consultation is available at: www.gov.uk and will close on 11 April.
[HCWS530]
Environment Council
(7 years, 9 months ago)
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The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Dr Thérèse Coffey)
I attended the EU Environment Council in Brussels on 28 February along with the Minister for Climate Change and Industry, my hon. Friend the Member for Ruislip, Northwood and Pinner (Mr Hurd).
I wish to update the House on the matters discussed.
EU emissions trading system (ETS)—Council agreement
The main outcome of Council was reaching an agreed position (“general approach”) on the reform of the EU emission trading system (ETS) for phase IV of the system (2021-2030). Council began with a full roundtable debate of the EU ETS where Ministers set out their respective policy positions. The UK expressed support for reaching an agreed position that achieved the right balance between incentivising change and supporting competitiveness. Following the debate, the presidency presented a revised proposal and called for an informal vote of agreement.
The key elements of the agreement are:
a provision to increase, if necessary, the volume of free allowances allocated to support industrial sectors at risk of carbon leakage (where production relocates outside of the EU as a result of carbon costs);
two provisions to strengthen the carbon price—increasing the rate at which allowances are removed from the market and placed in a reserve, and, from 2024, annually cancelling allowances within the reserve above a certain threshold.
The UK Government consider this to be a balanced package that incentivises cost-effective carbon reduction, while safeguarding the competitiveness of UK industry. The agreement to reform the EU emissions trading system is a positive step forward in collaboration with our European partners to reduce emissions across all sectors.
The European Parliament reached an agreed position on EU ETS reform on 15 February. The file will now progress to the next stage of negotiations, “trilogies”, where member states (represented by the presidency), European Parliament and the Commission negotiate a final agreement on the reform package.
2030 Agenda for Sustainable Development
Council discussed the implementation of the 2030 Agenda for Sustainable Development, following the publication of a Commission communication in November 2016. The Commission presented its ongoing work including the use of better regulation tools and the regulatory scrutiny board to ensure coherence across policy areas within the 2030 agenda. Many member states highlighted the need for greater co-ordination between policy areas and the need to mainstream the environmental dimension of the 2030 agenda into other policy areas. The UK called on the Commission to focus on the coherence of existing mechanisms. The presidency circulated a brief summary of the exchange of views that would serve as a contribution to a forthcoming discussion at the General Affairs Council.
EU environmental implementation review
Ministers exchanged views on the 2017 annual growth survey (AGS) in the context of the European semester and how it links with the environmental implementation review (EIR). While most Ministers welcomed the 2017 AGS, particularly aspects including sustainable and climate-related investment and the transition towards a low-carbon and circular economy, some regretted that environmental and sustainability aspects were still not given a more prominent role in the AGS. They also underlined the importance of stronger links with wider EU environment policy. Ministers broadly welcomed the Commission’s new EIR as a useful tool to improve the implementation of EU and national environmental policy and as a contribution to the greening of the European semester. Some member states underlined the need for national reports to be based on sound scientific data.
AOB items
AOB—Emission trading system (ETS): aviation
The Commission presented its proposal on the future of aviation in the EU emission trading system (ETS) post-2016. The proposal recommends a continuation of the reduced, intra-EEA scope of aviation in the ETS beyond 2016. This would mean that the current rules would remain unchanged. The proposal also requires the Commission to conduct a further review once there is more certainty about the rules for the global market-based measure (GMBM) for aviation, and to make recommendations for aviation EU ETS in the post-2020 period.
AOB—Paris agreement: international developments
The delegations from France and the Netherlands provided information on international developments regarding the implementation of the Paris agreement.
AOB—EU action plan for the circular economy
The Commission provided an update to the Council on the EU action plan for a circular economy.
AOB—Natura 2000 in the European Solidarity Corps
The Commission provided information to Council on Natura 2000 and the European Solidarity Corps.
AOB—Luxembourg circular economy hotspot (June 2017)
The delegation from Luxembourg provided information on its upcoming circular economy hotspot event in June 2017.
AOB—Environmental concerns regarding Belarus nuclear power plant
The delegation from Lithuania noted its concerns regarding a nuclear power station in Belarus. The Commission highlighted the importance of compliance with international law on nuclear safety.
AOB—Scientific conference on “Sustainable Development and climate changes in the light of the encyclical letter of Holy Father Francis, entitled “Laudato Si””
The delegation from Poland provided information on the conference on sustainable development in light of the papal encyclical “Laudato Si”.
AOB—Update on the environmental liability and mining waste directives
The delegation from Hungary—supported by Poland—provided information to the Council on the environmental liability directive and the mining waste directive.
On 23 June, the EU referendum took place and the people of the United Kingdom voted to leave the European Union. Until exit negotiations are concluded, the UK remains a full member of the European Union and all the rights and obligations of EU membership remain in force. During this period the Government will continue to negotiate, implement and apply EU legislation. The outcome of these negotiations will determine what arrangements apply in relation to EU legislation in future once the UK has left the EU.
[HCWS529]
General Affairs Council
(7 years, 9 months ago)
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The Minister of State, Department for Exiting the European Union (Mr David Jones)
I attended the General Affairs Council on 7 March 2017. The meeting was held in Brussels and chaired by the Maltese presidency.
The General Affairs Council discussed: resolutions, decisions and opinions adopted by the European Parliament; preparation of the European Council of 9 March 2017; the European Semester; the implementation of the inter-institutional agreement on “better law making”; and the mid-term review of the multiannual financial framework 2014-2020.
A provisional report of the meeting and the conclusions adopted can be found on the Council of the European Union’s website at: http://www.consilium.europa.eu/en/meetings/gac/2017/03/07/.
Resolutions, decisions and opinions adopted by the European Parliament
The Council noted the resolutions adopted by the European Parliament at its plenary sessions of February and March 2017.
Preparation of the European Council of 9 March 2017
The Council examined the second draft of conclusions for the March European Council. The discussions focused on: jobs, growth and competitiveness; security and defence; migration; and external relations.
On jobs, growth and competitiveness, and the European Council’s discussion on the sustainability of the economic growth in the 28 member states, I welcomed the positive signs on the economy and set out our strong support for completion of the digital single market. I supported the calls from other member states for further ambition on EU trade policy.
On security and defence, and the European Council’s assessment of the implementation of its December 2016 conclusions, I expressed my support for the balanced nature of the text and stated that any changes should be within the parameters set out at the December European Council.
On migration, and the review of how decisions taken at the informal summit in Malta on 3 February 2017 concerning the central Mediterranean route have been implemented, I welcomed the focus on continued engagement with source and transit countries. I also stated that there needed to be a stronger focus on breaking smugglers’ business models.
The external relations agenda item proposed a discussion on the western Balkans. I pressed for more co-operation with the western Balkans, including strategic communications, to tackle organised crime, third country interference and radicalisation.
European Semester 2017
The presidency presented its synthesis report on the European Semester and suggested that it sends its recommendation on the economic policy of the euro area to the European Council for adoption.
Implementation of the inter-institutional agreement on “better law making”
The presidency updated the Council on the implementation of the inter-institutional agreement on “better law making”. Good progress had been made and would be monitored three times a year. The June General Affairs Council meeting will provide a comprehensive overview of implementation.
Mid-term review of the Multiannual Financial Framework 2014-2020
The Council agreed to approach the European Parliament with proposed amendments to the mid-term review of the multiannual financial framework for 2014-2020. The UK abstained on this point.
[HCWS532]
Independent Police Complaints Commission
(7 years, 9 months ago)
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The Minister for Policing and the Fire Service (Brandon Lewis)
I am pleased to announce that today my hon. Friend the Financial Secretary to the Treasury, and I are publishing the Independent Police Complaints Commission (IPCC) annual report and accounts [HC 450]. Copies of the report have been laid before the House and will be available in the Vote Office.
This is the twelfth annual report from the IPCC, covering its work during 2015-16. In this period the IPCC has made good progress as they continues its expansion. It has started more than twice the number of investigations than in 2014-15 and completed 259 cases (139 more than in the previous year). The report also highlights some key investigations the IPCC handled, for example those involving deaths during or following police contact. It also reports on the progress made with the Hillsborough investigations.
As well as covering the police, the annual report also includes a section on the discharge of the IPCC responsibilities in respect of Her Majesty’s Revenue and Customs.
[HCWS534]
EU Informal Foreign Affairs Council
(7 years, 9 months ago)
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The Minister for Trade and Investment (Greg Hands)
My noble Friend the Minister of State for Trade Policy (Lord Price) has today made the following statement.
The EU informal Foreign Affairs Council (Trade) took place in Brussels on 3 March 2017. I represented the UK at the meeting. A summary of the discussions follows.
Anti-dumping methodology
The Commission (Commissioner Malmström) presented its proposal for a new anti-dumping methodology. With a WTO ruling on China’s dispute likely by the end of the year, Malmström called for rapid agreement to avoid a legal vacuum in the EU. She recognised that the challenge was to find an approach that was both fully compliant with WTO rules while retaining effective trade defence measures.
There was broad support for the proposals as a basis for further discussion, while noting the importance of working to get the details right to ensure proportionality, simplicity, effectiveness and legal certainty. I called for the EU to promote openness against protectionist headwinds, and noted the need to respect the interests of consumers as well as producers.
Autonomous trade measures for Ukraine
The Commission urged support for its proposed extension of autonomous trade measures for Ukraine. Malmström insisted that the additional quotas would not impact EU markets but would be valuable to Ukraine while difficult economic reforms were under way.
Multilateral investment court
Malmström underlined the global interest in amending investor-state dispute arrangements in general, and in the idea of a multilateral investment court (MIC) in particular. Following extensive international outreach conducted jointly with the Canadians, the Commission expected to seek a mandate to launch formal negotiations over the next year. Malmström recalled that the MIC would not provide any new rights for investors but rather ensure a more legitimate means of resolving disputes.
Most member states supported the concept of the MIC, although many emphasised the importance—and potential difficulty—of securing a critical mass of global and cross-stakeholder endorsement.
[HCWS531]
House of Lords
Brexit: Aerospace and Automotive Industries
(7 years, 9 months ago)
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Baroness Quin
To ask Her Majesty’s Government what recent discussions they have had with United Kingdom aerospace and automotive industries about continued access to the European Union single market.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Prior of Brampton) (Con)
My Lords, we engage closely with the UK aerospace and automotive sectors. We have frequent conversations about the challenges that leaving the EU poses and the opportunities that will become open to us. Both sectors have effective partnerships with government through the Aerospace Growth Partnership and the Automotive Council respectively.
Baroness Quin (Lab)
My Lords, the Foreign Secretary has said that it would be perfectly okay to leave the EU without a deal on Brexit, but how can this possibly be true in the case of two of our most crucial industries—the automotive and the aerospace industries? In evidence to this House, they have shown not only how important exports to the European market are but how they are part of European integrated supply chains, how much they benefit from the movement of trained European workers across European countries, and how they benefit hugely from participation in funding and key European research and development and other programmes. How can the Foreign Secretary’s statement be true for these industries?
Lord Prior of Brampton
My Lords, clearly, trading with the countries of the European Union is extremely important. What we are discussing are the terms of that trade. The Prime Minister has made it very clear that she hopes to negotiate a deal that means trade that is as free and frictionless as possible. On that basis, there is a very good outlook for both industries.
Lord Foster of Bath (LD)
My Lords, the Vehicle Certification Agency is our national approval authority for new road vehicles and it is involved with EU policy formulation. Its approval certificates are recognised without question throughout the EU, bringing enormous access benefits to our vehicle manufacturers. What future do the Government see for the VCA’s activities post Brexit and what do the car manufacturers think about that?
Lord Prior of Brampton
My Lords, the issues raised by the VCA are broadly the same as those for the EASA, the MHRA and lots of other regulatory authorities in this country. The relationship between our national regulators and the European regulatory authorities is obviously extremely important and will be the subject of negotiations over the next two years.
Lord Hamilton of Epsom (Con)
My Lords, can my noble friend confirm that there is not an Audi, Mercedes or Volkswagen that is not assembled outside this country? German exports of these cars to the United Kingdom are absolutely massive, and the Germans will have every interest in seeing that that trade continues without tariff barriers.
Lord Prior of Brampton
My Lords, it is clear that there is a huge mutuality of interest in negotiating a free, frictionless trade agreement between the EU and the UK. In the car industry and industries where, as the noble Baroness indicated in her question, there are integrated supply chains, it is doubly in the interests of both parties to negotiate such an agreement.
Lord Watts (Lab)
Why is it that the Foreign Secretary says one thing and the Prime Minister says another? Surely, the industry knows what is good for itself. The industry is quite clear that we need a deal, but the Foreign Secretary says that it is unimportant and we can walk away.
Lord Prior of Brampton
My Lords, I think it is clear, as the Prime Minister has said—and the Government subscribe to the views of the Prime Minister—that we would like to negotiate a free trade agreement with the European Union with as few non-tariff barriers as possible. If we are not able to negotiate such an agreement, we will fall back on the WTO rules.
Lord Tebbit (Con)
My Lords, does my noble friend not think it is very nice to hear spokesmen for the Labour Party saying day after day how important it is that government should do what business wants? Oh, if only that had been the case in past Labour Governments —and I hope it will be if we ever get one again.
Lord Prior of Brampton
My Lords, in both the aerospace and automotive industries, for a number of years we have had an extremely close partnership between industry and government, to the benefit of both parties.
Lord Lea of Crondall (Lab)
It is reassuring for this side of the House to see the noble Lord, Lord Tebbit, scraping the barrel. To enable integrated production around Europe, is it not just a question of tariffs? As the Road Haulage Association said, instead of needing one piece of paper to get from Munich to Toulouse, for example, we will need 60 pieces of paper, unless we are part of a European arrangement for all these technical standards.
Lord Prior of Brampton
My Lords, the integrated supply chains that have developed over a number of years are not just limited to the EU. The aerospace industry is a case in point: its supply chains are global supply chains—and, of course, under WTO rules there are no tariffs for aircraft or aerospace parts. We should raise the horizon away from just the European Union.
Baroness Crawley (Lab)
Following on from my noble friend’s Question on continued access to the European Union single market, what is the Minister’s reaction to recent House of Commons Library research which shows that none of the G20 countries trades with the EU on WTO rules alone? They all have some sort of preferential trade agreement. Does he think that, in the event of our having to rely solely on WTO rules in two years’ time, we will also leave the G20?
Lord Prior of Brampton
I think that the Prime Minister has made it absolutely clear that it is our intention to negotiate a free trade agreement with the European Union. That is the policy priority over the next two years.
Lord Roberts of Llandudno (LD)
My Lords, has the Minister considered the situation of Airbus, which is in Flintshire in North Wales and employs 7,000 people, as well as people in the ancillary industries? The wings are produced in Broughton, and there are plants in Filton, near Bristol, Hamburg and Toulouse. The whole of the European Union is involved in building the Airbus. How will we secure the future of those jobs, not only in Wales but in the rest of the European Union?
Lord Prior of Brampton
The noble Lord makes an extremely important point. Airbus, in a sense, is globalisation writ large. France, given the huge investment in Toulouse, Germany and the UK—Wales and England —have a very great mutuality of interest in negotiating a deal that enables Airbus to compete competitively with Boeing. So it would be extraordinary if we cannot negotiate a deal that enables Airbus to continue to prosper.
National Identity Cards
(7 years, 9 months ago)
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Lord Campbell-Savours
To ask Her Majesty’s Government what representations they have received from public authorities since 1 January 2017 on the case for introducing national identity cards in the United Kingdom.
The Minister of State, Home Office (Baroness Williams of Trafford) (Con)
My Lords, Her Majesty’s Government are not aware of receiving any representations from public authorities on the case for introducing national identity cards.
Lord Campbell-Savours (Lab)
My Lords, following the Brexit decision and its possible implications for national identity cards, have the Government not detected the mood change and change in public attitudes on their introduction, not only in the country but in the Commons, in this House and indeed on their own Benches? Why cannot we now sit down and have a sensible conversation with the Government on the way forward? We could start by supporting the application before the Liaison Committee for an ad hoc committee inquiry into ID cards to be set up in this Session of Parliament.
Baroness Williams of Trafford
My Lords, I have not detected any more of an appetite for national identity cards since the Brexit discussions began. The Government will certainly have to think about identity post Brexit, but that will be the subject of discussions and negotiations.
Lord Robathan (Con)
My Lords, those such as me who used to oppose identity cards have actually changed their minds. Time has moved on and the changes in IT and terrorism are so important. When the world changes, we should change too.
Baroness Williams of Trafford
My Lords, we believe that the investment we are making in better security, use of intelligence and cybersecurity is a much more effective use of resources.
Lord Paddick (LD)
My Lords, the Government’s position on ID cards is clear, and we support it. However, an even greater intrusion into privacy has been highlighted in today’s Guardian by the Surveillance Camera Commissioner, who said that:
“The problem is when new and advancing technology is brought together by well-meaning people that actually invades people’s privacy, or worse, leaves privacy at risk of theft or uploading on YouTube”.
He concludes that,
“regulators and the government were struggling to keep up with the pace of technological change”.
What are the Government doing about it?
Baroness Williams of Trafford
One of the reasons why the Conservative Party opposed identity cards was because of the civil liberties issue which the noble Lord outlined. However, he is absolutely right to point out that the Government should also always be mindful of privacy versus the advances in technology that such information can give us.
Lord Mackenzie of Framwellgate (Non-Afl)
My Lords, given that most terrorists and professional criminals use multiple identities in committing crime, is it not self-evident that a biometric identity card would be an advantage in changing policy?
Baroness Williams of Trafford
My Lords, the biometric card would not be any more robust than some of the systems which we have in place. In fact, there is evidence that it is just as liable to counterfeiting as other methods.
Earl Attlee (Con)
My Lords, how would ID cards help the United Kingdom avoid terrible attacks such as the ones in Paris, Nice and Berlin?
Baroness Williams of Trafford
My noble friend raises a good question. Many European countries have identity cards but we have seen no evidence that they offer any greater protection than we have in this country.
Lord Green of Deddington (CB)
My Lords, does the Minister accept that, since exit checks were cancelled about 20 years ago, we have not had the slightest idea who is on this island? Will the Government therefore look again at this issue and perhaps take up an idea first proposed by the noble Lord, Lord Blunkett, that we could start with passports, which are already owned by 80% of the country’s population? There is surely a way forward here and we should take it.
Baroness Williams of Trafford
The noble Lord has highlighted the merit of exit checks, which we have previously discussed. They were reintroduced in May 2015 and those data will prove valuable.
Lord Blunkett (Lab)
My Lords, it is a great pleasure to agree with the noble Lord, Lord Green. If biometrics are so easily attacked and discredited, why have the Government introduced them for passports?
Baroness Williams of Trafford
The identity card was a tackle-all type of card. The Government are now trying to be far more robust at identity assurance from a problem-solving perspective rather than seeking a particular solution.
Lord Scriven (LD)
My Lords, have not reports suggested that the way to deal with terrorism on these shores is through targeted, intelligence-led police operations rather than mass surveillance?
Lord Gadhia (Non-Afl)
My Lords, has my noble friend the Minister read the early evidence to the Economic Affairs Committee’s investigation into Brexit and the labour market? I do not want to prejudge the conclusions of that report but it makes for interesting reading, highlights the significant difficulties in both measuring and controlling migration, and provides some compelling reasons for revisiting the case for identity cards.
Baroness Williams of Trafford
Unfortunately, I do not agree with my noble friend. The approach that we have adopted in successive immigration Acts is to make it harder for illegal migrants to live and work in the UK and easier for us to remove them.
Lord Harris of Haringey (Lab)
My Lords, I refer to my interests in the register. Given the decision that has been taken to leave the European Union, and the fact that a timetable is about to be established for that which sets an end date, can the noble Baroness tell us what assessment the Government are making of the need for better identity assurance—for example, for the citizens of Northern Ireland, those citizens who wish to use our health service, and, indeed, to tackle the employment issues that have just been raised by her noble friend? Those are urgent questions. What assessment are the Government making?
Baroness Williams of Trafford
The noble Lord is absolutely right: they are important questions. We are considering a range of options for our future immigration system. It would be absolutely wrong of me to set out further positions at this stage.
The Minister of State, Ministry of Defence (Earl Howe) (Con)
My Lords, I think the next Question has been called.
Great Western Main Line: Electrification
(7 years, 9 months ago)
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Baroness Randerson
To ask Her Majesty’s Government what is their estimate of the final cost and timetable for completing the electrification of the Great Western Main Line.
The Parliamentary Under-Secretary of State, Department for Transport (Lord Ahmad of Wimbledon) (Con)
My Lords, in the recent National Audit Office report, the total estimated cost of the Great Western route modernisation programme was £5.58 billion. The timetable for the remaining elements is due to be part of the planning process for Control Period 6. The Government welcome the Public Accounts Committee’s recommendation to reassess the case for electrification by section and fund schemes only where worthwhile benefits for passengers could not be achieved otherwise at lower cost.
Baroness Randerson (LD)
My Lords, I hear the Minister clearly. I believe he is telling us in clear terms that the Government do not intend to complete the electrification of the Great Western Railway to Swansea. If that is the case, please will he confirm that this afternoon?
Lord Ahmad of Wimbledon
I thought I was pretty clear, but obviously not clear enough for the noble Baroness. I said that some parts of the electrification have been deferred to Control Period 6, as she is aware. The Government will review the spending on that to ensure the electrification on all remaining parts that have been deferred is in the interests of customers. The Cardiff to Swansea route that the noble Baroness specifically mentioned will be subject to the next control period—CP6.
Baroness McIntosh of Pickering (Con)
My Lords, the electrification of the east coast main line route was completed in 1990. We are expecting a massive investment by Virgin Trains East Coast by 2020. At the moment, the line frequently fails. Does the noble Lord have a timetable and an idea of the investment that is required, and when Network Rail might carry out the investment required to ensure that the investment that Virgin Trains is making will be worth it?
Lord Ahmad of Wimbledon
We acknowledge the investment that rail companies are making in rail services across the board. As regards my noble friend’s specific question, she may well be aware that Sir Peter Hendy was appointed to Network Rail specifically to look at the rollout of the electrification programme, which prioritised certain key investments. The investments that are not made in CP5 will be part of the consideration for the next control period.
Lord Anderson of Swansea (Lab)
My Lords, coming back to GWR, the Minister will be aware that we in south-west Wales are very concerned about any decision, on infrastructure or otherwise, that might harm perceptions regarding the isolation of areas west of Cardiff. We were promised a fixed completion date to Swansea. Can he now undertake that he will try to expedite that and give a fixed completion date for rail electrification as far as Swansea?
Lord Ahmad of Wimbledon
The noble Lord is right to raise the issue of Swansea but I believe I have already addressed that. It will be considered as part of the CP6 expenditure. However, to put this into context, £2.8 billion is specifically allocated to the electrification of the Great Western line. We are talking about 170 bridges, 1,500 sets of foundations, 14,000 overhead lines, 1,500 pieces of signalling equipment and 17 tunnels. Notwithstanding that, the Government are making investments, as I am sure the noble Lord acknowledges. The rollout of new rolling stock, which will start to be applied to the line from the end of this year, will ensure better and more efficient customer service across the whole network.
Lord Bradshaw (LD)
My Lords, the Great Western railway electrification scheme was designed in the Department for Transport; it was specified there and the trains were ordered there. However, the new trains and the new system will not provide a faster or better service than was the case 40 years ago, when I was general manager at Paddington. In future, will the Government look very carefully at whether there are better design and procurement methods to ensure that we get a scheme that delivers benefits to passengers and saves the taxpayer money?
Lord Ahmad of Wimbledon
I do not agree with the noble Lord’s premise. I believe that the new rolling stock that I referred to will bring passenger benefits. As I am sure he knows from his experience in and vast knowledge of the area, the IEP fleet, which is coming into service on the whole route, will run in both diesel and electric modes. That will provide flexibility in the delivery and appropriate scheduling of the electrification programme, which I accept is challenging.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, although any initiative that allows faster travel to Wales is to be welcomed, and we already have excellent road, rail and air links to south Wales, does the Minister agree that even greater commercial and cultural benefits might be gained by improving road and rail travel from north to south Wales?
Lord Ahmad of Wimbledon
I agree with my noble friend. As I am sure she is aware, Wales will benefit to the tune of £2 billion from rail modernisation. For her information, together with the Welsh Government we have allocated a further £125 million to update the initiative around the Valley Lines.
Lord Berkeley (Lab)
My Lords, is the Minister aware that this project started off at £800 million and has now gone up to over £2 billion, £3 billion or maybe £4 billion, and that the same team responsible for the pricing has been pricing phase 1 of HS2? As he will know—I put it to him at the Committee stage of the HS2 Bill—those costs will now be, in my estimation, £54 billion and not £24 billion. Is it not about time that we got a grip on costs?
Lord Ahmad of Wimbledon
We had several meetings away from this Chamber about the costs of HS2. As the noble Lord is fully aware, the experts who are working on the modelling and pricing of HS2 are meeting notable experts whom he himself put forward, and it will be interesting to await the outcome of that meeting.
Earl Attlee (Con)
My Lords, do the difficulties with electrification not show the benefits of building a new line such as HS2?
Lord Wigley (PC)
My Lords, does the Minister accept that, while it is vital that the electrification goes as far as Swansea and indeed beyond, there is an equally pressing case for electrification of the north Wales line through to Holyhead? Does he accept that that is important not only in respect of the local benefits from Crewe to Holyhead but in respect of the main line link through to Ireland, which has increasing importance in the wake of Brexit? What will the Government do to expedite that electrification?
Lord Ahmad of Wimbledon
The noble Lord raises a specific issue away from the line in the Question. It is important to recognise that the Government’s approach is that, where it will be of benefit to the customer and the consumer, electrification will be prioritised, and the Hendy review reflects that very objective.
Brexit: Declaration of Friendship
Lord Cormack
To ask Her Majesty’s Government whether, before invoking Article 50, they will lay before each House of Parliament a declaration of friendship and intent which they will then circulate to the Parliaments of the other European Union member states.
Baroness Goldie (Con)
My Lords, the Prime Minister’s Lancaster House speech made clear that, while we are leaving the European Union, we are not leaving Europe. Europe matters, and the UK will continue to be a reliable partner, willing ally and close friend to all the EU member states. Friendship is implicit in our relationship with Europe and there is therefore no need to lay a declaration of friendship and intent before this House and the other place ahead of triggering Article 50.
Lord Cormack (Con)
My Lords, I thank my noble friend for that Answer, although I am sorry that it was not shorter and more in the affirmative. I am sure that she will acknowledge that it is vitally important that the friendship to which she referred, and to which the Question refers, is emphasised at every conceivable opportunity. We are sitting down with friends, neighbours and allies and not seeking to negotiate a peace treaty with enemies. It is clearly important that advancing our friendship is crucial to the success of the talks.
Baroness Goldie
My Lords, let me try to reassure my noble friend. I am absolutely certain that our negotiators, in conducting these vital and extremely important negotiations, will do so in the best traditions of relations amical, amistad und Freundschaft.
Lord Lamont of Lerwick (Con)
My Lords, does the Minister recall the wise words of the great Liberal politician, Richard Cobden, who once said:
“Free Trade is God’s diplomacy and there is no other certain way of uniting people in the bonds of peace”?
Is not the best thing we can do to show our everlasting friendship with Europe to advance the possibility of a comprehensive free trade agreement with Europe?
Baroness Goldie
I must thank my noble friend: it is certainly good to be reminded of a time when there were wise Liberals. I also thank him for his very pertinent question. I am sure that those issues will be to the forefront of our negotiators’ thoughts.
Baroness Hayter of Kentish Town (Lab)
My Lords, one really important issue will be about people and the ability of all of us to travel, study, work and indeed drive in Europe and go on holidays there. One worry that consumers have is that we will possibly lose our car insurance and have to revert to the old green card. Indeed, we could also lose our European health card—the E111, as some of us still call it. My discussions so far about how much those consumer interests are being discussed have not been very fruitful, but those interests are really important. Will the Minister give an undertaking that these wider people-to-people issues will be taken seriously?
Baroness Goldie
I thank the noble Baroness for raising an extremely important point. Part of the preparatory period in anticipation of triggering Article 50 has been devoted to extensive consultation. Indeed, the Department for Exiting the European Union has conducted an analysis and consultation with many sectors of society. But she raises very important issues and I am sure that her remarks will be noted.
Lord Hannay of Chiswick (CB)
My Lords, will the Minister, rather than trying not to answer the Question asked by the noble Lord, Lord Cormack, reflect on the fact that since it appears, if one believes what one reads in the newspapers, that the Prime Minister has given herself two extra weeks to write this important missive, she might settle down with a sharp pen and put some of the thoughts in the noble Lord’s Question into that missive?
Baroness Goldie
I apologise to the noble Lord if I omitted to answer my noble friend’s Question: I thought that I had tried to do that in a rather original manner. But I reassure him that the sentiments raised by my noble friend Lord Cormack are extremely important, and they will be at the forefront of the manner in which we conduct the negotiations.
Lord Wallace of Saltaire (LD)
My Lords, the Minister quoted the Prime Minister as saying that we are leaving the EU but not leaving Europe. That seems to many of us to be a deliberately meaningless phrase in the face of the underlying hostility to continental European Governments of some Conservatives on the Benches behind her. The Foreign Secretary, rather more floridly, has several times said that he sees the future relationship between the UK and the European Union as similar to the relationship between a flying buttress and a cathedral. Could she explain exactly what he means by that?
Baroness Goldie
I have no pretensions to architectural expertise and I hesitate to venture an opinion. What is clear is that during the negotiations we will not only seek to do whatever we can to get the best possible deal for the United Kingdom but, equally importantly, set out the parameters for our future relationship with the EU. I do not agree with the noble Lord’s dismissal of the argument that we will leave the EU but remain in Europe. I do not think that that is a platitude; it is a self-evident truth.
Lord Foulkes of Cumnock (Lab)
My Lords, would the Minister consider sending one of these declarations of friendship and intent to the Scottish Parliament?
Baroness Goldie
I say to the noble Lord that if I were to articulate the words that instinctively come to my lips about the First Minister of Scotland, they would not constitute parliamentary language.
Lord Pearson of Rannoch (UKIP)
What about adding a short PS to this letter of solidarity along the lines of, “Why not come with us?”.
Baroness Goldie
I did not quite get the start of the noble Lords question, but if his sentiment is that we are on a joint enterprise as we embark upon these negotiations, with the UK seeking to do what is best for it but at the same time engaging constructively with our EU friends and allies, then yes, there is a joint dividend and prize to be gained.
Lord Dykes (CB)
My Lords, bearing in mind that the Minister says that Europe is so important to us, should we not only welcome and thank the noble Lord, Lord Cormack, for his beguiling, romantic and enticing suggestions, but come to the conclusion that we might as well stay in the European Union?
Baroness Goldie
That is a beguiling and enticing question to respond to, but the referendum result has happened. We are now in a very important part of our national affairs—arguably the most important outside of wartime. All of us collectively will want to wish our Prime Minister, Government and negotiators well for the sake of the whole country.
Scottish Independence Referendum
(7 years, 9 months ago)
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Lord West of Spithead
To ask Her Majesty’s Government what response has been given to the Scottish First Minister in response to her request for a further referendum on Scottish independence.
The Parliamentary Under-Secretary of State, Northern Ireland Office and Scotland Office (Lord Dunlop) (Con)
My Lords, a little over two years ago people in Scotland voted decisively to remain part of our United Kingdom in a referendum. The UK Government remain of the view that there should not be a further referendum on independence. Even at this late hour we call on the Scottish Government to take it off the table. Another referendum would be divisive and cause huge economic uncertainty at the worst possible time.
Lord West of Spithead (Lab)
My Lords, I should declare that I lived in Scotland for many years and was educated there. Does the Minister not agree that, to give clarity to the people of Scotland, if a referendum is allowed it is essential that it is held after the Brexit negotiations are completed, not in the midst of complex negotiations with no ability whatever to understand the implications of the detailed agreements being worked on?
Lord Dunlop
I am sure that the noble Lord received a very good Scottish education. Regarding the negotiations, Nicola Sturgeon said yesterday that she wanted the UK to get a good deal. I can think of nothing more calculated to undermine the achievement of a good deal than holding a divisive and disruptive independence referendum during the last six months of one of the most important peacetime negotiations this country has ever faced. At this time we should be working together to get the best possible deal for the whole of the UK and each part of it, particularly Scotland.
Lord McAvoy
My Lords, I was in a rush because I understand I have only a minute or so. The most important point is that there is no desire in Scotland for another referendum. It is simply not in Scotland’s best interest, especially not at a time when we need stability and a period of relative calm, not yet more uncertainty. Before the 2014 vote the SNP said that the referendum was a once-in-a-lifetime opportunity and promised that it would abide by the result. The fact is that ever since it lost in 2014 the SNP has been agitating for another referendum and will seize upon any excuse. Scottish Labour MSPs will oppose a second referendum in the Scottish Parliament, but if it is successful and comes here the Labour Party will not oppose it. But we certainly call on tough negotiations—tougher than the last time—over the timing and the question, because it is quite clear that Mr Alex Salmond ran rings around the then Prime Minister. If the Government want any advice on negotiations, I am available.
Lord Dunlop
I know that the noble Lord’s reputation goes before him, so I thank him for that offer. I strongly agree with what he said. We must respect the result of the independence referendum that took place in 2014. As Alex Salmond and Nicola Sturgeon said, it was a once-in-a-generation vote. Both sides signed the Edinburgh agreement, which committed to respect that result. Only two-and-a-half years after that vote, which was won by more than 10 points—a result that was fair, legal and decisive—the First Minister is now calling for another vote. All the evidence is quite clear that people in Scotland overwhelmingly do not want another divisive, disruptive referendum. They know the damage that it would do to the Scottish economy and Scottish jobs, taking the eye off the ball of the domestic agenda: schools, hospitals and getting the economy going again. That is what we should focus on.
Lord Stephen (LD)
My Lords, does the Minister agree that there is no justification for a second independence referendum and that the best way for that to be made clear is for the UK Government to make a simple, clear statement to the Scottish Parliament and the Scottish people on that issue? It is not what people in Scotland want, not now nor after Brexit. The SNP should stand by the Edinburgh agreement and stick to their word—that this was once in a generation, not a “neverendum” to be repeated and repeated. What we on these Benches and the people of Scotland want is a Scottish Government focusing on better outcomes for the people of Scotland on health and education, not what is best for the SNP and its obsession with independence.
Lord Dunlop
The UK Government and the Prime Minister could not be clearer: we do not think there that should be a further referendum on independence, for all the reasons that the noble Lord and others have given. Even at this late stage, the Scottish Government can and should take that referendum off the table.
Lord Lang of Monkton (Con)
My Lords, should we not remind the First Minister of Scotland that the Prime Minister is Prime Minister of Scotland as well as of the rest of the United Kingdom and that the worst possible way to help her get the best deal for the United Kingdom and for Scotland within it is to attack her at the outset of these important negotiations?
Lord Dunlop
I very much agree with my noble friend. The Prime Minister will work tirelessly to secure the best possible deal for the whole UK and, as she has said, for every part of it. This is a time to work together to that end, not to sow division and difference.
Baroness Liddell of Coatdyke (Lab)
My Lords, in the past half-hour, I have received an email from a leading player in the Scottish commercial property market to say that, overnight, £50 million worth of deals have been withdrawn as a consequence of the possibility of a Scottish referendum. Does the Minister agree with me that, when the Scottish economy is already weakened, when we are seriously troubled about our education and our health sectors, the First Minister’s action is one of unpardonable folly?
Lord Dunlop
Yes, I agree with the noble Baroness. I meet many Scottish businesses and have yet to find one which thinks that it is a good idea to engender such uncertainty by calling for another independence referendum. It should be a matter of concern for all of us that the economic data for Scotland show that the Scottish economy is lagging behind the rest of the UK. Those data started coming out before the vote last June. It is a matter that we should attend to. The UK Government are committed to working with the Scottish Government to focus on those issues, which are so important for the Scottish economy.
Lord Foulkes of Cumnock (Lab)
Has the Minister noticed, however, that the arguments being used by Nicola Sturgeon for pulling Scotland out of the United Kingdom are exactly the same as those used by Theresa May for pulling the United Kingdom out of the European Union? Does that not create a problem for the Government?
Lord Dunlop
The problem for us is an SNP Government, with their one-track mind, using the pretext of Brexit to pursue their obsession with taking Scotland out of the United Kingdom. We know that the UK market is worth four times more to Scottish businesses than the EU market.
Lord Campbell of Pittenweem (LD)
My Lords, in view of the unexpected taciturnity of the noble Lord, Lord West, would the Minister care to hazard a guess as to the consequences for warship building on the Clyde in the event of independence?
Lord Dunlop
Some very positive investment announcements have been made regarding the Clyde. It is the centre of excellence for surface warship building and that would not happen if Scotland were ripped out of the United Kingdom.
Lord Empey (UUP)
My Lords, is it not the case that nationalists in Northern Ireland have welcomed the decision of the Scottish Government, and are now trying to see whether they could have a pincer movement and have both referenda at the same time? Is it not clear that the Government are going to have to take a much more robust position? Will the Minister confirm that neither a Scottish referendum nor a Northern Ireland border poll will be held?
Lord Dunlop
I have made the position on a Scottish referendum absolutely clear. With regard to Northern Ireland, there are clear mechanisms under the Belfast agreement for the holding of a border poll. My right honourable friend the Northern Ireland Secretary has been very clear that the conditions for such a poll do not exist.
Lord McConnell of Glenscorrodale (Lab)
The last referendum left a deep legacy in Scotland of division that affected families, friendships and communities. During that referendum, there was regularly a real problem of aggression and, occasionally, violence. Can the Government guarantee that, in any discussions that take place over these next two years about the possibility of another referendum in Scotland, they will keep uppermost in their mind the need to ensure that any debates are conducted properly and that the leadership of those debates behaves in a way that inspires people positively?
Lord Dunlop
All political debates should take place with courtesy and respect; the Government would obviously want to promote and uphold that. The key question here, however, is whether there should be another Scottish independence referendum. The Government are absolutely clear that there should not be.
Recess Dates
Lord Taylor of Holbeach (Con)
My Lords, it may be for the convenience of the House if I make a short Statement about dates for the Summer Recess. As usual, as is our practice, a note of all the dates that I am about to announce will be available in the Printed Paper Office by the time that I have sat down. All of these dates have the usual and very necessary caveat that they are subject to the progress of business. We will rise for the Summer Recess at the end of business on Thursday, 20 July. We will return for a September sitting on Tuesday, 5 September. Further dates will be announced in due course, but I hope that, for now, having details for the long adjournment over the summer is helpful to the House.
Reporting on Payment Practices and Performance Regulations 2017
(7 years, 9 months ago)
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Lord Prior of Brampton
That the draft Regulations laid before the House on 31 January be approved.
Considered in Grand Committee on 9 March.
Transport Levying Bodies (Amendment) Regulations 2017
(7 years, 9 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Ahmad of Wimbledon
That the draft Regulations laid before the House on 24 January be approved.
Considered in Grand Committee on 9 March.
Broadcasting (Radio Multiplex Services) Bill
Tuesday 14th March 2017
(7 years, 9 months ago)
Lords ChamberRead Full debate Broadcasting (Radio Multiplex Services) Act 2017 View all Broadcasting (Radio Multiplex Services) Act 2017 Debates Read Hansard Text Amendment Paper: Consideration of Bill Amendments as at 3 February 2017 - (3 Feb 2017)
Baroness Bloomfield of Hinton Waldrist
That the order of commitment be discharged.
Relevant document: 19th Report from the Delegated Powers Committee
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Unless, therefore, any noble Lord objects, I beg to move that the order of commitment be discharged.
European Council
(7 years, 9 months ago)
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The Lord Privy Seal (Baroness Evans of Bowes Park) (Con)
My Lords, with the leave of the House I will now repeat a Statement made by my right honourable friend the Prime Minister in another place. The Statement is as follows:
“With permission, Mr Speaker, I would like to make a Statement on last week’s European Council, and the next steps in preparing to trigger Article 50 and beginning the process of leaving the European Union.
The summit began by re-electing Donald Tusk as President of the European Council. I welcomed this because we have a close working relationship with President Tusk and recognise the strong contribution he has made in office. In the main business of the Council, we discussed the challenge of managing mass migration, the threats from organised crime and instability in the western Balkans, and the measures needed to boost Europe’s growth and competitiveness, which will remain important for us as we build a new relationship between the EU and a self-governing, global Britain. In each case, we were able to show once again how Britain will continue to play a leading role in Europe, long after we have left the European Union.
First, on migration, I welcomed the progress in implementing the action plan we agreed at the informal EU summit in Malta last month. This included Italy strengthening asylum processes and increasing returns, and Greece working to implement the EU-Turkey deal, where the UK is providing additional staff to support interviewing of Iraqi, Afghan and Eritrean nationals. At this Council, I argued that we must do more to dismantle the vile people-smuggling rings that profit from the migrants’ misery and which subject many to unimaginable abuses. With co-ordinated and committed action, we can make a difference. Indeed, just last month an operation between our National Crime Agency and the Hellenic coastguard led to the arrest of 19 members of an organised immigration crime group in Greece.
As I have argued before, we need a managed, controlled and truly global approach, and that is exactly what this Council agreed. We need to help ensure refugees claim asylum in the first safe country they reach, and help those countries to support the refugees so they do not have to make the perilous journey to Europe. We need a better overall approach to managing economic migration, one which recognises that all countries have the right to control their borders. Engaging our African partners in this global approach will be crucial, and this will be an important part of the discussions at the Somalia conference which the UK will host in London in May.
Turning to the deteriorating situation in the western Balkans, I made clear my concerns about the risks this presents to the region and to our wider collective security. Organised criminals and terrorists are ready to exploit these vulnerabilities, and we are seeing increasingly brazen interference by Russia and others. In light of the alleged Montenegro coup plot, I called on the Council to do more to counter destabilising Russian disinformation campaigns and to raise the visibility of the western commitment to this region.
The UK will lead the way. The Foreign Secretary will be visiting Russia in the coming weeks, where I expect him to set out our concerns about reports of Russian interference in the affairs of the Government of Montenegro. We will provide strategic communications expertise to the EU institutions to counter disinformation campaigns in the region, and we will host the 2018 western Balkans summit. In the run-up to that summit, we will enhance our security co-operation with our western Balkans partners, including on serious and organised crime, anti-corruption and cybersecurity.
More broadly, I also re-emphasised the importance that the UK places on NATO as the bedrock of our collective defence, and I urged other member states to start investing more, in line with NATO’s target, so that every country plays its full part in sharing the burden. For it is only by investing properly in our defence that we can ensure we are properly equipped to keep our people safe.
Turning to growth and competitiveness, as I have said, I want us to build a new relationship with the EU that will give our companies the maximum freedom to trade with and operate in the European market, and allow European businesses to do the same here. A successful and competitive European market in the future will remain in our national interest. At this Council I called for further steps to complete the single market and the digital single market. I also welcomed the completion of the free trade agreement between the EU and Canada, and pressed for an agreement with Japan in the coming months. For these agreements will also lay the foundation for our continuing trading relationship with these countries as we leave the EU.
At the same time, we will seize the opportunity to forge our own new trade deals and to reach out beyond the borders of Europe to build relationships with old friends and new allies alike. This weekend, we announced a two-day conference with the largest ever Qatari trade delegation to visit the UK, building on the £5 billion of trade we already do with Qatar every year. We will also strengthen the unique and proud global relationships we have forged with the diverse and vibrant alliance of the Commonwealth, which we celebrated on Commonwealth Day yesterday.
Finally, last night the Bill on Article 50 successfully completed its passage through both Houses unchanged. It will now proceed to Royal Assent in the coming days, so we remain on track with the timetable I set out six months ago. I will return to this House before the end of this month to notify when I have formally triggered Article 50 and begun the process through which the United Kingdom will leave the European Union. This will be a defining moment for our whole country, as we begin to forge a new relationship with Europe and a new role for ourselves in the world.
We will be a strong, self-governing global Britain, with control once again over our borders and our laws. We will use this moment of opportunity to build a stronger economy and a fairer society, so that we secure both the right deal for Britain abroad and a better deal for ordinary working people at home.
The new relationship with the EU that we negotiate will work for the whole of the United Kingdom. That is why we have been working closely with the devolved Administrations, including the Scottish Government, listening to their proposals and recognising the many areas of common ground that we have, such as protecting workers’ rights and our security from crime and terrorism. This is not a moment to play politics or create uncertainty and division. It is a moment to bring our country together, to honour the will of the British people and to shape for them a brighter future and a better Britain. I commend this Statement to the House”.
My Lords, that concludes the Statement.
Baroness Smith of Basildon (Lab)
My Lords, I listened carefully to the Leader of the House repeating the Statement, and I am grateful to her for doing so. It must have been a strange meeting because there really was an elephant in the room. The one thing we most need to talk about with our European partners is what everybody else sitting round that table is thinking about but nobody is talking about—Brexit. I welcome the issues that were discussed, but the longer-term implications for all of these will naturally be different for the UK and it would be helpful to know whether at any stage during this informal summit acknowledgement was made of the different position of the UK, given the long-term nature of some of the plans being made.
The Statement says that, in all the items that were discussed,
“we were able to show once again how Britain will continue to play a leading role in Europe, long after we have left the European Union”.
That is certainly welcome, and it is that vision of a post-Brexit UK that we have all been waiting to hear more details about. We have heard aspirations and we have had general statements, but how it will be achieved has been missing. Given that the Prime Minister was able to show the summit how this will be achieved, is the Leader able to share this information with your Lordships’ House today? Perhaps she could follow up with a Written Statement to Parliament so that we can have the same information as was made available to the European summit.
The summit also discussed organised crime, which does not feature in the Prime Minister’s Statement, apart from a brief reference. Clearly, EU-wide co-operation on serious and organised crime and terrorism has been, and remains, essential. It is an issue on which the UK has taken a lead. The Minister will understand that any reduction in the capacity to tackle these issues, or in the level of co-operation, engagement and information sharing, would damage the interests of the UK, and indeed of the EU.
Given that part of the discussion of security and defence at the summit was on future legislative work, can the Minister say how far we will engage with such legislation, and whether, as a parallel process, the implications for UK legislation will also be examined? Can she also confirm that, following the great repeal Bill, primary legislation will be needed on these issues? Furthermore, in respect of information sharing, have any representations been made, or concerns expressed, by our own security and policing organisations about the implications of our leaving the EU?
Yesterday during Questions, the noble Lords, Lord Harris of Haringey and Lord Rosser, raised serious concerns about the Government’s failure to provide full information on illegal weapons imported into this country. I know that that information is available. Can the Minister say whether it is being shared across the EU with other police forces and security organisations?
I welcome the Prime Minister’s reassurance to the EU about our commitment to NATO. She also discussed this issue with President Trump, and indeed her comments to the summit about other countries investing more echo the comments that he made at the press conference he held with the Prime Minister. Given that the Prime Minister and President Trump appear to think alike on this point—and we agree that all members should commit to 2% of GDP on defence—can the Minister nevertheless confirm that our commitment to NATO is absolute?
In relation to growth and competitiveness, the Prime Minister called for,
“further steps to complete the single market and the digital single market”.
That was said without any sense of irony, but is the Prime Minister really pressing the EU on the single market that she is intent on withdrawing from? More out of interest than anything, I ask: what was the response from the summit?
The Statement also refers to the EU’s free trade agreement with Canada, and the Prime Minister pressed for an agreement with Japan, because,
“these agreements will also lay the foundation for our continuing trading relationship with these countries as we leave the EU”.
Can I ask how? We will have to negotiate our own trade agreements and, given that the Prime Minister has indicated that she wants to take us out of the customs union, surely it follows that we will lose access to all trade agreements negotiated by the EU.
Finally, we get to Article 50 and Brexit. In the Statement, the Prime Minister confirms her long-held date of the end of March for triggering Article 50. I would have hoped, however, that the Prime Minister would have taken this opportunity—her first Statement to Parliament following parliamentary acceptance of the Bill—to say something a little more meaningful, possibly even to confirm her personal commitment on EU and UK nationals living across Europe and on Parliament’s role in the process. We thought that there was a good case for the amendments on these points and that the outcome was the result of stubbornness on the part of the Prime Minister, who wanted a clean Bill. A Statement today, or something in this Statement, would have been extremely helpful and welcome.
The Statement also refers to us taking back control of our borders. Can the noble Baroness confirm that this will require legislation, and confirm the Prime Minister’s commitment to maintain the soft land border with the Republic of Ireland?
The time for broad sweeping statements has gone. It is time for the detail. Words in the Statement, therefore, that offer a “strong, self-governing global Britain”, “control over our borders”, a “stronger economy”, a “fairer society”, a “better deal” and a “brighter future” are meaningless: without some flesh on the bones, they are just words.
Furthermore, a lecture on not playing politics or creating uncertainty is misjudged. There is uncertainty here and now—across the whole of Europe—about the position of EU nationals, UK nationals, business and the environment, and the uncertainty is growing. We have now heard demands for a second referendum in Scotland and calls for an Irish border poll. The Government must act to reduce uncertainty and provide some certainty. I press the Prime Minister for detail not from any party-political motive but out of a need for her to do all she can to remove that uncertainty.
Lord Newby (LD)
My Lords, like the noble Baroness, Lady Smith, I was struck by the Prime Minister’s claim that she was,
“able to show once again how Britain will continue to play a leading role in Europe, long after we have left the European Union”.
The Statement sets out the roles we play at present in a number of areas but I wonder how these roles will be maintained in the years to come. For example, if we are,
“providing additional staff to support interviewing of Iraqi, Afghan and Eritrean nationals”,
in Greece, do the Government envisage that we will play this sort of role beyond Brexit? The Prime Minister then said that,
“we need a better overall approach to managing economic migration”.
In which form does she envisage that such an overall approach will be co-ordinated involving the United Kingdom?
On the western Balkans, the Prime Minister said:
“We will provide strategic communications expertise to the EU institutions to counter disinformation campaigns”.
This is very welcome but how does the noble Baroness, Lady Evans, envisage that we might provide that kind of support, vital as the Government claim it is, once we have left the European Union?
Turning to growth and competitiveness, the Statement says that the Prime Minister wants us,
“to build a new relationship … that will give our companies the maximum freedom to trade with and operate in the European market”.
That is of course welcome but outside the single market and the customs union it is impossible to have the maximum freedom to trade, so how do the Government marry that welcome assertion with their actual actions? The Statement goes on, as the noble Baroness, Lady Smith, pointed out, with the Prime Minister rather patronisingly calling,
“for further steps to complete the single market and the digital single market”,
at the very moment when we say that it is such a costly thing for the United Kingdom to be a member of the single market that we are leaving it. Was that well received? Did they think, “Yes, the Prime Minister really has a consistency of approach on that”?
The Statement mentions strengthening our trade relationship with the Commonwealth. Does the noble Baroness, Lady Evans, accept that our trade with the Commonwealth amounts to 9% of our total trade, compared to 44% of our total trade being with the EU? Does she believe that the scope for increased trade with the Commonwealth will be greater than the threat of reduced trade with the EU outside the single market?
On triggering Article 50, the Prime Minister said that,
“we will use this moment of opportunity to build a stronger economy and a fairer society”.
Those are very familiar words on these Benches:
“A Stronger Economy and a Fairer Society”,
was indeed the Liberal Democrat general election slogan. While imitation is the sincerest form of flattery, I jolly well hope that the Government have more success with it than we did.
But a stronger economy and fairer society is impossible to achieve outside the European Union. There is no significant body of opinion, beyond one or two noble Lords opposite, which believes that we will have a stronger economy. If we do not have a stronger economy, we will not have as strong public finances, and without public finances being as strong, it is frankly impossible for the state to promote the kind of fairer society of which the Government, and in particular the Prime Minister, speak so often.
Finally, the Statement says that,
“this is not a moment to play politics or create uncertainty and division. It is a moment to bring our country together”.
I wonder whether the Prime Minister, or indeed the noble Baroness the Leader of the House, has tested that sentiment on the 3 million EU citizens living in the UK and their families.
Baroness Evans of Bowes Park
My Lords, I thank the noble Baroness and the noble Lord for their comments. In response to a previous Statement I repeated, the noble Lord questioned maintaining our leading role in the EU and at that time I was able to point out that we still play a leading role. In fact, the Prime Minister was key to the conclusions on the western Balkans, in particular, during this summit. We have great strengths and great relationships with Europe. There is no reason why we cannot still share expertise and experience to ensure that we play a leading role. For instance, we are leaders in cybersecurity, as the noble Baroness said. We are making our expertise available to our European partners and are using it to great effect in a number of regions. We want a strong relationship with the EU. Just because we are not in the EU does not mean we cannot maintain that. Where we have strengths, we can offer them to the EU, and where it has strengths, we can play that to our advantage. Just because we are leaving the EU does not mean we cannot have strong relationships with our European partners.
Particularly in relation to the western Balkans, our strategic communications support to them and to EU institutions to counter disinformation is part of our wider UK response. In February, we opened the National Cyber Security Centre, which will help to drive technological improvements and offer advice to citizens and organisations to defend against threats. We are also providing our expertise across the EU.
The noble Baroness asked about our commitment to NATO and I can confirm that we are completely committed to it. The UK, Estonia, Greece and Poland are the only European nations that currently spend 2% of their GDP on defence. We welcomed commitments from Latvia, Lithuania and Romania to reach that target soon. Defence spending across the continent increased by 3.8% above inflation last year, but we have a long way to go. We continue to say that NATO is the bedrock of our defence, and we encourage all our European partners to play a strong role.
On the questions about trade agreements with Canada and Japan, we believe that the EU continuing with them is important. We want to support them because we believe they will be crucial to our future bilateral relations with countries such as Canada and Japan. For instance, the CETA agreement estimates economic benefits to the UK of about £1.3 billion a year while we remain in the EU. We want to encourage British businesses to take advantage of their early relationships so that we can build on them. We think they will be able to help us in future in the relationships that we develop, and we are keen to keep momentum in relation to the Japanese agreement.
Questions were asked about our encouragement of the European Union to complete the single market in the digital economy. We believe it is great news for the EU because it will result in stronger growth and job creation, which helps us. We are very pleased with the positive trends in the European economy. We believe that part of the UK’s economic success is helping to drive success in Europe. We want a strong partnership and a strong relationship, which means we want a thriving European economy, just as we want a thriving UK economy.
Finally, the noble Baroness asked a couple of questions. I can certainly reiterate that we do not want to return to the Irish borders of the past. We are very committed to working with the Irish Government to avoid that. In the White Paper we made clear that we will be bringing forward primary legislation, including on immigration, that Parliament will have the opportunity to scrutinise and to discuss in great detail. There will be a number of Bills coming forward as we start to move towards exiting the EU.
Lord Howell of Guildford (Con)
My Lords, in the discussions about future trade relations in the Council, was any mention made of the World Trade Organization’s new trade facilitation agreement, which came into operation last week? It transforms the handling of trade across customs union barriers and into traditional protected markets, such as the single market. Will this not change a great deal of the argument we are having about the validity of the single market and whether we are in or out of it? The noble Lord, Lord Newby, did not seem aware of that major change in the pattern of trade relations.
As to the Commonwealth, I am sure the Minister is aware that last week’s meeting of Commonwealth Trade Ministers reflected that a whole new pattern of world trade, driven by digital considerations, is emerging to which the Commonwealth, with its common legal arrangements and language, is peculiarly well suited. The prospects, which are again something that the noble Lord, Lord Newby, did not seem to understand, are very great for the expansion of trade in the digital age.
Baroness Evans of Bowes Park
I thank my noble friend. My noble friend Lord Price, in response to a Question earlier this week, outlined a number of ways in which we are looking to improve our trade relations with the Commonwealth. It is certainly a focus for us and we want to take advantage of our historic links. Obviously, as my noble friend well knows, our objective is to seek an ambitious and comprehensive free trade agreement with the EU. We are going into the negotiations positive that we can get a good deal for both the UK and the EU, which will work in both our interests.
The Duke of Somerset (CB)
My Lords, did the Council address the vile treatment of refugees and asylum seekers in European countries such as Italy, where they are not allowed to cross the border to France, it takes three years to process their applications, during which they are not allowed to work to earn money to survive, and the police deal brutally with those that they detain? These human beings live in squalor, wherever they can, including under bridges or in drains, with little hope for a better future. The EU seems to have no coherent or humanitarian policy, and certainly not one that works on the ground. How is the UK going to help improve this terrible state of affairs when the doctrine is that the first safe country they reach does the processing—the very states that are overstretched to manage it?
Baroness Evans of Bowes Park
The Prime Minister certainly stressed our commitment to working with our European partners to tackle the Mediterranean migration crisis. Reforms to the Italian asylum process and implementation of the EU-Turkey deal are helping to relieve pressure on EU migrant returns, but of course we are very concerned about the conditions that many of these migrants live in. That is why last month in Valletta we announced a further £30 million in UK aid to assist refugees and migrants across Greece, the Balkans, Libya, Egypt, Tunisia, Morocco, Algeria and Sudan, which will provide immediate life-saving aid to vulnerable migrants, help to train front-line workers responding to the crisis and support voluntary returns and reintegration.
Baroness Symons of Vernham Dean (Lab)
My Lords, there is no reference in this Statement to any joint European response to the appalling famine in South Sudan. This is the first declaration of famine in the world for a number of years, and 2 million people are at imminent risk of starvation. Was this simply ignored in the meeting last week? Was it discussed in the margins? I am bound to say I was very surprised not to see any reference whatever to one of the worst humanitarian crises we have seen in a very long time.
Baroness Evans of Bowes Park
I think all of us around the House share the noble Baroness’s concern. I am not aware that it was discussed, but obviously I was not there either. Perhaps I could confirm whether that is the case and let her know, but it was not on the formal agenda, no.
Baroness Ludford (LD)
My Lords, the Minister just referred to the aim of a comprehensive free trade agreement with the EU, and I wondered whether the Government have reflected on a couple of references in the summit conclusions to relations with trade partners. One said that,
“the EU has to equip itself with modernised … tools to tackle unfair trade practices and market distortions”.
Another said:
“The EU will be particularly vigilant concerning the respect and promotion of key standards”.
That was particularly directed at China, but it might well be directed at other trade partners. In the light of the threat by the Chancellor a couple of months ago suggesting an alternative economic model in the UK—generally thought to mean low tax and low regulatory standards—have the Government reflected on where it would lead in terms of undermining any ambition of a comprehensive FTA if we do not maintain high standards?
Baroness Evans of Bowes Park
My Lords, as I have said, we anticipate a positive deal between us and the EU. Of course we start negotiations from the unique position of sharing many of the identical rules and regulations, so we are positive and optimistic going into these negotiations.
Lord Hamilton of Epsom (Con)
My Lords, did the European Council discuss the deal done with Turkey whereby it would hold on to millions of Syrian refugees in return for accelerated membership of the EU and a payment of €3 billion, not all of which I gather has come through? There certainly does not seem to be any enthusiasm for allowing Turkey into the EU.
Baroness Evans of Bowes Park
The UK wants a strong, stable and prosperous Turkey, and it is in our and the EU’s interest to maintain our co-operation with Turkey on counterterrorism, regional security, migration and trade. The UK remains of the view that the EU accession process is important for delivering security, stability and prosperity in Turkey, and we encourage it to continue to engage constructively with that process.
Lord Wigley (PC)
My Lords, have the Government ruled out under all circumstances the UK having any ongoing single market participation, as proposed by the Welsh Government White Paper?
Baroness Evans of Bowes Park
My Lords, as I have said, and as we have said repeatedly, we want Britain to have the greatest possible tariff-free and barrier-free trade with our European neighbours, and to be able to negotiate our own trade agreements.
Lord Ashdown of Norton-sub-Hamdon (LD)
My Lords, I greatly welcome the west Balkans summit. The region is in a parlous state, as many of us predicted it would be without stronger action from the EU. There has been a Russian-promoted, if not Russian-backed, coup in Montenegro; Macedonia is close to civil war; Serbia goes backwards; Croatia threatens to do the same; and Bosnia continues to unravel. However, the summit will follow the trail of many others that have achieved nothing unless the end product is a united EU and US policy that is clear, strong and muscular and which will be driven towards a regional policy for the entire area. Absent that, I fear that the Balkans will continue to go backwards, and we all know what that means for Europe.
Baroness Evans of Bowes Park
I agree with the concerns of the noble Lord. We will certainly be engaging closely with our partners. The summit next year that I mentioned will be focused on tackling serious and organised crime, anti-corruption and cybersecurity, and will include Prime Ministers and Foreign and Economic Ministers from the west Balkans and key partners such as France, Germany, Italy, Austria and the EU institutions. We are also providing a range of support to the region, including more law enforcement resources to tackle organised crime groups with links to the western Balkans, additional embassy staff, UK-led capacity building to build resilience to serious and organised crime in the region, and strategic communications expertise to the EU institutions to counter disinformation campaigns in the region. It is an issue that we take extremely seriously and that the Prime Minister led on in this Council meeting.
Lord Hannay of Chiswick (CB)
I very much welcome what was said about supporting the negotiations with Japan and other trade negotiations that the EU is conducting. I welcome also the realism that the Prime Minister has shown in saying that those agreements when concluded will provide a good basis for our own agreements when we are outside the EU. However, where does that leave the argument that we have to leave the EU to have these benefits? Secondly, in the western Balkans there is again a very welcome development. Will the noble Baroness confirm that our co-operation will continue even if, as is very likely, the EU decides in June to co-ordinate its activity in the western Balkans through an operational headquarters in Brussels?
Baroness Evans of Bowes Park
On the first part of the noble Lord’s question, we are leaving the EU. That is the decision that has been made, and we will now work with our European partners to come to the best deal that we can between us. We will want excellent trade agreements with other countries. We continue to support the EU in ensuring that its economy as a whole improves, but want the best deals with our partners. We are absolutely committed to continuing to work with our European partners in the west Balkans. As the noble Lord said, it is extremely important to all our security.
Lord Cashman (Lab)
My Lords, I do not wish to return to previous speeches but in the Statement the Prime Minister said with regard to the referendum that she would honour the will of the British people. As has been said, there is deep division and concern. What of the will of the 48% who voted differently? What will the noble Baroness say to them and how will she placate their fears?
Baroness Evans of Bowes Park
The Prime Minister has been very clear in saying that we need to move forward together as a country and that we want to heal the divisions caused by the referendum. The decision has now been made—we will be triggering Article 50—we need to come together, and Parliament will have a role in scrutiny and be involved in the discussions about what the future of Britain will look like. I think that it will be an optimistic and positive future, and that is something that we as leaders in the country need to get across to help give people the bright vision of Britain that I believe they will have.
Lord Elystan-Morgan (CB)
My Lords, the Minister rightly mentioned the significance of the single market. Does she agree that many economists take the view that almost equally important is the question of a single system of documentation that will allow egress into Europe, and thus guarantee a proper and steady flow of commerce?
Baroness Evans of Bowes Park
As I have said to the House, we are determined and optimistic about an excellent trade deal with the EU, and will do everything we can across the negotiations to ensure that we achieve that.
Lord Campbell of Pittenweem (LD)
My Lords, is it not necessary to have some realism about increased trade with Commonwealth countries? In particular, for example, have the Government considered what the position would be of Cumbrian sheep farmers, and indeed sheep farmers in the less favoured areas of Scotland and Wales, were there to be an agreement on agriculture with New Zealand?
Baroness Evans of Bowes Park
I think we might be straying slightly off the agenda of the EU Council—which is not to dismiss the concerns that the noble Lord raised. As I said, we and the Prime Minister are looking for a deal that works for all of the UK.
Lord West of Spithead (Lab)
My Lords, the United States and the United Kingdom have ensured the safety and security of Europe for decades now. Indeed, 25% of European spending on defence within NATO comes from the UK. Our agencies are the best in Europe and are crucial to the internal security of Europeans. Will the Minister confirm that these factors will play a full part in any negotiations? We must continue to make sure that the countries of Europe remain safe.
Baroness Evans of Bowes Park
The noble Lord is absolutely right that UK co-operation with Europe on defence, law enforcement and internal security remains a key priority for this Government and will be at the forefront of our mind.
The Earl of Sandwich (CB)
Perhaps I may return to the western Balkans. I was recently in Kosovo and can confirm that these countries will be delighted to see the United Kingdom standing up to Russia, or helping others to stand up to Russia, not least through technology. But there is the problem of European enlargement. We were a cornerstone of European enlargement in the Balkans. Will the Minister help me on the high-level dialogue between Serbia and Kosovo that is so crucial? Will we continue that process after Brexit, because the western Balkans needs to know these things now?
Baroness Evans of Bowes Park
I can certainly reassure the noble Lord of our commitment to the western Balkans—and, indeed, of our commitment to offer our expertise in tackling some of the disinformation and cybersecurity threats that we have seen. The Chancellor announced that this would be underpinned by £1.9 billion-worth of spending this Parliament on cyber.
Lord Brooke of Alverthorpe (Lab)
My Lords, following my noble friend Lord West’s question on NATO and security, I wonder whether we are confident that the strength of our forces is sufficient to deal with all the problems that we currently face—because, without any doubt, we face more divisions in the country than we have done for many years. In speaking to others, did the Prime Minister make any inquiries of the Swedes as to why they have decided to reintroduce conscription? Given the pressures that we have on our forces and the rumblings in Northern Ireland, in Ireland and in other places, might we not have to start thinking in terms of our public services looking back to the 1960s and 1970s and perhaps even back to conscription?
Baroness Evans of Bowes Park
I think that all noble Lords around the House will join me in paying tribute to our Armed Forces. They do a fantastic job on our behalf around the country. We are committed to ensuring that we continue to spend 2% of GDP on defence to give them the resources that they need.
Lord Empey (UUP)
My Lords, could I ask the noble Baroness a question on the migration issues? The guiding rules are those in the Dublin agreement, but that is just not working and has not worked. In fact, a whole industry has been set up by smugglers who are making vast fortunes. While it is welcome that a number of arrests have been made, that is merely a drop in the ocean. Do the Government intend to press our European partners to have a really coherent policy on these matters, because the problem is not going away—it is going to get worse?
Baroness Evans of Bowes Park
We are working closely with our European partners. Of course, the Royal Navy has vessels in the Mediterranean, saving lives and assisting with the training of the Libyan coast-guard, for instance. We are providing 40 staff to Greece to support admissibility and interviewing of migrants, and sharing expertise to support Italy, and work by our National Crime Agency and Organised Immigration Crime Taskforce, in concert with our European counterparts, has seen us managing to arrest quite a number of individuals involved in smuggling in the past three months alone—and that remains a priority for us.
Lord Judd (Lab)
My Lords, the Prime Minister constantly emphasises that whatever our future we want to remain a main player in world affairs. Across the African continent there is the most appalling famine. How much time was spent at the Council discussing this and how Europe should respond, and how are we going to continue to co-operate with Europe in meeting this huge humanitarian challenge?
Baroness Evans of Bowes Park
The noble Baroness, Lady Symons, asked a similar question and I said that the famine was not on the formal agenda and that I would go back and check whether any discussions were had. I cannot give the noble Lord a definitive answer, but I have said that I will investigate. Of course, I also said that we were committed to doing what we can to help the countries affected, because it is an appalling humanitarian crisis.
Lord Cormack (Con)
Does my noble friend accept that, as we move towards exit, bilateral relations with our neighbouring nations in the European Union will become more and more important, particularly with those nations that until less than three decades ago were in the Warsaw Pact and looked to us for support and leadership as they moved into the European Union?
Lord Wallace of Tankerness (LD)
My Lords, the Prime Minister’s statement made reference to working with the devolved Administrations as we move towards the exit negotiations. Can the Leader of the House indicate whether the UK Government intend to give a substantive response to the Scottish Government’s submission of December 2016 and, if so, when?
Baroness Evans of Bowes Park
The Scottish Government’s proposals have been considered in detail, including through the JMC process. In the last month, there have been a series of technical meetings on the content of the proposals. Officials in the Scottish Government have met UK specialists in trade, customs, the single market, law, devolution, and goods and services, so close working is going on.
Baroness McIntosh of Pickering (Con)
Does my noble friend agree that we currently have access to the widest free trade area through our membership of the European Union? Will she agree that it is extremely important to have transitional arrangements in place? If we lose access through the World Trade Organization, does she accept that, overnight, we will lose access to the free trade agreements negotiated by the EU? Will she use her good offices to ensure that we continue to have free trade access that we currently enjoy under transitional arrangements, until such time as a permanent agreement is agreed?
Baroness Evans of Bowes Park
We want to have reached an agreement about our future partnership by the time the two-year Article 50 process has been concluded. From that point onwards, we expect a phased process of implementation, in which both Britain and the EU institutions and member states prepare for the new arrangements that will exist between us.
Budget Statement
(7 years, 9 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Neville-Rolfe
That this House takes note of the economy in the light of the Budget Statement.
The Commercial Secretary to the Treasury (Baroness Neville-Rolfe) (Con)
My Lords, it is a privilege to present the 2017 Budget to the House. As your Lordships will be aware, this will be the last spring Budget before we move to an autumn timetable. It is also the first Budget since the referendum and our historic vote to leave the European Union. We want to provide as much certainty as possible and therefore it is only right that we take a cautious approach in our stewardship of the economy. Further, despite the Government’s success in bringing down the deficit by two-thirds, it is still too high at 3.8% of GDP last year. These are two major reasons for prudence.
Accordingly, this Budget is designed to strengthen our financial position still further and prepare the economy for the challenges and opportunities ahead. It invests in making the UK more productive—the best way to raise living standards in the long term—and in the quality public services that we depend on. In short, it gets us ready to make the most of the opportunities ahead by laying the foundations for a stronger, fairer, better Britain outside the EU and to create a truly global Britain to compete internationally.
It is fair to say that in March 2017 we are in a better position economically than many predicted. Growth in the second half of 2016 was stronger than the OBR had anticipated in the Autumn Statement. In fact, last year the UK grew faster than most other advanced major economies, while employment remains at a record high. That is very welcome, but the OBR continues to judge that in the medium term, growth will slow due to weaker growth in consumer demand as a consequence of a rise in inflation. Business investment is also expected to remain subdued as we begin the period of negotiation with our EU friends and partners. The OBR is, however, forecasting that net trade will make a positive contribution to growth, as the recent sterling depreciation supports exports.
As I have said, the deficit remains too high, and a range of factors in the global economy present potential risks. So it is right that we get ourselves in a position of readiness to handle difficulties of any kind which come our way. Accordingly, putting the public finances in good order will remain vital for the foreseeable future. Our fiscal rules to do so strike the right balance between reducing the deficit, maintaining flexibility and investing for the long term. The OBR predicts that we will continue to make good progress, with borrowing forecast to fall to a two-decade low of 0.7% of GDP by 2021-22. As a consequence, we are within sight of bringing to a halt the increase in the national debt as a proportion of GDP. Debt is forecast to peak at 88.8 % of GDP in 2017-18 and then to fall in subsequent years. So we are on track to bring the public finances under control.
I want to address the calls that we continue to hear for a spending splurge. It is true that the OBR has forecast £16.4 billion lower borrowing in 2016-17 than it did at the Autumn Statement, but with the national debt nearing 90% of GDP, and while we spend £50 billion on debt interest every year, this would be unwise. Also, the reduction in predicted borrowing owes much to one-off factors unlikely to be repeated. So we must maintain the momentum of reducing borrowing, and getting debt down. Hence a responsible and balanced Budget of targeted spending, with modest increases in revenue, which more or less cancel each other out.
I turn now to the proposed revenue-raising measures. It has been wisely said that:
“To tax and to please … is not given to man”.
If we want evidence for the truth of this quotation we need look no further than the reaction to this Budget. Taxation is a serious matter. Our principles are that the tax base must be sustainable and fair. That is the only way we can continue to sustain public services. So it was with those principles in mind that we proposed changes to national insurance contributions and to the dividend allowance.
I start with the proposal which has attracted the most widespread comment, that on national insurance. This is about creating a fairer and more sustainable system, and 60% of self-employed people affected—those on the lowest incomes—will actually gain from our reforms by an average of £115 a year. We will also explore the rights and protections for self-employed workers, including on issues like parental rights and maternity pay. Legislation will not be brought forward until the autumn, as the Prime Minister has said.
It is also a fact that within the current system, the self-employed, who represent 15% of the British workforce, pay a much lower rate. There are historical reasons for this, reflecting the difference in contributory benefits received, but it is telling that the number of self-employed has increased markedly in recent years. Some—I would say not all—of these newly self-employed are motivated by the tax advantages. With that trend set to continue, it is simply not a sustainable way to fund the benefits self-employed people receive, which now, importantly, include the same access to the state pension. Lower rates paid by the self-employed—some of whom are on very high incomes—are forecast to cost our public finances over £5 billion this year alone.
We have also reduced the dividend allowance from £5,000 to £2,000 from April 2018. This reduces the incentives for individuals to work through a company. The OBR has estimated that increases in incorporations would cost the Exchequer an extra £3.5 billion a year by 2021-22. This measure also ensures support for investors is more effectively targeted.
All can benefit from the increased personal allowance, for example, which rises to £11,500 this April. Investors will also benefit from the ISA allowance of £20,000 per annum from 2017-18. General investors, typically only those with a share portfolio outside an ISA worth at least £50,000, will pay more tax as a result of this change. Over 80% of general investors will continue to pay no tax on their dividends.
I now turn to business rates, where we have recognised that for some businesses the 2017 revaluation meant a large change in bills. While the revaluation is itself, by law, fiscally neutral, last year the Government set out £3.6 billion of transitional relief to support businesses with rising bills, capping the increases that businesses could face each year. We have committed to a package of cuts to business rates now worth nearly £9 billion, with 600,000 small businesses taken out of paying rates altogether. And at the Budget, my right honourable friend the Chancellor announced a further £435 million of support for businesses facing the steepest increases in bills, including help for small businesses losing small business rates relief and funding for local authorities to support discretionary relief.
Overall, the changes we have made to the tax system, especially for business, should be seen in the context of the competitive tax environment we have already put in place on corporation tax, capital gains tax and the R&D tax credit regime.
The revenue raised by tax measures in the Budget has enabled the Government to invest more in the public services that people care most about. One of the most significant commitments was on social care and health, where we have taken action to deal with short-term pressures as well as looking to the longer term. We have allocated an extra £2 billion to councils, which will reduce pressures on the NHS and help them provide more social care to people in their communities over the next three years, of which £1 billion will be made immediately available. It is agreed that we face growing pressures for the longer term as populations become older and the costs of complex medical treatments rise.
Noble Lords may recall that the OBR’s Fiscal Sustainability Report in January predicted that without mitigating action, the percentage of GDP spent on social care would double in the next 50 years. We will publish a Green Paper setting out our proposals for dealing with this challenge later in the year, and I believe that this House will play a valuable ongoing role in considering this issue over the longer term. We are also putting an extra £425 million into the NHS for complementary measures to help assess and manage patients waiting in accident and emergency, and to enable local NHS organisations which already have good plans for long-term reform to put those plans into action.
As a nation, we face a major challenge on productivity. It is well established that we lag behind the G7 average by 18%, and we are even more behind leaders such as Germany. Noble Lords who know me know that this issue has exercised me since my very first day in this House. To meet this problem in the Autumn Statement, we announced a new national productivity investment fund, worth over an extra £23 billion and targeted at areas critical to boosting the UK’s long-run productivity, including housing, research and development, and economic infrastructure.
The Budget included further details on how we will use the new fund to make a real difference, improving the UK’s physical infrastructure and keeping up as a leader in global technological progress. I cannot be comprehensive today but examples are the £690 million competitive fund for local authorities in England to unclog the congestion that blocks our urban road networks, and the £113 million to address traffic pinch-points on our roads in the north and the Midlands. Both those measures will help to boost productivity quite quickly. A third example is the £200 million to speed up the rollout of full-fibre broadband and a new 5G mobile technology hub. I am passionate about Britain becoming yet more successful as a digital society. Important allocations were also made to keep Britain at the forefront of global science and innovation, including funding for 1,000 new PhD places.
That brings me to my final point: the importance of investing in people. I know from experience that it is the combination of capital and skills that can transform productivity. Here, perhaps the most important announcement concerned the new T-levels, which will give our students a much clearer system of qualifications and a much more enticing route into skilled careers.
It has long been recognised that our vocational education has been comparatively weak, especially compared with that in countries such as Germany, where I worked as a non-executive director, or Switzerland. It is hoped that the new routes, taken with other measures such as apprenticeships, will finally put us on the right track. We are also helping more people to take their technical skills to the next level, offering maintenance loans to those studying at our prestigious institutes of technology or national colleges, such as the new colleges for nuclear and for high-speed rail. This means that such students can get the same kind of support with their costs that university students can access through student loans.
We have also built on the far-reaching improvements we have made to our schools—improvements that have seen 1.8 million more children in good or outstanding schools than just six years earlier. We are putting an additional £216 million into our existing schools and funding an extra 110 new free schools, which will mean ever more choice for people in finding a good school place for their children or grandchildren.
This is not a large or a flashy Budget but it contains sensible, realistic measures aimed carefully and proportionately at the problems we face. I beg to move.
Lord Livermore (Lab)
My Lords, this was a Budget of broken promises that has left Britain’s economy weaker, less resilient and unprepared as we approach the biggest challenge faced by our country in decades. It contains no plan to deal with the difficult journey that now lies ahead, but it breaks binding manifesto commitments on our nation’s finances, on working people’s incomes and on our ability to trade with the biggest market in the world.
On 14 April 2015, the then Prime Minister, David Cameron, launched the Conservative Party’s election manifesto. In his speech, he said that,
“by 2018 we’ll be running a surplus”,
but,
“not through tax rises on you and your family”.
Yet last week the Chancellor of the Exchequer, elected on that manifesto, not only confirmed that we would not, as promised, be running a surplus in 2018 but revealed that, far from keeping his promise not to raise taxes for working people, he would now break that promise too.
At the last general election, we were told by the Government that reducing debt and eliminating the deficit were the most important challenges facing our nation. Indeed, their manifesto described failure to do so as,
“more than an economic failing; it would be a moral failing”.
Yet, since then, the Government have failed to meet a single target on debt or deficit reduction.
On debt, the Chancellor told us in his Budget Statement:
“Britain has a debt of nearly £1.7 trillion”,
that it would rise to 86.6% of GDP this year, and would peak at 88% next year. On the deficit, immediately after the last general election, the Government delayed their target date for running a surplus from 2018 to 2021. Now, in this Budget, they have abandoned any attempt at all to close the deficit during the lifetime of this Parliament. As the Chancellor said,
“borrowing over the forecast period is still set to be £100 billion higher than predicted at Budget 2016”.
He is now not on course to achieve his fiscal objective of eliminating the deficit until 2026—a full 15 years after George Osborne started to raise taxes and cut spending. Even that the IFS describes as “a substantial challenge”, meaning that Britain is now facing a third consecutive Parliament of austerity.
The Government have failed to meet their central manifesto commitment on our nation’s finances. As a result, in this Budget, they have also broken their promise not to raise taxes for working people. The Prime Minister and the Chancellor stood for election on a manifesto that, on four separate occasions, without qualification, pledged not to raise national insurance contributions. During the general election campaign, this promise was described as a five-year tax lock with no national insurance rises and as a vow. Yet, in this Budget, the Chancellor has increased national insurance for the self-employed by 2%—a £2 billion tax rise that will cost 2.5 million people an average of £240 per year.
These manifesto commitments—to run a surplus and not to raise taxes—have been broken because the mandate won by this Government less than two years ago has now been trumped by their determination to pursue the hardest of Brexits. Indeed, in his Budget Statement, the Chancellor was largely silent on the Government’s third broken manifesto promise; their promise to safeguard Britain’s economy inside the single market. But the alternative path that they have now set us on, to pull Britain out of the single market, discarding our membership of the largest trading zone in the world, is now clearly putting our economy at risk.
Last November, the Autumn Statement revealed the first instalment of the bill that we will have to pay for leaving the European Union. Now, having taken account of the Government’s negotiating position, the OBR concludes that after Brexit,
“our trading regime will be less open than before”,
and has spelled out the further damaging consequences.
While the Chancellor sought to focus attention on this year’s growth number, the OBR has revised down its growth forecast for every subsequent year from 2018 to 2021. By the end of the forecast period in 2022, the economy is expected to be even smaller than in the downgraded forecasts in the Autumn Statement. The OBR stated that cumulative growth over the forecast as a whole is weaker than in November.
The fundamentals of our economy are also weakening. The OBR forecasts lower business investment, and a savings ratio back to the low levels last seen before the financial crisis. Average productivity growth has been downgraded again to just 1.3%, while nominal pay growth has been revised down from the second quarter of 2018 onwards. The inflationary impact of the devaluation of sterling means that real earnings are now set to fall and will return to their pre-crisis peak only in late 2022—15 years after the pay squeeze began. According to the Resolution Foundation, this is the worst decade for pay growth for 210 years, and it will be those who can afford it least who will suffer the most.
The large and regressive benefit cuts due in the coming year could see a single-earning couple with two children lose £1,630 a year from 2021. The Joseph Rowntree Foundation estimates that, by the end of this Parliament, a working family of four on universal credit will be over £1,000 worse off than they were expecting in 2015. This combination of low pay growth and benefit cuts means that the next four years will be even worse for the poorest third of households than the four years following the 2008 financial crisis. The British people did not vote to make themselves poorer. But that is precisely what this Budget will deliver.
In his introduction to the Conservative’s 2015 election manifesto, David Cameron said:
“Our friends and competitors overseas look at Britain, and they see a country … on the rise … But our national recovery … is fragile, and with the wrong decisions, it could easily be reversed”.
Much has happened since he wrote those words and the Government have indeed taken the wrong decisions. They have taken the decision not to prioritise the national economic interest, but to take Britain out of the single market and make Britain less prosperous as a result. Our friends and competitors overseas now look on not with envy, but with astonishment at this act of national self-harm. In this Budget we begin to see the likely consequence of this decision: an economy in decline and ill prepared for the very real challenges that lie ahead.
Lord Shipley (LD)
My Lords, I am pleased to follow the noble Lord, Lord Livermore, largely because I agree with virtually everything that he said. In a few years’ time this spring Budget will be seen as a watershed because it is the last spring Budget and because serious structural problems in taxation and spending policy have been revealed by the debate about the self-employed, who now represent one in seven of our workforce.
Employment is at an all-time high—that has to be conceded—at 31.8 million. But a lot of that growth in recent years has been in low-paid jobs and jobs that have low productivity rates. I found the Budget surprising in the sense that it was overshadowed by the massive Brexit black hole at the heart of the Treasury’s forecasts. You cannot have a strong economy and a hard Brexit. It was surprising that in his hour-long Budget speech the Chancellor failed not only to talk about housing and its contribution to growth and social inclusion, but crucially to discuss the implications to the economy of leaving the EU single market and the customs union. The Chancellor is supposed to assess our economic prospects in the Budget, but with only two short references in his speech to EU matters, he signally failed to do so.
The Minister has talked about getting the deficit down. The Government have been trying for seven years to get the annual deficit down. In fact, in the last seven years the total debt has risen to £1.7 trillion, which, according to the Government’s own press release, amounts to £62,000 on average per household. This year the deficit will be £52 billion. Of course, it was forecast a year ago to be £38 billion between 2017 and 2020, with the final two financial years producing a surplus. What has actually happened a year later is that the projected increase in the deficit over that period has risen by £100 billion.
When she replies to the debate, will the Minister be in a position to tell the House what modelling the Treasury has undertaken on the impact of higher interest rates over the next few years on the level of debt? She mentioned the annual interest payments of just over £50 billion, but that is at historically low interest rates. It would be helpful to know what modelling has been done by the Treasury for what happens if a range of scenarios might occur.
The Minister referred in her speech to higher growth. There has been some higher growth, but most of that has been fuelled by credit. There is now a case for changes in the tax system. We have seen problems in a whole range of spheres beyond national insurance for the self-employed—business rates is another. There are now issues around the extent to which we tax income rather than wealth. Quite recently we had the issue of whether council tax, which is a local property tax, should be required to fund the increased demands for adult social care. We will have to have a debate about wealth and income, business rates, the role of council tax and the declining level of corporation tax, which is now at 17%. Given the global economy it is of course increasingly difficult for Governments to track what international companies do. That debate will have to be had.
I draw the attention of the Minister to real income growth. The Institute for Fiscal Studies has said that, by 2022, incomes will be no higher than in 2007. Outside London and the south-east, no part of the United Kingdom has recovered from pre-crash levels. As this debate is about the economy, I remind the Minister that there are different levels of the economy. Neighbourhood economies face great difficulty caused by the freezes and cuts taking place in the benefits system. In the Government’s drive to get the deficit down, the impact on some neighbourhood areas is sometimes forgotten. I hope that the Minister might look at that.
This is not all negative. I welcome the £500 million investment in technical education, which is hugely beneficial. The extra PhD places and loans for part-time and doctoral students are welcome; the industrial strategy fund is welcome, as are new approaches to lifelong learning. However, there is an issue about employers investing. UK employers invest half as much as other employers in the EU in workplace training for employees. We should adopt the model that many other countries have of a single body to co-ordinate state-led business support and provide a forum for shared learning across the public, private and third sectors.
Perhaps I may ask the Minister about the British Business Bank. It seems to be doing good work; it is collaborating with local enterprise partnerships and certainly to my knowledge, across the north of England, is seeking to increase regional economic development. I understand that it will operate with a slightly wider risk appetite than high-street banks, which is welcome, but I seek the Minister’s assurance that the British Business Bank is Britain-wide and will not just go for the easy wins.
I welcome the apprenticeship levy. While it is not directly part of this Budget, it is very important. There have, however, been problems behind the need to increase apprenticeships. The report, Apprenticeships for Northern Growth, launched three weeks ago at the northern powerhouse conference, makes it clear that the north of England,
“faces a shortfall in productivity compared to other areas, with a skills gap emerging before individuals leave school”.
That is very important. I want also to refer to a press release issued by the Baker Dearing Educational Trust approximately 10 days ago. It states that the trust undertook a survey of 1,000 young STEM workers and found that,
“three out of five (60%) of those surveyed didn’t believe teachers had a sufficient understanding of the labour market and a similar number … felt that schools didn’t understand the skills employers needed”.
To what extent is the Minister confident that Ofsted is inspecting adequately what is happening in careers advice in schools?
The Chancellor made great play of the fact that the proportion of young people not in work or education is now the lowest since records began. It sounds a great achievement. Actually, we still have 850,000 16 to 24 year-olds who are not in education, employment or training. I am looking for measures that demonstrate that the Government understand that and will do something concrete about it.
Baroness Vere of Norbiton (Con)
I respectfully remind your Lordships’ House that we have an advisory speaking limit of six minutes. There is another debate after this one and I am sure that those taking part in it would appreciate noble Lords not exceeding that limit.
Lord Hain (Lab)
My Lords, it is no slight on the Chancellor to say that the web of deception that he tried to weave in his Budget Statement fell short of the standard set by Britain’s foremost author of spy thrillers, John le Carré. He contrived to create the impression of an economy that is coming in from the cold, one that is enjoying robust growth.
Robust is hardly the word that I would choose to describe economic growth in 2016 that was slower than that expected 12 months ago: a miserly 1.8% compared with the 2% forecast by the Office for Budget Responsibility last March. It is surely misleading for the Chancellor to claim that the economy is expanding at a brisk pace when, as my noble friend Lord Livermore pointed out in his excellent speech, the OBR has downgraded its forecasts for growth in each of the next four years compared to what it expected one year ago. Growth will be slower next year than it was last year, or the year before, or the year before that. The OBR expects unemployment will be higher in each of the next four years than it is today. In the next couple of years it expects pay to go up more slowly and, thanks to Brexit, prices to rise more quickly than it thought last year. If this is the Chancellor’s idea of economic vigour, what on earth is his idea of economic sclerosis? Real recovery and rapid economic growth seem as far off as ever.
UK GDP grew more slowly in 2015 than in 2014, and more slowly still in 2016. The OBR expects it to grow no faster in each of the next four years than this year. These are all signs of an economy that is losing momentum, not gaining it; an economy that is stuck in the slow lane, not one that is picking up speed; an economy still mired in austerity. The Institute for Fiscal Studies expects the marginal improvement in the public finances that has emerged over the past few months to be short-lived and to make no difference to the prospects for public borrowing three years down the road. The OBR also expects the economy to be in the same sad place in 2020 that it thought in its November report.
The Chancellor announced a string of minor measures, which have been referred to already, such as rate relief for pubs and free season tickets for some kids at selective schools. He tweaked a few schemes such as technical training and gratuitously hit the self-employed. However, he did not cancel any spending cuts that were already in the pipeline; nor did he explain why he plans to spend only a fraction of the proceeds from the new apprenticeship levy on extra training. He left investment in public infrastructure stuck below 2% of GDP, miserably less than half the share it was between 1948 and 1983. Does he really think we have enough social housing, care homes, hospital beds and classrooms? Are there enough Sure Start children’s centres? What he did do is quietly tighten still more the fiscal squeeze that he has planned for 2017-19, as the figures for cyclically adjusted public borrowing show.
It will mean austerity, still more austerity, and more failure. Not only are local government services being decimated; not only is the NHS tottering underneath the strain; not only are head teachers at their wits’ end; not only is social care almost collapsing, with the Chancellor’s extra funding risibly and insultingly inadequate, as the noble Baroness, Lady Altmann, an expert on elderly policy, has pointed out. Not only is there all this colossal social failure, but there is massive economic failure created by the Tories’ own self-imposed obsessions, with their borrowing and debt targets still wildly out. Having missed them by a mile in the last Parliament, they will miss them again in this Parliament, he now admits, so he has shifted their achievement to the next Parliament. It is austerity for ever, and that is without the crushing self-inflicted economic damage of Brexit.
Will the Tories never learn that it is growth, not austerity, that brings borrowing and debt down? After the sky-high debt and borrowing bequeathed by the Second World War, both Labour and Tory Governments invested, not cut—achieving much higher growth than the pitiful levels achieved under Tory Chancellors since 2010—and simultaneously cut borrowing and debt. British productivity is pathetically pitiful; our skills are painfully poor; our trade deficit is historically huge; our infrastructure is embarrassingly inadequate. We have mammoth personal debt, a sinking savings ratio, and in real terms pay is about to plummet: real average earnings will be stagnant for 15 years, no higher in 2022 than they were in 2007—the longest squeeze on real wages since the Battle of Trafalgar.
All this and Brexit broods ominously ahead, with this Government having not the slightest notion of where they are taking the country or the economic damage that will result. Yet the Chancellor tinkers here and there. The story of this budget is simple, and le Carré provides the clue: tinker tailor wonder why.
Lord Macpherson of Earl’s Court (CB)
My Lords, I should first declare my interests as chairman of Hoare’s bank and a director of British Land. I had the privilege as a Treasury official of working on 34 Budgets. If there was any pattern to them, those which attracted the greatest opprobrium on the day turned out to be the most sensible in hindsight.
The good news I take from the OBR’s detailed and thorough report is that the economy is growing—and so it should be. The US economy is strong and, defying the doom-mongers, so is the eurozone. The pound has fallen by 15% and weakened again in the last week. In the old days, there was a Treasury rule of thumb that a 4% depreciation in sterling was broadly equivalent to a 1% cut in interest rates. I do not think that that relationship still holds, if it ever did—but it is a reminder of the expansionary effect of devaluation.
This means that macroeconomic policy is extraordinarily loose. Interest rates are at a record low. The Bank of England has embarked on further quantitative easing. It cut rates as an emergency measure last summer and I am a little surprised that it did not reverse that measure when it emerged that the economy was still growing at a good pace. That is what the noble Lord, Lord Lawson—who sadly cannot be here this afternoon—did in February 1988 when it became clear that the stock market crash of the previous October would not have the deflationary impact that conventional wisdom had suggested. However, the Bank of England is independent and I would not seek to influence it.
In setting fiscal policy, the Government must take monetary policy as given. The Chancellor should be congratulated on not loosening fiscal policy further. He has taken the view that any increase in public spending should be paid for through tax increases, but the fact is that fiscal policy is already very loose. The OBR notes that the economy is broadly on trend—or, to put it another way, we are at full employment. That means the structural deficit will be 2.9% of GDP next year, which is too high given that it is almost nine years since consolidation began under the noble Lord, Lord Darling.
Even more importantly—as my former Treasury colleague the noble Lord, Lord Livermore, pointed out —the national debt is still rising. Because of the effect of QE, it will not now fall as a percentage of GDP until 2018-19, by which time debt will have risen for 16 successive years, which I think might be a record in peacetime: eight years under a Labour Chancellor and eight under a Tory Chancellor. At the moment, the debt interest bill is flattered by unsustainably low interest rates, but when yields begin to rise, so will the debt interest burden. As ever, future generations will pick up the bill. We need a proper debate about how much public spending citizens are prepared to pay for, in particular on the so-called triple lock. We also need to think through how to finance the NHS in the longer term.
Successive Governments have found it all but impossible to raise the tax burden, which means that they enter new spending commitments at their peril. The source of the Chancellor’s current difficulties is no doubt the result of the extra spending announced in the Budget. Raising national insurance on the self-employed is right in principle. The lower rate was justifiable in the old days, as the noble Baroness, Lady Neville-Rolfe, pointed out, because employees were entitled to earnings-related benefits and the self-employed were not—but earnings-related pensions and unemployment benefits were abolished long ago.
Of course, the Treasury hates anomalies. A sensible tax system should generally not favour one group over another. I can remember contributing advice to the noble Lord, Lord Lawson, to raise national insurance on the self-employed. I can say this since it was more than 30 years ago. We got a predictably dusty response. The lesson I took from this and from my time at the Treasury more widely was that there are certain no-go areas when it comes to tax. Sadly, residential property is one. Inheritance is another. The self-employed are perhaps the most significant no-go area of all. I hope that it will be possible for the Chancellor to stick to his guns, but I fear that it will not be.
In an ideal world, the main political parties will not go into the next election having made quite so many irreconcilable commitments on spending and tax. I remember in the run-up to one general election pleading with the then Chancellor to drop some of the Government’s most egregious spending commitments when it came to drafting the manifesto. His response was that that was all very well but the fact was that whoever was sitting across the table from me at No. 11 after the election would be the person who had entered into precisely those spending commitments. I would like to think that next time it will be different—but I shall not be holding my breath.
Lord Higgins (Con)
My Lords, it is a pleasure to follow the noble Lord, Lord Macpherson, not least because he started his speech on exactly the same point I was going to make, referring to Iain Macleod’s famous dictum that a Budget that looks good on Budget day may look a lot less good a few weeks later. It has never been clearly established whether the reverse of that is true: that a Budget which is unpopular on Budget day turns out to be a lot better on reflection.
In any event, the issue that caused the most controversy the day after Budget day—NICs—needs to be considered very carefully, not least because the Chancellor got support from both the Institute for Fiscal Studies and the FT leader on the subject. I think there is some justification for what he did. Some little while ago I had the honour and pleasure of serving on your Lordships’ Select Committee on Personal Service Companies. We came to the clear view that there was a strong case for integrating national insurance and taxation altogether. Alas, that is very complicated and not something we can do at present.
I will make one other point on the controversy over national insurance contributions. It is unfortunate that the Prime Minister intervened in this matter because it is very important indeed that in the present circumstances and against the background of Brexit, we should give the Chancellor every possible support we can.
I am worried that there is insufficient integration between fiscal policy and monetary policy at the moment. The Governor of the Bank of England has been very good in responding to the position as far as Brexit is concerned. He thought there was a danger of a decline in activity and adjusted interest rates accordingly. His problem, of course, is that the effect of Brexit has been to lower substantially the rate of exchange. This is bound to have an inflationary effect and he may have to put up interest rates in the opposite direction.
The same situation is broadly true as far as fiscal policy is concerned. But, to my surprise, in the Budget the Chancellor did not really outline what he thought the challenges of Brexit were. In fact, very little reference was made to Brexit in the speech and clearly there is going to be a very real problem. It would have been helpful if the Treasury and Chancellor had spelled out the real dangers. I believe they are very profound.
The noble Lord who spoke immediately after the Minister said that in the referendum people did not vote to be poorer. Regrettably, that is probably precisely what they have done. Therefore, getting the right balance and the right Budget judgment at the present time presents a very real challenge for the Chancellor. I hope that he can subsequently spell out these issues in more detail, and integrate them more with monetary and fiscal policy.
Other points can be argued both ways. I find it rather strange to change the dividend allowance so soon after the proposals in last year’s Budget. On the other hand, I particularly welcome the proposals on social care: this will be the greatest challenge—other than Brexit—we face in the future.
Overall, therefore, this is very much a neutral, standstill Budget. We shall have to see how things develop in the background. However, it is clear from the excellent recent report from the European Union Committee, Brexit and the EU Budget, that as a result of Brexit, a lot of costs will not have been adequately analysed. We are going to go through a very difficult period as a result.
I am running out of time. I thought that today I was going to make a speech on what the Chancellor has rightly described as his last spring Budget. It will indeed be the last spring Budget. I discovered that I had spoken on not a mere 50 spring Budgets but 53, other than this one. We must wish the Chancellor well. I hope that he succeeds, not least on the very important matter—also raised by others—of reducing the deficit. When the Chancellor of the day first tried to cut the deficit, I said that it was going to be immensely difficult. I have been through that experience at the Treasury. None the less, the deadline for getting things in balance is moving ever further forward. It is essential, despite the unpopularity of austerity, for the Chancellor to continue that line of attack.
The Lord Bishop of Chester
My Lords, it is not only the last spring Budget, it is the last Budget in Lent. If we had any doubts, then the early speeches in this debate brought that Lenten theme home rather well.
I do not want to get into the details of the Budget, which are very political, but want to talk about two broader, longer-term issues to which the Chancellor referred in his speech. The first, which has already been alluded to, is our national debt. Its rate of growth is forecast to slow in this decade, but that is stabilisation at a very high level, representing nearly £62,000 for every household in the country. Even at the current very low interest rates, servicing that debt costs £50 billion a year—more than the combined costs of defence and police services in this country.
I do not know what level of national debt is sustainable, because I am not an economist, although the economists do not seem too sure either and take different views. I believe, however, that the current level, which grew greatly through the financial crisis that broke about 10 years ago, is much too high for our long-term good, not least if a further, serious long-term crisis were to hit us, for whatever reason. The blame lies in the years before the crisis, when, amid favourable economic conditions—not least the bonanza years of North Sea oil reserves—the national debt was allowed to rise so much. This reflected a national mood that is summed up in the iconic advertisement for an early credit card: that we should “take the waiting out of wanting”. Whether for individuals or for our nation as a whole, I question whether it is right and healthy to prioritise taking the waiting out of wanting. Getting our national finances genuinely into a better state will be a very difficult challenge amid all the political pressures which arise in a consumerist society so resistant to increased taxation.
That leads me to the second area upon which I would like to comment. The upward pressures on national expenditure are greatest, as has again been referred to, in the National Health Service and social care. It is difficult to keep track of all the reports and analyses on the delivery and financing of the NHS and social care. The absolute plethora of those in recent years simply illustrates why the underlying situation is so difficult. Indeed, the Chancellor has announced a new Green Paper this autumn on the future financing and delivery of social care. In the meantime, we await quite shortly the report from our own Select Committee special inquiry into the long-term sustainability of supporting and funding the NHS and social care.
Current plans from the NHS settlement at the 2015 spending review include a commitment to achieve 2% net efficiency gains through the remainder of this decade. Those are well ahead of the customary efficiency gains and will be demanding to achieve. Even if those challenging efficiency targets are met, the inexorable rise in demand will still prove immensely challenging. The underlying escalation in cost is estimated by the chief executive of NHS Providers at about 4% a year, driven by an ageing population and increasingly sophisticated medical treatment. The cost of social care rises in parallel. So what is to be done?
It seems unavoidable that we will need to devote a higher proportion of our GDP to health and social care. You can slice it and dice it but it seems to me that you would come to that conclusion. We are already significantly behind France and Germany in this respect, and well behind the United States, but will it be achieved while the whole area is such a political battlefield? We need to try to reduce the element of political controversy as far as possible in the basic decision-making processes, because once something becomes a political football, things tend simply not to happen because of the developing stalemate and the associated emotions.
I know that Governments are generally opposed to ring-fencing taxes but I have come to think that due to the inexorably increasing costs and unique political pressures involved, the future challenges to funding health and social care will best be represented by some form of hypothecation of tax revenues. There is something of a distinct anomaly here, which can be addressed separately. While individual Governments will have to take overall responsibility for what happens when they are in charge, the recommended Budgets and tax-raising plans would best be proposed by an independent and cross-party body—a bit like the OBR. That may not be politically palatable but, frankly, paying for what we need to pay for will be unpalatable in one form or another. We simply have to face up to that, and to a degree of austerity which seems simply unavoidable in the decades to come.
Lord Flight (Con)
My Lords, I congratulate the right reverend Prelate the Bishop of Chester on his speech, much of which I agree with.
I think that the Chancellor is a good and decent man, and when I read his Budget it all sounded pretty reasonable on a first read, if a little dull, but in no time there had been a political explosion. We all know what the issue was—class 4 NI—but, stepping back, what then struck me was that, over the past two years, there has been a whole chain of tax attacks on SMEs and the self-employed, and that was one of the reasons why the media got so excited this time around.
I imagine that there is within the Treasury—whether it is Matthew Taylor’s review or a body in HMRC—a body that, because there is such pressure to develop tax revenues, is looking for areas that it thinks could take some more taxation. The problem is that this is very much in conflict with the whole Thatcherite philosophy of the self-employed getting fewer benefits, no sick pay, no holiday pay and no minimum wage but equally paying much less tax—the whole idea of a more self-reliant people. You cannot have that and then start taxing them on the same basis as employed people.
As I said, it has not just been the class 4 NICs this year; we have got digital tax returns coming up, with the most extraordinary requirement for the self-employed that they do their accounts four times a year and submit different tax returns four times a year. There will be extra costs for them and for the Revenue. That will hit 5 million people in total. To my mind, I cannot see the point of it, and there will be a lot of ill feeling about it.
We have heard a lot about business rates. Although there has been help this year and last year, in London, where property values have gone up so much, local stores are typically finding an increase in rates of some £20,000 per annum. There is also the issue of dividends. A lot of self-employed people with companies could take some of their remuneration from the company in the form of a tax-free dividend rather than taxable pay, so I can see the sharp-eyed Treasury saying, “We’d better tighten up on that one”. Last year, there was the big tax attack on small buy-to-let landlords, which reduced the interest charge they could levy against their revenue, and stamp duty was put up by 3%. To my mind, that was unwise. In fact, the country should be grateful for small buy-to-let landlords for making available premises for people to rent, which have otherwise been in short supply.
We have also had something that has not attracted much attention, which is the abolition of the lower VAT system for small businesses. They could pay a reduced rate of VAT provided they did not claim expenses. This actually benefited the Revenue. That is now being forced out, if you like, rather than phased out.
As regards sourcing equity finance for SMEs, as a result of EU requirements we have had a great tightening up of the availability of EIS-qualifying finance—here I declare my interest as chairman of the EIS Association. In essence, the pre-clearance mechanism is now taking a lot longer because it has all become hugely more complicated and some areas no longer qualify. For small amounts of money, it is pretty impractical.
The big issue is that the Revenue sees the danger of many more people transferring to a self-employed basis. It is already generally cheaper for companies to take on self-employed people for particular tasks rather than to hire full-time employees, and that will increase with the increase in the minimum wage. The Revenue does not much like the self-employed—it views them as tax avoiders—and it certainly does not understand the political situation, where they are very much seen as the bedrock of Thatcherite Conservative support.
As we all know, the reason behind this is that the public finances have not been put in order. While this year and next year are much the same as forecast, I cannot understand why, as the noble Lord, Lord Shipley, pointed out, between now and 2020 the forecast deficit rises from the £38 billion that was forecast last year to £141 billion this year—an increase of more than £100 billion. What on earth is happening? What is causing this? Did the previous Chancellor somehow get his sums wrong when he was forecasting £38 billion? I would be extremely grateful if the Minister could explain the reason for that extraordinary £100 billion increase.
I believe that we have to come to terms with the fact that the scope to increase taxes is sorely limited, in terms of both whether it will deliver more revenue and whether we have the political ability to do it. Indeed, Chancellor Merkel, of all people, has warned that the trajectory for welfare spending is not sustainable and we need to change the way that we finance quite a lot of our benefits.
Lord Bhattacharyya (Lab)
My Lords, I remind the House of my interests as declared in the register, including my chairmanship of the Warwick Manufacturing Group at the University of Warwick.
Last week, the Chancellor unveiled a Budget that lacked any sense of theatre. There was no big reveal and no rabbit from the hat, but what a relief—we have had enough shocking plots and twists in the last year, and producing a rabbit from the hat usually means sleight of hand is involved. However, there was drama when MPs realised the Chancellor had freelanced a tax on freelancers. He took a lot of stick for this, but he is right: the current tax gap between the self-employed and PAYE taxpayers is unfair. The Budget was not dramatic because the economy is, apparently, gradually recovering. There is good news of course, but it is coming largely from consumer spending and increased debt, in turn driven by low interest rates, currency devaluation and high property prices.
I think we all know what is wrong with that picture, but why is it we have failed to address the long-term issues which prevent more sustainable growth? They are well known—low productivity, poor skills, low innovation, weak business investment—and I am pleased the Prime Minister is addressing these issues with an industrial strategy. I was relieved that both the Autumn Statement and Budget reaffirmed that commitment, so it was not a flash in the pan.
I have called for an industrial strategy for many years, sometimes in this House, but there has always been a perception that this meant picking winners. That is a gamble, not a strategy. Instead, we should create a framework to support growth, give new technologies time to prove their market value and help people acquire the skills new technologies need. This is the basis of Greg Clark’s new approach as Minister for Industrial Strategy. We see the first results in the budget decisions from the national productivity investment fund. Fast mobile and fibre data connections, along with new roads and energy networks, will increase returns for investors in Britain.
Just as welcome is the new support from the industrial strategy challenge fund for battery research. Climate change is a defining global issue, while, locally, increased air pollution—especially here in London but in all the big cities of the world—puts a burden on the NHS. Batteries are essential to a breakthrough in low-carbon transport, and backing them is a sign Ministers are listening to the research agenda of both industry and academia. We need to ensure business is involved as these research pathways develop, which is why I support the Budget announcement on mid-career research fellowships. This is a tool Innovate UK can use to build strategic partnerships with the next generation of business leaders. Will the Minister confirm that the distribution of fellowships will be Innovate UK’s choice?
As a graduate apprentice myself, who became a professor of engineering, I know technology transfer is difficult if short-termism dominates corporate culture. It is next to impossible if you have a skills shortage too. In this country, that has been a perennial problem, but we can do it—in the last 10 years, the automotive sector, having got the skills base and invested in research, has done it. It is continuing to do it and is now an example all over the world, including Germany, of how Britain has changed in this sector. The Budget announcements on the industrial strategy address this. T-levels offer a guarantee of quality and business relevance in vocational and technical education. I am particularly glad that this support will be offered to adult learners, as vocational education must be lifelong to be effective. I have been calling for simpler and higher-status technical qualifications since I arrived in this House. We have had skills systems so complex and incentives so distorted that I sometimes wondered whether industry was involved with this policy at all. The courses seemed to have nothing to do with the world of work.
To put power in the hands of students, I recall suggesting student maintenance loans for technical courses back in 2010. I am beginning to feel that someone has been listening. I was delighted by the introduction of the apprenticeship levy last year. The Budget is the second stage of this skills strategy for industry. Of course, it will take time to deliver real change, but with academies, the apprenticeship levy, the thousand doctorates in applied research and mid-career research fellowships we now have the outlines of a technical education system that offers student support and quality courses from UTC to PhD.
There is, of course, much more to do. I urge the Minister to open up maintenance loans to technical students doing high-level courses at any good education provider, not just the institutes of technology and national colleges. In the last Budget, the Chancellor announced an apprenticeship centre that would create 1,000 apprentices by 2020. We have already got 500, in partnership with many companies throughout the country. If we stick to our guns and do not change, I think we have a chance of fixing the problem.
Baroness Burt of Solihull (LD)
My Lords, I shall address these brief remarks to the effect that the Budget has had on disadvantaged groups within the equalities agenda. I was hopeful that there might be some good news for these groups, given that the Chancellor received a lot more in tax revenues than had been expected. So what did he spend the surplus on? Some £2 billion went towards filling the gaping funding hole in our social care services. Unfortunately, when you consider that local authorities are facing a £5.8 billion shortfall in social care funding and that they have already lost £4.6 billion since 2010, £2 billion is not even going to scratch the surface.
Still, even that is arguably better than the situation of disabled people suffering at the hands of the Government, who last year cut personal independence payments in a bid to save the Treasury £4.4 billion. Many commentators have been surprised, and the disabled community was incensed, that the Chancellor failed to mention the word “disabled” in his Budget speech even once. There was no mention of the new amendments to personal independence payment regulations that the Government announced last month, which will tighten eligibility criteria, especially for those suffering severe mental distress and those who need mobility assistance. No mention was made of the almost £30 a week cuts, which come in next month, for new ESA claimants placed in the work-related activity group. I leave the last word on the disabled to Catherine Hale, a disabled researcher who has written on the failure of the ESA system to increase the number of people in work. She said:
“When they”—
that is, the Government—
“say they want a country that works for everyone, they don’t really mean us”.
Nor do the Government mean the hundreds of thousands of women born in the 1950s who are caught in the pensions trap. Here I have to declare my interest: I am one of those women of a certain age who may support the equalisation of the retirement age between men and women—after all, we live longer than those poor, frail, delicate male members of the species—but have had the changes rushed upon them with insufficient time to plan for later retirement. The WASPI movement seeks a bridging pension to help women negotiate this shortfall—but, unfortunately, it does not look as if they will get any change out of this Chancellor.
I would like to give credit where it is due, however, and to welcome two initiatives in the Budget. I give a small welcome—because it is only a small amount of money—to the £5 million of “returnship” funding to support workers at all levels returning to work after a long period away from the workplace. The sentiment is great. The problem is that the amount of £5 million is tiny in relation to the problem that returners to the workplace—mostly women—face. Let us hope that industry embraces this very effective method of filling skills shortages with capable, mature people without too much need for financial inducement.
Secondly, the £20 million introduced to help tackle domestic abuse is welcome. As I mentioned in an intervention yesterday, Women’s Aid’s most recent annual survey found that over a third of women’s abuse organisations were running a service with no dedicated funding. So I ask the Minister again: will these organisations be supported by this money? Many support organisations have until now been supported by local authorities, but they themselves have been subject to such swingeing cuts that many are no longer in a position to help. Domestic violence is on the rise. Women and their children need the support of these agencies and refuges.
Finally, I wonder if the Minister saw the story in the Metro yesterday about a charity which sends sanitary products to girls in Africa being asked if it could donate some to girls in Leeds who are bunking off school each month because they cannot afford sanitary products to wear to school. I am sure that the Minister will agree that this is a shocking state of affairs, where low-income girls and women cannot afford hygiene products during their period. We cannot have that in this country. So perhaps I may make a suggestion for the Government to consider. Could we not give sanitary towels to girls who qualify for free school meals? We already know who they are, and the cost of setting up the system would, I am sure, be very small. It would mean that all girls in school could confidently attend school all month round without having to worry about the embarrassment of their period letting them down.
The Government are investing hundreds of millions of pounds for their pet project of free schools, many of which will end up being selective, helping mostly middle-class children further up the ladder at the expense of the rest. Liberal Democrats want you to invest a very modest amount to protect the dignity and the education of some of the lowest-income, most deprived children in our country. That is not too much to ask, is it, for a Government who want,
“a country that works for everyone”?
Lord Willetts (Con)
My Lords, I draw the House’s attention to my entry in the Register of Members’ Interests and particularly my post as executive chair of the Resolution Foundation. I shall draw on some of our Resolution analysis in my brief remarks.
I welcome the Budget, and we at Resolution particularly welcome the steps, however controversial, on the reform of national insurance contributions. The back-drop to this measure is an increasing tendency for companies to try to shift their employees into self-employed status so as to save on employer national insurance contributions. This is a significant and growing gap in national insurance revenues. At the beginning of this Parliament that gap was perhaps £3.2 billion. We estimate that it could be as high as £5.7 billion by the end of this Parliament. I would love to believe that this trend reflected a fantastic and sudden growth in the spirit of entrepreneurship in our country. The evidence, however, is that whereas in 2002 22% of the self-employed had employees, now that is down to 11% of the self-employed having employees.
Of course we need to promote entrepreneurship, and I would welcome any measure specifically aimed at providing incentives to entrepreneurship, but that is not the origins or the purpose of the way in which national insurance contributions are set for self-employed people. The purpose of the different national insurance contribution rate for the self-employed was supposed to reflect the fact that their benefit entitlement is more modest, as we have heard already from the noble Lord, Lord Macpherson. However, over years the entitlements to benefits of self-employed people have grown—most recently, of course, with the single tier pension. It has been calculated that, if the self-employed national insurance contribution rate were set below 12% to reflect their more modest benefit entitlement, it would be 11.8%. So the logic of this in the contributory principle is clear—the 9% rate was not justified. That is why I support the proposal. I very much hope that, in the course of the summer, when we have Matthew Taylor’s review published and the wider consultation that the Government are committed to, we will see that important reform in a wider context.
I pay tribute to the personal commitment to productivity of my noble friend Lady Neville-Rolfe. I know that throughout her ministerial career she has pressed on that; she is fortunate in having as Secretary of State Greg Clark, who is personally committed to it, and we heard an excellent intervention from the noble Lord, Lord Bhattacharyya, supporting some of the measures to boost productivity. The cliché that hangs over this debate is the remark of Paul Krugman:
“Productivity isn’t everything, but in the long run it is almost everything”.
That is not as straightforward as it sounds; I draw the Minister’s attention to the fact that, although compensation in total has broadly tracked productivity, it is not the case that median earnings have tracked productivity. Indeed, in the last decade or so, median pay has gradually fallen behind productivity and is now 18% lower than it should be if it had just matched productivity improvements since 2002. So we do not just have a productivity problem in this country—it is not getting through to people in their pay.
There are two main reasons for the problem. One reason is that an increasing proportion of the improvements in pay are being secured by the more affluent employees, so it is not feeding through into median pay. That is a problem that needs addressing because, if we want people to be motivated to make their contribution to improving productivity, it is reasonable to expect them to have a share in the improvements and benefits. But there is another reason as well that is even more important. We reckon that out of that 18% falling behind in median pay, 5 percentage points or so are attributable to the fact that median pay has underperformed compared with wages as a whole, but 8 percentage points are attributable to wages in general falling behind compensation. An increasing element of compensation is not coming in the form of wages at all; an increasing share of compensation has been taken in pension contributions and less is being taken in pay. For the generation to which I belong—the baby boomers—when we were at our peak earnings there were contribution holidays, because company pensions were supposed to be in surplus, so we enjoyed the period when an unusually high proportion of total compensation went in pay. Now we have discovered deficits in pension schemes and instead an unusually low proportion of compensation is being taken in pay. That means that younger workers are working hard to generate revenues that do not flow into their pay packets but go to plug deficits in pension schemes to which they do not even belong.
I draw the Minister’s attention to a consultation document produced by the Department for Work and Pensions the other week, specifically looking at company pension schemes. Among other issues, it looked at whether the generous inflation rules for uprating company pensions could be justified. The sole consideration in that document was whether or not the companies would go bankrupt if they were obliged to pay these very large sums into their pension schemes to plug deficits to enable this generous inflation protection to be delivered. There was no discussion of the wider issue of the fair distribution of economic returns between generations and no consideration of the fact that the younger workers in those companies may not be enjoying any pay increases at all, while at the same time pensioners are protected in that way. Will the Minister assure me that, as part of the consideration of that consultation document, the Treasury will look at the perspective of fairness between the generations? I wholeheartedly support her commitment to productivity improvements, and I hope that it is matched by a similar commitment to ensuring that improvements in productivity feed through into the living standards of all age groups in our country.
Lord Monks (Lab)
My Lords, it is a pleasure to follow the noble Lord, Lord Willetts, and pay tribute to the stimulating work being done by the Resolution Foundation, of which he is chairman. I hope that other noble Lords opposite have taken note of his speech. It would be a pleasure to hear rather more of its kind in this House, particularly from those Benches.
This debate takes place against the backcloth of our risky exit from the EU single market, now compounded by Scotland’s possible exit from the UK, which is also hugely risky. The UK’s economy, including Scotland’s, will be in the eye of consequential political storms, buffeted by multiple cross-currents and uncertainties. How robust is our economy going to be? Bill Clinton’s advisers famously said: “It’s the economy, stupid”, that motivates voters. Not at the moment, it is not. Politics is overriding economics; hearts are ruling heads; nationalism is trumping common sense. This is very evident in the reckless decision that we are making to leave the single market and the customs union—this hard, clean Brexit. It is also evident in Nicola Sturgeon stirring up the Scottish independence question at a time of exceptional fragility for Scotland’s economy. On current form, an independent Scotland’s first act could well be to seek a bailout from the IMF.
We have to look squarely and honestly at our economic situation. As we have just heard, the millennial generation is earning rather less than its parents. Average living standards have been stagnant since 2008 and are forecast not to increase for several years, with the main burden falling on low-income households. As the Chancellor—and the Minister today—has recognised, the UK has embarrassingly low productivity levels. Although I welcome what has been said about boosting technical training, I look in vain for steps to stimulate business investment and longer-term perspectives in company management. The Chancellor has, apparently, killed off the Prime Minister’s plan to provide for workers to serve on company boards. This is a bad mistake. As the Bank of England found recently, three-quarters of companies put investment behind mergers and acquisitions and paying dividends. Short-term profit maximisation, linked to excessive executive pay, still rules in too many of Britain’s boardrooms—and it is getting worse. Worker representation at board level would help counter that.
In the 40 years to 2007, investment growth averaged 5% a year. For the eight years since the crisis, it has limped along at 1.5% a year. We have to add to that mix the fact that many of our best businesses are foreign owned. From investment banks to car companies, from energy companies to football clubs, overseas ownership is now extensive. Many came here to participate in the single market and they are becoming more and more agitated—rather quietly, in my view—about the risks of the UK leaving that market and crashing over the cliff of no agreement with the EU. I understand that they are employing armies of consultants to assess their options. I wish they would articulate more forcefully their concerns about the current situation and what they fear. They have been too deferential and tactful in public. I bet they would not be like that if a Labour Government were in power.
We have enough problems without self-inflicted ones. We know about the pressures on the NHS; about the huge problems in social care; and that tax revenues fail to cover our spending at governmental level and in the case of many households. We live on tick at many levels in our economy—and it seems to me that this is more likely to get worse than better. We see public services under strain and stress. Zero-hours contracts in the labour market and bogus self-employment, which the noble Lord, Lord Willetts, hinted at in his contribution, are surging. We should remember that a zero-hours contract often means for an employee or a worker zero loyalty to the firm for which they work or by which they are employed. That is not the basis for quality or better productivity.
Employment growth apart, our economy is fragile, so my call today is for the Government as a first step to revisit their decision to quit the single market and the customs union and to try to stay in it, perhaps initially as a transitional, provisional measure pending the negotiation of a comprehensive trade deal. This step would cut at a stroke the number of uncertainties. My message today is, “Save us from that clean, hard Brexit”.
Lord Gadhia (Non-Afl)
My Lords, I had the opportunity to watch the Budget from the Gallery in the other place last Wednesday alongside a handful of noble Lords, including my noble friend Lord Lawson. I could not help but reflect that he, and some of his predecessors, enjoyed more degrees of freedom than the present occupant of No. 11.
Our economy, while surprisingly resilient in the near term, is in a holding pattern until we have greater clarity on the road ahead after Brexit. The Chancellor is operating in a macroeconomic straitjacket defined by four important and mutually reinforcing constraints: first, the continuing high deficit and debt levels, which benefited from a windfall in 2016-17 but are otherwise largely unchanged from the Autumn Statement. The only saving grace is that while debt to GDP has more than doubled from under 40% prior to the financial crisis to well over 80% today, the cost of debt service, net of the Asset Protection Fund, remains constant at around 2% of GDP, underpinned by abnormally low interest rates.
Secondly, protected departments now represent 75% of the entire government budget, a point which the chair of the Treasury Select Committee, Andrew Tyrie, has also highlighted. It therefore makes finding savings ever more difficult. Thirdly, in a similar vein, the tax lock and commitment to reduce corporation tax now covers 80% of the base, which makes it difficult to raise revenue other than by increasingly creative means. The national insurance controversy should be seen in this context. In addition, with the tax burden rising above 37% of GDP, the highest for 30 years, I believe that we have reached the limits of what we can sustainably squeeze from taxpayers.
Fourthly, with the uncertainties ahead and OBR’s disclaimer that it has not factored in different economic scenarios for Brexit, the Chancellor quite rightly wants to build in some headroom for unexpected outcomes. With forecast net borrowing reducing to 0.9% of GDP by 2020-21 and a ceiling on the structural deficit of 2%, the implied buffer is about £25 billion—frankly, more of a contingency than a war chest.
The irony, of course, is that if consumers and companies did what the Chancellor is doing and held back, then their individual prudence would, at an aggregate level, have led to a sharper slowdown—something which economists will recognise as the fallacy of composition. We are therefore fortunate that UK consumers have done exactly the opposite. When the going gets tough, the Brits go shopping. However, this predilection comes at a clear cost in terms of rising household debt and eroding savings rates, now at negative levels excluding pension saving. The most recent retail data from the high street indicate that this party is ending as price squeezes from sterling’s depreciation come through and real wages are squeezed. Therefore, we are in the awkward position that our future economic trajectory will largely be determined by factors beyond our control.
Apart from Brexit, I would highlight two other factors. The first of these, which has worked in our favour so far, is the more benign global growth environment, particularly in the US where we have seen the “Trump Bump”, China’s relatively soft landing and signs of economic life from the EU. Indeed, the Eurozone PMI Index has just crossed 55 for the first time in six years while the comparable UK data are heading in the opposite direction. Mark Carney, in the Bank of England’s latest quarterly inflation report, attributed about a quarter of our economic outperformance to more robust global growth. The financial markets are also chiming in, with the VIX Index, commonly known as the “fear index”, currently enjoying its longest period below average levels since the crash. It goes without saying that these favourable trends might easily reverse.
The second factor is potentially more seismic—namely, our preparedness for future interest rate increases. The financial markets have already factored in three US rate increases from the Federal Reserve this year, starting later this week. Although UK rate increases do not appear imminent, their eventuality is now closer on the horizon. We have enjoyed almost a decade of morphine from quantitative easing. The process of weening us off will involve some major adjustments and I would encourage Ministers to pay close attention to the consequences.
So with few macro levers available and big external influences at play, what should we do? The scarcity of options is thankfully focusing the Government’s mind on supply-side reforms which address the underlying structural challenges of the UK economy and prepare us for the consequences of Brexit. It is a strange paradox that we are close to full employment, which the OBR estimates at around 5%, but capacity utilisation is 81.7%, towards the upper end of its historical range, and the output gap has turned positive for the first time since 2008. Yet productivity has been downgraded yet further in the OBR forecasts, so we cannot grow much faster without risking inflationary consequences.
We are effectively stuck in a rut of relatively low growth, low inflation and low productivity, which might be compounded in the future by lower immigration. I therefore welcome the measures and resources allocated to improving skills and vocational training such as the T-levels and offering maintenance loans for further education. There are some additional areas raised by honourable friends in the other place which we should also consider carefully. One of these is from Alan Mak, chair of the All-Party Parliamentary Group on the Fourth Industrial Revolution, who has advocated a skills audit at the start of each Parliament. This strikes me as highly sensible since disruptive technologies such as artificial intelligence or robotics can make seemingly valuable skills obsolete almost overnight while other more emergent skills become highly sought after. Another welcome idea has been put forward by my honourable friend Rishi Sunak about the creation of a vocational skills equivalent of UCAS, targeted particularly at apprenticeships, creating a unified portal. I would like to ask the Minister whether that is being investigated seriously.
As well as human capital, our physical capital is equally important in galvanising an enterprise economy and wealth creation. This was recognised in the Autumn Statement with the creation of the £23 billion National Productivity Investment Fund. If you delve into the OBR forecasts for growth, it is apparent that a rebound in both public and private investment is essential in taking up the slack as household consumption falls off. I would therefore urge Ministers to make every effort to crowd-in private sector investment, particularly attracting capital which is trapped offshore by our tax system and should logically find the UK an attractive destination at current exchange rates. At the Autumn Statement, it was announced that business investment relief would be simplified and made more attractive. I ask my noble friend the Minister: what progress has been made on this front?
In conclusion, I make one final observation. Large sections of the business and financial community are currently biting their lip until they see how the Brexit negotiations progress, but we should not mistake their compliant behaviour for acquiescence. More than ever, we need strong, evidence-based policy-making grounded in economic realities and facts and not a blind pursuit of ideology. This is a time, more than ever, when our national trait of economic pragmatism must be unleashed and allowed to prevail.
Baroness Wheatcroft (Con)
My Lords, I applaud the judgment of my right honourable friend the Chancellor in making this the last spring Budget. In my time as a City editor, the Budget was one of the worst elements in the calendar. It was a challenge to look through all the small print that came from HMRC and the Treasury to find what was missing from the Chancellor’s speech. This being a competitive business, it was not a good thing to miss the story. Having two Budgets a year compounded the agony, so one is definitely a relief in the right direction.
I also commend the Chancellor for not burying the bad news. The national insurance increase was right up-front and I support it. I cannot see why it is being greeted as quite such an appalling blow to the entrepreneurial spirit of this country when, as my noble friend Lord Willetts pointed out, it is a perfectly rational move to begin to align these two national insurance contributions, as benefits are being aligned. That makes sense. The Institute for Fiscal Studies greeted it as “modest but welcome”.
My noble friend Lord Macpherson of Earl’s Court suggested that there may be no-go areas when it comes to tax. I do not think that we should accept that. I see no reason why national insurance any more than other taxes—of course, it is a tax by any other name—should be beyond the Chancellor’s writ. As the Chancellor pointed out, he does not have wads of cash to shell out. With our net debt standing at an astronomical £1.7 trillion—a whopping £62,000 for every household —we are having to keep on borrowing on a prodigious scale.
We have already heard many dissections of the state of our national finances but I would like to concentrate on just two issues. I will not drone on about Brexit. My views are clear and others have made it perfectly clear that they too have grave fears for the economy, but let us hope that the Government are right.
I would like to talk about productivity, which has been mentioned by other speakers. As the Chancellor said, it remains stubbornly low, and there is certainly no denying that. We are 35% behind Germany and 18% behind the average of the G7, and GDP per capita is barely 2% higher than it was before the crash. That means that the economy has grown by little more than 2% over nine years, which is just about what you might hope it would do in a single year. Of course, the ramifications of that poor performance are painful. According to government forecasts, average earnings in 2022 will be no higher than they were in 2007—15 years without a pay rise, which is painful. As my noble friend Lord Willetts pointed out, for many people it has been much worse than that average figure. No wonder some people are feeling deeply disillusioned and perhaps showing their disillusionment at the ballot box.
The productivity gap has been much discussed but nothing seems to make any difference. Only last year, the then Business Secretary, Sajid Javid, outlined his suggestion for making things better. There were 15 key areas and two pillars. What it amounted to was infrastructure and training and all the things we have talked about over the years. Of course, I am delighted to see the emphasis on technical education in this Spring Budget. However, there may be another problem. Certainly, the Productivity Leadership Group, chaired by Charlie Mayfield, came to the view that one of the biggest problems with productivity in this country was bad management. The Chartered Management Institute did its own survey and found that 43% of managers rated their own line managers as “ineffective”.
Therefore, I ask the Minister whether the Government have any plans to help business improve its not entirely impressive record on management as a means of improving productivity growth. It is certainly worth fighting for that growth. As we know, households are suffering and could do with more national income. The OBR records that average household debt has reduced from the peak of 160% of income down to about 140% but is now on the rise again. The OBR even suggests that in the final quarter of last year people were dipping into their savings to go shopping—and this at a time when it is absolutely essential that the country saves more. We need the money to pay for our old age and social care, not for an increased spend on consumer goods now. Can the Minister say what she thinks would help improve the savings ratio? I suggest that a national savings bond with an interest rate of 2.2%, when inflation is heading towards 2.4% this year, might not be the answer.
Lord Beecham (Lab)
My Lords, I refer to my local government interests.
Seventy years ago this November, the Labour Chancellor of the Exchequer, Hugh Dalton, was sacked by Clem Attlee for disclosing in general terms to a journalist the details of his Budget while he was on his way to the Chamber to deliver it. This year’s prize winner in the parliamentary leak show is Philip Hammond, whose Budget last week, appropriately close to the ides of March, contained little of note which had not already been trailed in the media. Not that this amounted to much, in any event. The Treasury’s summary of the Budget boasts of “robust economic growth”—without, of course, mentioning that much of this is due to household spending fuelled by debt. It also purports to tackle two areas of growing public concern: the crisis in social care and the state of our schools.
In relation to social care, the King’s Fund forecasts a £2.8 billion annual shortfall by 2020. The Budget allocates £2 billion in total by 2020, manifestly leaving a substantial gap—of the order of £2 billion annually—at a time when needs will continue to grow. As the noble Lord, Lord Porter, chair of the Local Government Association, pointed out in the association’s response to the Budget, local authorities are facing an overall funding gap of £5.8 billion by 2020, such that, as helpful as the announcement of extra funding is,
“short-term pressures remain and the challenge of finding a long-term solution to the social care crisis is far from over”.
Since 2010, Newcastle alone has had to reduce social care spending by £40 million a year. Even after the extra funding, it now faces further cumulative cuts in funding for social care of £19.2 million by 2020, or £38.7 million in total over the next three years—and this in the context of an overall cut in funding for the council of £290 million a year by 2020.
On schools, in which investment is critical for the future of our economy, £216 million will be invested nationally in maintaining existing schools, whereas the National Audit Office reports that no less than £6.7 billion is needed to rebuild dilapidated school buildings across the country, such that the allocation represents 3% of what is required. Yet £360 million—50% more than will be invested in this maintenance programme—will be allocated to new free schools. I remind the House that councils cannot invest in new schools due to the Government’s obsession with the free school concept. Here again, the Conservative-led Local Government Association calls for councils to,
“have a role in determining where new free schools are created”,
and to have a say over,
“whether or not selective schools are introduced in”,
currently,
“non-selective areas”.
On the fiscal front, two areas are currently generating concerns. The first—about which a number of your Lordships have spoken—is the change in national insurance contributions for the self-employed, in flagrant contravention, as we have heard, of the Conservative manifesto commitment in 2015. At the very least, any such change should surely reflect the different circumstances of the self-employed in relation, for example, to sick pay, holiday pay and employer contributions to pensions. The Government need to review the tax and benefit systems and the employment aspects of the so-called gig economy, which threatens to be, if I may be excused the pun, “uber alles”. Personally, I am beginning to wonder whether NI itself is in need of a fundamental review. People tend to forget that the impact of national insurance contributions is felt even before income tax becomes payable. At the very least, we should examine aligning the two systems at both ends of the income scale.
The second area is business rates. Here, the problems have been exacerbated by the deliberate decision of the coalition and the Conservative Government to postpone the revaluation, and they have been compounded by the failure to have regard to the changes in the market, with online retailers taking a growing share of that market from the low-rated sheds outside urban areas. Given the Government’s policy of substituting business rates for revenue support grant to councils, it is surely necessary urgently to review the system, including the approach to valuations. I suspect that in addition there will be an avalanche of appeals, which themselves are costly for councils. Will the Government reimburse councils for such costs?
Will the Government clarify how they propose to ensure that councils with relatively low business rate income can be compensated for the effect of replacing grant with the proceeds of business rates? When can we expect an announcement about the distribution of such rates?
Mention of rates brings me to the issue of council tax. It is 25 years since this replaced the poll tax and, over time, it has become increasingly unfair. I remind the House that there are eight bands for council tax, with the top band paying only three times as much as the lowest. I can illustrate the outcome from my experience in Newcastle. Zoopla, an organisation that values properties and publishes those assessments, valued properties in two streets in the ward that I have represented for just under 50 years at £49,000 and £76,000 respectively. They are in band A, the bottom tier, and the council tax is £1,008 per year. In a street near where I live, a house in band H, the top band, was sold recently for more than £2 million. The council tax payable for that property is £3,024—only three times more than for a property a fortieth of its value. For the record, my own four-bedroomed house is in band F, the sixth band. The council tax that I pay is £2,084 and the house is worth perhaps £750,000—substantially more than those of my constituents, but their council tax bears no real relation to the difference in value.
This is a grotesquely unfair system that the Government adamantly refuse to change. They could do so by having a revaluation and then adding more bands at the top and bottom of the scale without, if they so choose, necessarily increasing the total yield. Why do they not take action? Why are they equally complacent about the stagnation of earnings, which according to the Institute for Fiscal Studies will be no higher in 2022 than in 2007—15 years without any real rise in earnings? It is time for the rhetoric of the just about managing to be translated into action and extended to those who, through no fault of their own, are just not managing.
Lord Razzall (LD)
My Lords, in our experience, the world is divided between people who see the glass as half full or who by temperament see the glass as half empty, and in some cases totally empty. I have always regarded myself as in the first category, which noble Lords may say is not surprising for a Liberal Democrat. But notwithstanding the valiant attempt by the Minister to talk up the Budget, when I contemplate the future of the economy, rather like the noble Lord, Lord Hain, I fear that I have moved to the half empty, almost totally empty category.
Recent reports from the Institute for Government and the Rowntree Foundation demonstrate that the financial position of what Labour used to call ordinary working people and what the Prime Minister now calls the just about managing is deteriorating and is likely to deteriorate faster. As the noble Baroness, Lady Wheatcroft, did, let us look at the numbers. Real incomes for the bulk of people have barely grown since the 2008 financial crash. On many calculations, this means that average income will be 18% lower by 2020-21 than if life had continued as before. Rather surprisingly for a Tory Government, home ownership is falling for the first time in 50 years, and the worst-hit group are those in the middle-income category, who now have little prospect of home ownership.
We are seeing now real pressure on public services. In hospitals where delays in cancer services and A&E are rising, clinical standards have been maintained only by running record deficits. Bed-blocking cases rose 40% from 2014 to 2016 because no social care was available. In prisons, assaults against staff are up 60% in two years. As the noble Lord, Lord Beecham, indicated, inevitably, local authority cuts imposed by central Government have meant the elimination of many services which are so necessary to make our society civilised. I do not need to remind noble Lords of the crisis in social care for the elderly. If I may bastardise the phrase of the noble Lord, Lord Kinnock, in the 1992 election campaign, “Be very afraid if you are ill or elderly in Britain today”. As Jenni Russell memorably put it in the Times last week:
“A rolling austerity programme with bursts of emergency spending is no way to run a country”.
Of course, as many noble Lords have indicated and as all economists know, the only real solution to our problem is for our existing workforce to become more productive so that we can increase the value of what we produce in every hour worked, which will feed through to increased wages, taxes and profits. To achieve the productivity gains that we need, we must have a vibrant and growing manufacturing sector. As my noble friend Lord Shipley and other noble Lords have indicated, unless the Government negotiate a soft Brexit, irrevocable damage will be done to our manufacturing industry.
First, as 52% of manufacturing exports go to the European Union, it is essential that access to the European Union for goods and services be maintained, even, contrary to the desire of the serious Eurosceptics, if some continued financial contribution is required. Secondly, it is not just potential tariff barriers that are of concern: non-tariff barriers must be removed that deal, for example, with regulatory issues, technical barriers, standards and measurements. Harmonisation of standards has worked well in recent years, so there is real nervousness in the manufacturing community that following our exit, we will revert to the bad old days of Germany setting rules that suit its manufacturers. It is also essential that lengthy customs checks are not introduced that would be damaging, particularly in industries where there is a significant flow of components to and from the European Union.
Thirdly, British manufacturing requires significant skilled immigration from Europe. There are many examples of a likely skills shortage. I pick just one: the need of some engineering companies for analogue design engineers. British universities now teach only digital electronic engineering, but skilled analogue design engineers can still be found from the Czech Republic, Slovakia, Romania and Bulgaria and must be given the right to work in the United Kingdom. There is considerable scepticism among most manufacturers about whether the skills shortage can be made up by UK employees once we have left the European Union, as David Davis rather confirmed in his speech in Estonia a few weeks ago. If the Government get this wrong, the Chancellor of the Exchequer’s fighting fund to deal with the financial fallout from Brexit will be small beer in comparison with the damage the Government will have caused the British economy.
Baroness Altmann (Con)
My Lords, what kind of economy do we in the United Kingdom intend to foster? Do we want policies that will encourage growth, investment, risk-taking, entrepreneurship, hard work, family values and responsible rather than reckless spending? That is certainly what I believe are core Conservative principles, and I wholeheartedly endorse them. In addition, the Prime Minister has talked of fairness and helping those who are “just about managing”, and I absolutely echo those sentiments too. However, this Budget contains some measures that, in the overall context of our long-term economic interests, seem to send confusing messages about those core principles.
I start by welcoming the Chancellor’s reaffirmed commitment to fiscal responsibility. Yes, tax revenues have been stronger than expected in the past year, but just using that windfall to boost current spending would not be sensible. Huge budget deficits and ultra-loose monetary policy are not sustainable over the medium term. I urge my noble friend to encourage the Treasury to take more seriously the opportunity to harness the power of pension funds and long-term insurance assets to stimulate growth directly and invest in infrastructure and housing.
As we negotiate an exit from the EU, we cannot assume that the economy will keep surprising on the upside. Lower immigration is a risk to our growth prospects. The Minister mentioned the importance therefore of investing in people. The new T-levels are welcome, but that needs to apply to older people too, so I warmly welcome the Chancellor’s decision to spend £5 million on returnships. Such initiatives could certainly provide much-needed help for older adults to help them extend their working lives. Pilot schemes helping people to return to work could particularly benefit older women wanting to work again after taking time out for caring. Leaving the EU means that it is increasingly important to help Britons keep working if they want or need to, taking advantage of our home-grown skills and talents to boost economic growth. Each extra one year later that the average British person delays retirement is estimated to add 1% to GDP. The economic benefits of fuller working lives need to be much better appreciated.
Another welcome measure that could help some older people is the Chancellor’s £2 billion boost to help councils fund social care. However, this is just a sticking plaster. Demand for care and costs of delivery have risen sharply, and cash-strapped councils are leaving too many frail elderly people without the care they need. This is already creating havoc in the NHS and the crisis has hit while the current cohort of older people is relatively small, before the baby-boomer generation reaches more advanced old age. If our economy is to support a health system that can cope with rising numbers of elderly people, reduced immigration and smaller cohorts of working people, clearly much more needs to be done on social care.
It is astonishing that, with a rapidly ageing population, there is absolutely no money set aside, either in the public accounts or at the private sector level, specifically to cover care costs. Previous politicians have just kicked this issue into the long grass. I welcome the Chancellor’s Green Paper later this year, but it must lead to action. Will my noble friend the Minister recognise the urgency here? The Budget was another missed opportunity to kick-start the extensive reform programme that is so urgently needed, including proper integration of health and care, helping families to prepare for care costs, new tax-favoured saving products, incentivising employers to help individuals fund care—perhaps elderly care vouchers, similar to the principle of childcare vouchers—and even auto-enrolment into care saving plans.
That brings me to my next point. The Chancellor specifically ruled out the so-called death tax to fund social care, so money will not be recouped retrospectively from people’s homes or estates to pay for care, but at the same time the Government will introduce precisely such a death tax. However, this one is what we might call a stealth death tax. It comes in the form of the massive rise in probate fees. Some 97% of the respondents to the Government’s own consultation were firmly against this. The Ministry of Justice seems to have landed the Chancellor with a little bit of a problem here. I suspect that, having admitted that this money is actually supposed to be there to fund other parts of the court system, because the current probate fees fund the cost of delivering the probate registry, many families might prefer to have a death tax to pay for social care rather than to help the Ministry of Justice.
The most surprising news in the Budget was of course the hit to the self-employed. These are the very people who will keep our economy going and growing. They have no maternity pay, holiday pay or sick pay and nobody else to fund a pension for them. I must admit that I fail to understand the urgency of introducing a rise to class 4 national insurance rates. The manifesto commitment not to raise national insurance was clear and we knew at that time about the rises in self-employed people’s state pensions. I was not surprised, when I took the tax-lock legislation through this House, that it related only to class 1 national insurance because we were reforming class 2 and we knew there would be reform of class 4. I would not have expected an increase in rates at this time, hitting the self-employed directly. The Chancellor talked about the need to create the growth that will underpin our future prosperity and his ambition for the UK to be the best place in the world to start and grow a business. I do not quite understand how this is ensuring that those with the broadest shoulders bear the heaviest burden. This measure fails that test.
Indeed, the cut to the dividend tax allowance is another tax on risk-taking and equity capital. It will hit not only small investors but those people who are trying to start a business and want to take a dividend out of that company. Our dividend taxation and the tax on risk-taking is out of line with the tax on debt instruments, yet economic growth can usually benefit more from equity risk-taking than debt finance. People who set up their own businesses are being hit twice in this Budget. I do not believe that is sensible for the future growth of our economy, and I hope the Chancellor will rethink these plans.
Lord Desai (Lab)
My Lords, as the noble Baroness said, this is the last spring Budget. Miraculously, it will stretch into the autumn, because the legislation required to support the tax rises will not be done until autumn. We have a very nice Budget. I like Budgets that are dull, which pass without much notice and stretch out into infinity before we can deal with their consequences. From here on, I hope we will have autumn Budgets which will then go on into the spring to have their tax proposals implemented.
Our problem is that the era of high growth, which lasted from 1990 until about 2008, has gone for ever. It will not come back. All the thinking about spending and taxation is still stuck in the era when growth was robust and high. It will not happen, so we have to find some ways of economising or bring in high taxation. We cannot have a culture in which the self-employed, who are not a poor class, refuse to pay extra tax and make such a lot of noise that the Chancellor has to rethink. Only this morning there was news that the BBC encourages its highest-paid people to become self-employed rather than pay tax. That is the BBC—the paragon of virtue. We know that self-employment is a tax dodge and it has been since my friend Ken Livingstone became a company and started paying himself—a good socialist such as Ken Livingstone discovered 15 years ago that it paid to dodge taxes. We have to stop pretending that the self-employed are the backbone of society and guarantee growth. They are no such things. They are just tax dodgers. Tax dodgers ought to be treated like tax dodgers.
I welcome the fact the Chancellor abandoned his predecessor’s obsession with moving the Budget into surplus, but he is still obsessed with the debt problem. We went through this first with five years of coalition Government, where it was perhaps necessary to be severe about reducing the deficit, which had risen rather highly. It was quite clear that there was not going to be a sufficient multiplier from consumption spending to get growth going. That is fine, but now we have come to the stage where we really ought to ask a fundamental question: is the debt-to-GDP ratio a good indicator of anything? Debt is a stock and GDP is a flow. When you compare a stock to a flow there is no particularly ideal number at which you should stop. What you ought to compare is the cost of servicing the debt with the GDP. It so happens, as the noble Lord, Lord Gadhia, reminded us, that the cost of servicing the debt is 3%. It is one of the lowest costs that there is.
We have an ageing population and considerably high demands on social care and health. We ought to stop repeating this cliché that we are not going to burden our future generation with extra debt. What are you going to do about the present generation? Why are you burdening them with bad social care just because you do not want to burden the future generation, who are, if anything, going to be richer than us? We ought to seriously, fundamentally examine whether we should not have different fiscal rules to suit an ageing population in which there is a great reluctance to pay tax, but no reluctance to cut expenditure.
It has been suggested, especially by the noble Lord, Lord Finkelstein, who is not here, that we hypothecate some tax revenue for financing the National Health Service. It is very difficult to find any real numbers in a Budget document; they are all percentages, but there are some real numbers in this one. It just so happens that the contribution made by national insurance to public sector receipts, £130 billion, is not too far away from what we spend on national health, £149 billion. We should think if not about a strict hypothecation then about a marriage of certain items of revenue and expenditure, and tailor our rising taxation to the rise in expenditure required. If we were to tie national insurance to financing national health, as was originally the idea—some people may remember—it would make sense to raise the national insurance target when the National Health Service needed it. That is a much better way of financing national health than any I can think of.
We have a productivity problem because the economy has moved to a low-growth path, but what will happen in the future will be much worse. If our productivity were enhanced by artificial intelligence and such things, the level of employment would be much lower and we would have very different problems in financing our welfare from those that we had previously. So watch out: more changes are coming.
Lord Skidelsky (CB)
My Lords, I always seem to follow the noble Lord, Lord Desai, or he follows me, in these debates. Like terrible twins, we cannot be separated. He is always fun to listen to and has given us a lot to think about, although I shall not follow him on this occasion down the path of secular stagnation, which is certainly worth thinking about.
Ever since I entered this debate eight years ago, I have said that the austerity policy was wrong—that it would slow down growth, and therefore make it impossible for Chancellors to meet their targets. I do not think that I was wrong. As Larry Elliott wrote last week:
“A one-term deficit reduction plan has now become a 15-year slog”,
and it will no doubt go on.
True enough, public sector net borrowing has fallen from 9.7% of GDP in 2010-11 to 3.8% this year, and is expected to fall to 0.7% in 2021-22, but this reduction is not the result of any measures taken or cuts made by George Osborne; it is the result solely of the growth of the economy, which is due to a different set of factors of which monetary policy has been very important. This is a difficult issue, but one cannot have this debate without a tiny bit of economic theory being somewhere buried in its recesses, and I want to produce my little smidgeon.
What has happened is that growth policy, such as it was, has been outsourced to monetary policy since 2010. This is by far the weaker of the two instruments, because of the slippage between printing money and spending money which was discerned by Lord Keynes in 1936. In other words, you can print the money; the problem is to get it spent. If there are leakages on the way, there will be quite a weak impact.
The net impact of fiscal contraction and monetary expansion has been to slow down the rate of growth of the economy. Everyone now recognises this, except of course the Front Bench on the government side. Everyone recognises that austerity policies have slowed down the rate of growth of the British economy. Mark Carney, Governor of the Bank of England, said in his recent Roscoe Lecture that,
“sustained austerity … has, on average, subtracted around 1 percentage point from demand each year”,
since 2010. That is not a unique statement; we hear it from official bodies as well. Had George Osborne simply continued with the policies of his Labour predecessor, he would have left his own successor, Mr Hammond, with a nice surplus by now.
It is a bit disturbing to see that the penny has not yet dropped. The austerity rhetoric seems to be hardwired into the minds of Chancellors, although their practice is somewhat different from their rhetoric, but it is more disturbing to see that it seems to be hardwired into the minds also of Treasury officials. Two representatives of the Treasury view have spoken today, the noble Lords, Lord Macpherson and Lord Higgins—the noble Lord, Lord Higgins, was brought up and bred in the Keynesian era, so he is a bit more relaxed about these things.
Over these years, someone has been getting something wrong. Is it the Chancellors? Is it the Treasury? Is it the OBR? Is it the economics profession? I blame the economics profession quite largely for these wrong models of the economy, but the truth seems to be that all macroeconomic forecasting policy models were wrong, because the theory on which they were based was wrong. At least the IMF has admitted that it was wrong, but I do not see any admission from the Treasury to that effect. The Treasury, after all, has never been interested in growth; it is the Government’s housekeeper. That is why Harold Wilson set up the Department of Economic Affairs in 1964 as a counterweight to the Treasury view. Who now remembers it? Very few. It ran aground on the sterling crises of that era, but it is certainly something Governments should look at again.
The Chancellor followed many of his predecessors in mentioning the productivity question. How come the UK’s productivity is 18% lower than the average of G7 countries? It is not such a puzzle. In every single year between 1980 and 2015, Britain’s investment share of GDP was 3.7% lower than the G7 average. This level of underinvestment over a 25-year period is bound to produce a depressing productivity record.
The private sector is not picking up the slack. As Martin Wolf wrote last week, consumption in the last year rose by 3%, but investment fell by 1.5%. Chancellors have tried to help investment and I welcome some of the measures, but the amounts pledged have not reversed the cuts in the capital budget that have occurred since 2010.
Our infrastructure quality is ranked as the second worst in the G7. I must finish now, because the noble Lord, Lord Desai, said everything that I wanted to say about the burdens on our future generations and did so extremely well. But now that we have bond yields that are near rock bottom, we should take advantage of them to build a better Britain and not go on about deficit targets which present policy puts perpetually beyond reach.
Lord Crickhowell (Con)
There will be no economic theories from me after those two contributions.
On 7 March, the day before the Budget, the Royal Society of Arts—I declare an interest as a fellow—published an article which said:
“Rumours have it that the Chancellor will use his Budget tomorrow to raise Class 4 NICs for the self-employed—a sensible move that could strengthen self-employment in the long run. But he risks a backlash unless he commits his proposals to meaningful consultation. Tax reform without popular support is always short lived”.
The article advanced arguments both for and against NICs reform. It continued:
“Legitimacy first, reform second … The Treasury, lobby groups and think-tanks can do all the number crunching they like, and make the most compelling technical case for reform. But if they are only talking to themselves … then there is little hope for meaningful change … All of this points to the need for a thorough consultation on NICs reform before any changes are made … And if not? Then the Chancellor may face his very own ‘pasty tax’ moment”.
Curiously, the article made no mention of the manifesto pledge, which in the event proved to be the major obstacle to the Chancellor’s intended change—that and perhaps the “no-go area” referred to by the noble Lord, Lord Macpherson, who probably has more experience of “pasty tax” moments than any man alive. The triple lock pledge made by Cameron was unwise and the circumstances have been transformed by the result of the referendum, but a pledge it was, and the case needed to be made for breaking it. The problem facing the Chancellor was well illustrated by two articles in the Daily Telegraph after the Budget. The first accused him of not doing anything like enough to reduce taxes and the second, two pages later, said that not nearly enough had been done to reduce the nation’s borrowing and debt. The Minister emphasised the need for caution and fiscal responsibility, pointing to the 60% of self-employed people who will pay less tax.
The Chancellor was right to make provision for a period of uncertainty, now made worse by the demand for a Scottish referendum. Those seeking a way out of the NIC mess could do worse than study The Entrepreneurial Audit, a report published in February by the RSA after months of evidence-taking and consultation. The report makes two sensible points at the outset. First, the Government should be guided by evidence, including direct consultation with the self-employed. Secondly, they should aim for policy continuity, as unnecessary change can create confusion and disruption. The report recognises the diversity of 4.8 million individuals; not all of the self-employed share the same expectations and needs, or live up to the stereotype of the heroic entrepreneur. I thought that the noble Lord, Lord Desai, was more accurate on that matter than my noble friend Lord Flight, whose remarks I criticised to his face outside the Chamber.
The report argues that its foremost concern is that people doing the same work but under different guises can face widely different tax treatment, and that creates three core problems. The first is the incentive it creates for false self-employment. Employers who treat individuals as self-employed contractors when they should be engaged as standard employees make considerable savings, while the workers lose valuable rights. The second is that the differential makes it hard to argue that the self-employed should have greater welfare protection. The third problem is the large sums lost to the Exchequer, particularly from the growth of gig work, enabled by platforms such as Uber.
The report makes numerous recommendations. What is important is that, although one might not agree with many of them, they are all set in the context of the need for other changes, notably the modernisation of business rates and changes to policy on welfare and pensions, regulation, late payments and universal credit. The report identifies flaws in universal credit as it applies to the self-employed and recommends that they be ironed out to ensure that it is fair for the self-employed and employees, and does not hinder potential viable businesses.
I finish with pensions and the need for continuity of policy. The reversal of policy on the dividend allowance was violent. The Minister defended it by saying that 80% of those receiving dividends would pay no tax on them, but one in five of the 2.3 million people who will pay are pensioners. I suppose that I should declare another interest because, although I have always invested the maximum in ISAs, I might have to pay a little more myself. Those pensioners have really been sold a false prospectus.
I draw one positive conclusion from reading the report: there are plenty of routes available to the Government for making workable and acceptable changes to the tax arrangements for NICs and remove them from the list of no-go areas, while, in this time of uncertainty, protecting as they must the revenue stream. A mistake has been made, but I hope that the squabbling will now cease and solutions are found in time for the Autumn Budget.
Lord Howarth of Newport (Lab)
My Lords, our economy is in deep trouble. Pace the noble Baroness, Lady Wheatcroft, this is not on account of Brexit, which the Chancellor barely mentioned. Though he touched on some of the problems—lack of technical skills, poor productivity and erosion of the tax base—his chirpy report on the performance of the UK economy in 2016 betrays a failure to recognise the systemic nature and scale of our predicament. Just as the dispensation of Bretton Woods, neo-Keynesianism and the corporate state hit the buffers in the 1970s, so the dispensation that followed, of neoliberalism, free markets and the small state, crashed in 2007-08.
In the 1950s we saw large improvements in living standards across society, the creation of great new public services and, for all the class consciousness of those days, a sense that we were one nation. What has neoliberalism brought us to? As corporate profits have risen, the share of income going to investment and labour has fallen. Higher productivity has not gone through to higher median pay, as the noble Lord, Lord Willetts, noted. Although the OBR reckons that our economy was growing at its maximum capacity in 2016, average earnings are forecast to be no higher in 2022 than they were in 2007, public borrowing is forecast for 2020 to be £30 billion more than was planned a year ago, and we face the prospect of austerity stretching to 2025. Our chronic current account deficit is now 5.2% of GDP. Spending per pupil on education, which is crucial to future productivity, is planned to fall by 7% in this Parliament. We have a growing precariat who know nothing of the Chancellor’s imagined “security and dignity of work”. The poor will get poorer with cuts to employment and support allowance and tax credits next month. We have huge regional disparities in prosperity and a fracturing United Kingdom. We need a new economic model, but not the ultra-neoliberal model envisaged by the Chancellor and the Prime Minister in their threat to turn Britain into an offshore haven of deregulation and low taxes.
The economic model of the last 40 years has been very nice for those with financial and property assets and high levels of skills. It has failed huge numbers of our people. Trickle down has not happened and very many of the “hard-working families” whom Ministers profess to support feel abandoned.
Governments have grovelled to attract footloose international capital. Corporation tax is due to fall again to 17% in 2020, while multinational businesses scandalously avoid paying tax. Policy has especially privileged finance, with tax rates lower on assets than on earnings. Top-rate tax relief on pension contributions, big reductions in inheritance tax and reduced capital gains tax for people selling their businesses have all benefited the wealthy while reducing resources for the public services on which most people depend. We have created a rentier economy and vast inequalities of income and wealth. Incentivising and deregulating finance has channelled savings not to productive investment, as free-market theory promised, but to an unstable, bubble economy.
The global financial crisis, under the shadow of which we continue to live, was caused not by excessive government deficits but by the recklessness of bankers let loose by the state. Bank bailouts in Britain rose to £133 billion in cash and £l trillion in guarantees and indemnities. Extreme fiscal austerity to pay down debt, easing only slightly now, has been accompanied by ultra-loose monetary policy. Low interest rates and quantitative easing have distorted the allocation of capital, apparent in the inflation of asset prices. The effect has been taken to an extreme in the housing market, exacerbated by policies of inflating demand while restricting supply. This has damaged the labour market and created misery.
It has been an illusion that the marketised state works better and costs less. Instead, we have seen administrative costs, professional demoralisation and public dissatisfaction all increase. Public functions have been handed over to commercial entities on long-term contracts, with information concealed from Parliament and the public under the spurious rubric of “commercial in confidence”, and poorly supervised by a stripped-down Civil Service. Government has become haplessly dependent on outsourcing contractors, some of which are a byword for accounting scandals and delivery failures.
Social care, the NHS and prisons alike are in crisis. The social security system is routinely operated by contractors both cruelly and inefficiently. The Chancellor intoned on Budget Day that “choice is the key to excellence in education”, defying the experience of the last 30 years that the values and dynamics of the market are no guarantee of quality in public services. What is certain is that more selective schools will mean more social division and more children left behind.
The failure of neoliberalism to create inclusive prosperity and economic justice, and the fear of parents that their children will be worse off than they are, are now generating a public revolt. Since the 1980s, citizens have abstained from voting in increasing numbers. When the Labour Party and the Liberal Democrats espoused neoliberalism, electors could see no essential difference between them and the Conservatives. Now, not just in the Brexit vote here but in the US presidential election, as in the last elections in Hungary and Poland, they have rejected the political establishment in favour of authoritarian populists. At least the referendum did not put Nigel Farage into Downing Street. Instead, as she entered Downing Street, Theresa May spoke rightly of burning injustice and her mission to make Britain a country that works for everyone. The recognition of that necessity could be the beginning of wisdom. We need radical thinking, however. Without it, both our economy and our democracy are in peril.
Lord Marlesford (Con)
My Lords, I fear that the Chancellor did make a political misjudgment in what he did to the self-employed. I can understand that, as a tidy-minded man, he would fall for the seduction of the symmetry so loved by the Treasury and so elegantly described to us this afternoon by the noble Lord, Lord Macpherson of Earl’s Court. But did the Chancellor really think through the strange fact that unemployment in the UK is so much lower than in, say, France or Spain? In part it is because we have such a large number of self-employed people that unemployment is so low. The asymmetry of the NIC system helps them greatly. In addition, they have the benefit of the high VAT threshold. At £85,000, it is the highest in Europe; in Spain, it is zero and there they have unemployment of around 25% for many of the young. This threshold is a boon to the small entrepreneur when offering services to those for whom VAT is not reclaimable and enables them to undercut the big boys by a straightforward 20%.
But to criticise without offering an alternative is sterile. I have a specific suggestion about how the Chancellor should raise the additional funds that he needs. Every year since David Cameron became Prime Minister, at Budget time the Chancellor has raised Back-Bench applause by saying that he will freeze road fuel duty. That has been very expensive applause. It is also counterintuitive in a whole number of ways. First, there has been a period of seven years of big fluctuations in oil prices and thus also in pump prices. In general, prices have been falling more recently from the highs of more than $100 a barrel, hitting $126 a barrel in July 2012, to below $30 a barrel in February 2016. For the present, it has settled in the region of $55 a barrel.
Secondly, public policy has been to encourage more efficient use of fuels. Thirdly, almost all new vehicles have become much more fuel efficient during this period. I was brought up with the idea that a family car would go between 20 miles and 30 miles per gallon of petrol, but now it is much more like 40 miles to 50 miles per gallon. Fourthly, at the retail level there is a remarkably inelastic response to fuel prices. HMRC estimates the elasticity of demand for road fuel to be 0.07% in the short run and 0.13% in the medium term, which is very low. A more obvious indicator of the inelasticity is to take actual examples. I have taken the example of fuel prices in Suffolk. Fuel prices in America are very low—but then, of course, they are uninsulated from oil prices. When oil prices go up, fuel prices go up enormously. We have a much higher proportion of duty. Currently, fuel duty is 57.9 pence per litre for petrol or diesel, which is more than 45% of the pump price.
My recommendation is that the Chancellor should increase road fuel duty by 10p per litre. With VAT, this would mean a price rise of 12p per litre. Petrol prices have a weighting of about 3% in the CPI and RPI. The Treasury estimates that the inflation effect of a 10p rise in road fuel duty would be only a 0.3 percentage-point increase in the CPI and RPI. Of course, any increase would immediately fall out of the index at the end of 12 months. Yet the fiscal impact—the benefit, the revenue gained from this increase—would be £4.6 billion a year. That is an extra £4.6 billion to spend on the NHS or any number of other good causes. These figures come from HMRC’s ready reckoner.
The impact of such a rise would be very moderate, as I will illustrate with actual figures. I have taken the price of Shell petrol in Woodbridge, Suffolk, where I live. In May 2010, it was £1.29 per litre. Today, it is £1.22 per litre. If you increase the May 2010 pump price by the RPI inflation of 19% up to December 2016, it would be £1.53. My 10p extra plus VAT would make today’s price £1.34. That would be 19p per litre cheaper than when Cameron first moved into Downing Street—and the Chancellor would have an extra £4.6 billion to spend each year.
Would this be unpopular politically? Initially, probably yes. Ernest Marples once said that if you have to have a political row, have a big one with a result worth getting. My proposal would produce £4.6 billion a year and the inflation increase would be negligible. I recommend this to the Chancellor.
Lord McKenzie of Luton (Lab)
My Lords, it is a pleasure to follow the noble Lord, Lord Marlesford, and to hear his imaginative proposal. I wish him luck in his discussions with the Chancellor.
We are entering unchartered waters as we, sadly, start the process of leaving the EU, but it is an opportunity first to take brief stock of the health of the economy and the stewardship of this Government. As others have said, the UK’s position can be characterised by sluggish growth, soaring personal debt and stagnating pay. Some 6 million people earn less than the living wage and 4 million children are in poverty, two-thirds of them in households in which at least one parent works. Zero-hours contracts abound, with all the insecurity they can bring. The OBR reports that business investment remains subdued, inflation is on the rise and our public services teeter on the brink. We have a housing crisis.
The Budget does nothing to change this. Certainly, the funding for skills is to be welcomed, although it will hardly address the FE budget cuts that have been endured since 2010. The additional £2 billion for social care, albeit spread over three years, will help, obviously, but there is nothing of substance which will help the crisis in the NHS. Apart from the modest change to the universal credit taper rate, the Chancellor has done nothing to unpick the brutal regime of social security cuts—to ESA and tax credits, especially—that is the legacy of his predecessor and which continues to drive families into poverty. Someone said earlier—I think it was the noble Lord, Lord Higgins, who is not in his place—that there is no alternative but to live with austerity. I say: who has to live with it? It is never us but always somebody else.
A report produced by the Chartered Institute of Taxation, the IFS and the Institute for Government set out 10 steps to making more effective tax policy. It is to be recommended to the Chancellor. To be fair, he started off rather well by adopting its first recommendation and committing to eschew two fiscal events each year. The report suggests that Budgets themselves have become engines for the proliferation of measures, and instances the past five years, when Finance Acts totalled at least 600 pages every year. Another recommendation was to establish clear guiding principles and priorities for tax policy at the start of a Parliament to deter a Government from falling into ad hoc approaches. Of course, this is to be distinguished from the practice of ruling out any changes to key tax rates for effectively the whole of a five-year Parliament and then finding that circumstances cause the commitment to be broken or some slippery wording to be deployed to justify a departure.
Of course, this brings us to the issue of national insurance contributions for the self-employed, in particular the increase in class 4 contributions from next April. There had been prior consultation—I think the noble Baroness, Lady Altmann, referred to this—around national insurance and the self-employed as a consequence of the decision last year to scrap the regressive flat-rate class 2. That was a recommendation of the Office of Tax Simplification. Because the class 2 rate was the route for the self-employed to gain access to some social security benefits—bereavement benefits, contributory ESA and now the single state pension —replacement arrangements are needed and changes have been proposed to class 4 NICs and class 3 voluntary NICs as the new route to those benefits.
The Government responded to the consultation but, so far as I am aware, at no stage was it suggested that the required changes or the earlier improved access to the new state pension would come with a price tag of increased contributions, nor, as is now suggested, possibly wider access to the social security system. This year’s 2% hike in the Budget seems to have been very much an afterthought—a piecemeal approach running contrary to the principles of sound tax policy-making.
That the growth in self-employment is eating into government tax collections, as the noble Lord, Lord Willetts, said, seems beyond doubt. This is in part fuelled by the growth of the gig economy, which is defined in the Oxford Dictionary as,
“A labour market characterized by the prevalence of short-term contracts or freelance work as opposed to permanent jobs”.
This work is typically available through digital sharing platforms.
Prima facie, this sounds like classic self-employment, but things have not proved to be so clear-cut, as my noble friend Lord Beecham said. The role of the platform as a quasi-agency can have ramifications, as Uber has discovered. Indeed, it is suggested that for employment law there are now three categories of individual—employees, the self-employed and workers—but for tax purposes there are only employees and the self-employed. Of course, there is also the director-controlled company, which has seen the reduction in the dividend allowance.
At present, the self-employed are not entitled to the benefits of auto-enrolment, the national living wage, sick pay, maternity, paternity and adoption pay, holiday pay and redundancy and unfair dismissal protection. The employed do, as, for the most part, do workers. So far as national insurance is concerned, erstwhile employers escape the 13.5% employer contribution if they can persuade people to be self-employed. Where to strike the balance in terms of the respective levels of national insurance contribution requires proper analysis, and I hope that the Matthew Taylor report on employment practices will aid that determination.
As for the current Budget provision, it can be argued that, taken together with the abolition of class 2 contributions, the Budget proposal is progressive up to the level of the upper profits limit. This is the view of the Resolution Foundation, as we have heard. It says that the bottom 54% of self-employed earners will pay less or nothing, while those earning over £16,250 will pay more.
However, this does not justify raising £2 billion of revenue from this source, who by definition are lower or median earners, when the Government are continuing with arrangements which cost taxpayers as a whole but benefit the better-off: a £20,000 limit on ISAs and inheritance tax cuts, to name but two. Spreadsheets notwithstanding, this has been a muddled Budget.
Lord Wrigglesworth (LD)
My Lords, I am very pleased to follow the noble Lord, Lord McKenzie. I do not want to follow him down the road he has just been driving along, although that is the first sensible analysis of what should happen that I have heard in this debate or, indeed, anywhere else. Clearly, something needs to be done about national insurance contributions. There are anomalies all over the place and I hope that with the report that is coming we will get a rather more sensible decision than has been taken on this occasion.
There is certainly a need for reform but the major mistake that has been made by the Government—and on these Benches we should understand it very well—is the absurd manifesto commitment that was made by the Conservative Party at the last election not to increase income tax, VAT or national insurance contributions. I say it is absurd because what serious party of government, coming into office for five years, would suggest that it is not going to change any of those taxes during the next five years, when it does not know what is going to happen and what the circumstances are going to be? The Government deserve every little bit of criticism that they are getting for the change that has been made.
I want to comment on two things: first, on the shape of the Budget and the economic forecasts that have been published; and, secondly, on the impact of Brexit on the Budget, which the Chancellor did not even mention and which, as many noble Lords have pointed out, is going to have an enormous impact on the economy in the year ahead and, indeed, in the five years ahead and beyond. The rather higher than expected growth rate, which has been a theme of a number of speeches today, has been driven by consumer spending. It rose by 3.2% in the fourth quarter—the fastest since 2007. Meanwhile, it was accompanied by a sharp fall in savings. The rate fell into negative territory, as has been pointed out in the debate, for the first time since 2008. It is an extremely worrying position where a large part of the consumer spending has clearly been taken by people out of their savings.
All this has been driven by low inflation and low interest rates but we have higher inflation and lower real wages coming down the track. As Paul Johnson from the IFS has noted, and has been referred to in the debate, in the forecasts, average earnings are no higher in 2022 than in 2007. He could not find an adjective to describe what an appalling situation that is. All this is against a background of low productivity, with business investment down 1% in the fourth quarter and 1.5% in the year as a whole. It is a very dangerous situation when the economy is driven by consumer spending in this way at the same time as investment is falling. We are on an extremely dangerous trajectory and the only way to overcome the debt problem—I am with the noble Lord, Lord Skidelsky, on this—is to increase productivity and growth. Any sensible business with the income to justify the borrowing will borrow and invest to increase its productivity and profitability and get itself out of trouble.
I note that the Government have £26 billion of unexpected undershoot in their borrowings. The Chancellor said that he was putting this into a “Brexit reserve”. The cynic in me says that it is more likely to be a general election reserve. I can see what is going to happen to the extra £26 billion when we get to the year before the next election: there will be a very good reason for using it, if not for Brexit expenditure then for bribes as the general election approaches. It should instead be added to the investment in productivity that has been announced elsewhere in the Budget.
There was no mention at all of Brexit in the Budget, which is a very serious omission. There will be some very high direct costs and dangers to revenue arising from our leaving the EU—for example, new administrative burdens in agriculture, fisheries, immigration, border control and customs.
I want to say something about customs before I finish. Before I came to the House I was chairman of the biggest trust port in this country, the Port of Tyne, so I follow the port industry with some interest. I was interested to hear from the chief executive of Dover—the Port of Tyne is bigger than Dover—that one lorry comes through the Port of Dover every minute. Some 31% of our imports and exports pass through the Strait of Dover—£220 billion of goods. One lorry per minute: that is an enormous amount—160 kilometres of lorries coming over every day. If they were parked they would stretch along the motorways from Dover to Stansted. That is how many lorries come in through that port. It takes one minute to get each lorry through the port. If that increases by two, or three, minutes, there are massive logjams on our roads.
A lot of the goods coming in are food and perishable items. At present the system can just about cope. Consider, however, the warning from Christopher Booker in last Sunday’s Telegraph. I have chosen Christopher Booker because he has been the scourge of the EU for quite a few years—incredibly anti-EU. However, he says in last Sunday’s article,
“our trade with the outside world has been governed by CHIEF (Customs Handling of Import and Export Freight), designed to handle 50 million customs items a year”.
In 2010, HMRC realised that it would need to be revised and it has spent all that time putting a new system in place. Time does not permit me to go through the full details, but the system will have to be revised again. It has taken HMRC all those years to put a new system in place. It does not yet know, and will not know until the negotiations are complete, what the system will comprise and it will be faced with the most horrible crisis at the end of this period if we come out with a hard Brexit or not knowing the details. If ports such as Dover—and many other organisations—cannot prepare for the onslaught that will face them as a result of Brexit it will cost the Government and the taxpayer a lot of money, and I would like the Minister to tell the House what preparations are being made for those eventualities.
Lord Lupton (Con)
My Lords, I address my remarks to the subject of business finance: the right way for the Government and the private sector to support businesses to grow, and ultimately the right way for the Government to tax them when they become profitable.
However, I start with a concern about the wrong way to finance businesses. In my day job as European chairman of an international corporate finance advisory firm, I am seeing the return of a disturbing trend: very high leverage levels—eight or nine times EBITDA—in large, “covenant-lite” leveraged loans that are quite often used to de-equitise businesses. In 2016 in the USA, such loans reached over $700 billion, compared to $670 billion in 2007, the year of the start of the financial crash. In the EU, the 2016 number was €220 billion, very nearly an all-time high. The good news is that banks’ participation in these loans is down to about 12%. The flip side, however— the bad news—is that this means that 88% was provided by non-bank investors, such as sovereign wealth funds, life and pension funds and the more lightly regulated CLO and credit funds, where, notably, there is asymmetrical personal risk and rewards for the individual fund managers, who typically take 20% of profits on the funds and none of the losses. Ringing in my ears is a quote attributed to Warren Buffett's business partner, Charlie Munger:
“Show me the incentive and I will show you the outcome”.
Leverage is not bad in itself: it is a way of increasing the quantum of capital available to finance business. It has, however, to be proportionate. In 2013, the Bank of England Quarterly Bulletin contained a report that highlighted the risks of the excessive use of leverage to financial stability and corporate solvency. Let us hope that the Bank of England is still watching closely.
My second point is that, thankfully, the Government are aware of the need to constrain the most bullish instincts of lenders. They have implemented the OECD recommendations to limit the tax deductibility of debt interest. This will at least remove the tax reasons for piling debt on to UK plc, especially if and when interest rates rise. The Government are also to be commended for developing more diverse channels for business finance, in particular SEIS, EIS—enterprise investment schemes—and VCTs. These continue to provide vital equity capital for start-ups and small businesses. The Business Growth Fund, founded by the major clearing banks as recently as 2011, has invested £l billion in over 160 companies in the UK, and is going from strength to strength. Entrepreneurs’ relief, too, is encouraging founders with great ideas to set up here, knowing that if they succeed they will keep more of the wealth they help create.
My third point is that helping businesses of the future requires long-term strategic support. Take artificial intelligence: how are we to ensure that the UK can capitalise on its leadership position, led by Cambridge University technology? The Government can play a role here, alongside the private sector. I welcome the industrial strategy Green Paper, published in January, and in particular the industrial strategy challenge fund. With an initial commitment of £270 million, this will invest in electric vehicles, artificial intelligence and advanced medtech. This strikes me as a bold and positive approach to business finance in areas where we are strong as a country, albeit an approach not without risk, given government’s mixed record on picking winners.
Finally, one of the challenges is knowing what to do when these technology companies grow and bestride the globe with multiple offices and subsidiaries in many jurisdictions, including the UK. I am referring, of course, to the taxation of multinational companies, on which I spoke in this House in a debate on the economy a few months ago. My thinking on this has developed, and I am clear on one point: directors’ fiduciary duties mean that the idealistic concept of companies voluntarily paying additional tax would almost certainly result in shareholder lawsuits—probably from US shareholders in particular—and is not practicable. We need, therefore, a global tax system that is fit for taxing these multinationals. Based on discussions that I have had at the top level in some of these global companies, including in the new disruptive technologies, I believe that those executives know that they have a growing social problem with low actual tax payments, an issue referred to by the noble Lord, Lord Howarth of Newport, in his apocalyptic description of a country that I do not recognise. These executives need a lead from major economies, and they are likely to respond in a responsible way. Unlike the noble Lord, I believe that lower and simpler is the right place to start. The refreshed corporation tax road map, which confirms that corporation tax will fall to 17% by 2020, is an excellent start. This will encourage technology businesses to be centred here and create jobs here.
It is no use, however, for the UK to try a unilateral approach to taxing multinationals, which sometimes take the dark arts of techniques like international base erosion and profit shifting to extremes. Britain must lead on this on the international stage. We have a low and attractive corporate tax rate and should seek to force the pace for a G20 pact on global corporation tax, whereby profitable multinationals pay a fair rate of tax in the jurisdictions where those profits are made. I have the following suggestion for my noble friend the Minister. Given that this is a worldwide issue, is of economic importance and requires a forum for a meeting of minds, the Government could do worse than to push for it to be the key agenda item on next year’s World Economic Forum, otherwise known as Davos.
Lord Haskel (Lab)
My Lords, it is a pleasure to follow the noble Lord, Lord Lupton. We are alumni of the same school, but we obviously took away different ideas.
To me, this Budget continues with austerity, which tells us that the strains on the National Health Service, education and public services are increasing. With food and fuel inflation expected to reach 2.4%, we must be approaching the limits of austerity and the ability of JAMs to cope. The Minister told us that the Government’s ambition is to relieve these pressures through growth in productivity. The Budget seeks to achieve this largely through skills, training and education as part of the Government’s industrial strategy, which I welcome, but this has not worked in the past.
To illustrate this, I will quote from the Explanatory Memorandum of the Immigration Skills Charge Regulations, which are due to come into force on 6 April. Under section 7, entitled “What is being done and why?”, the memorandum says:
“The Government is seeking to increase investment in skills to increase UK productivity. The data show that, on average, employers in the UK under-invest in training compared to other countries. There are many examples of good practice but at an economy-wide level, employer investment in training has been declining for 20 years; the UK is now 22nd out of 28 in the EU for the proportion of employees taking part in continuing vocational training courses”.
These regulations impose a charge on firms for bringing in skilled workers from outside the EU and are designed to encourage British companies to train UK residents instead. But also on the horizon is the apprenticeship levy, which is designed to do exactly the same. In addition, several industries, such as the construction industry, still maintain their old industry training boards. It is conceivable that there will be firms paying all three of these charges. Is it not time to get all of this together? The Government’s own Explanatory Memorandum tells us that it has not worked in the past. What is it about these new schemes that the Government think will make them work now?
Yes, the Budget provides £500 million to expand spending on technical training, which I welcome. So to be constructive, I appeal to the Government to learn the lessons of the past, make a special effort and use this provision to invest not just in buildings and equipment but in people—mapping their progress, celebrating good initiatives, identifying best practice and providing work experience for the teachers, too. Perhaps they could appoint envoys to spread the word, acknowledge that apprentices can also be adults changing careers and put staff on management apprenticeships, as suggested by the noble Baroness, Lady Wheatcroft. The noble Lord, Lord Gadhia, made other suggestions.
There is another reason why I urge the Government to emphasize and demonstrate their commitment: it will help firms to stay here. Many firms are considering a move because here they will be outside the single market. Demonstrating a commitment to skills training also demonstrates one to the industrial strategy. A strong commitment to the industrial strategy will help them decide to stay here.
The Minister explained the tangle over national insurance payments for the self-employed. To me, this was just another example of the Government’s failure to adjust to the so-called digital economy. They have allowed companies to differentiate between people who work off a digital platform and people who work off a bricks-and-mortar platform. As other noble Lords have said, of course all these people should receive the same health and welfare services and pay the same contributions. This anomaly has been created by digitalisation, so if we are to have an industrial strategy and an economy which thrives, we have to understand what is going on in this digital economy.
We think that our future trading relationship with the EU 27 will be influenced by their having a surplus in manufactured goods traded with us and our having a surplus in trading services with them. But according to Eurostat, it is the EU 27 which have a surplus of €31 billion in trading services with us. Could this be explained by our trade in intangibles and the digital economy? The biggest discrepancy lies in our trade with Ireland and Luxembourg. The Minister and I have debated this before and I know that she is concerned about it. Her Government appointed Sir Charles Bean to look into it and have acted on his advice as far as identifying intangible investment is concerned, but there is a lot more to do as this part of our economy grows. This must have implications in our search for productivity, which concerns so many noble Lords. To raise productivity, together with skills training, I urge the Government to undertake work to understand exactly what is going on in the so-called digital economy.
Lord Bilimoria (CB)
My Lords, this has been described as an unambitious Budget. As the noble Lord, Lord Skidelsky, said, austerity continues to bite. The Financial Times shows clearly that between 2016-17 and 2019-20, departments such as the Foreign and Commonwealth Office will see cuts of well over 30%. Looking ahead, according to the Joseph Rowntree Foundation, ordinary working families will be worse off. Couples who work full-time on the national living wage and have kids are set to be £1,051 worse off, while a lone parent will be £3,363 worse off by 2020. Does the Minister agree?
The big news of this Budget was when self-employed people’s national insurance contributions were increased. There was an absolute outcry because, whatever the Government try to say, it was breaking a manifesto pledge. It was not a question of “Read my lips”—one can read many times that there would be no increases in tax or national insurance contributions. That is bad enough. But, regardless of what the noble Lord, Lord Desai, said, it sends out the wrong perceptions for a Government—particularly a Conservative Government who are known to encourage entrepreneurship and self-employment. For people who work so hard, it sent out a very negative message. Linked to that was the reduction in the dividend allowance as well, when we are meant to be encouraging entrepreneurship, and in particular start-ups.
We have heard that debt has risen for 16 years in a row. It is approaching £2 trillion and is worth 88% of GDP. Debt interest, even at low levels of interest rates, is £50 billion—far more than our defence budget. Our fiscal deficit is still too high and we have a current account deficit, while tax receipts are approaching £38 billion. As the noble Lord, Lord Gadhia, said, that is the highest we have known—but what nobody has said is that almost 50% of our tax take comes from national insurance and PAYE; it is from jobs. So, basically, if you create jobs, that employment generates taxes to fund the public services.
Can the Minister confirm what public spending is as a percentage of GDP? Is it actually 43% or 40%? When he was Chancellor, George Osborne wanted to get it down to 36%, which I always thought was far too unrealistic. The noble Lord, Lord Willetts, spoke about pensions. Has the Chancellor done enough with this Budget to cater for an ageing economy in terms of welfare and health? I do not think we are doing anything near enough. There is also nothing in this Budget on tax simplification. We have probably the most complex tax code in the world. To me, the Office of Tax Simplification is an oxymoron.
The Budget did not mention exports once. We are meant to be encouraging exports. India has a GDP growth rate of 7% and overtook the UK as the sixth-largest economy in the world, thanks to the devaluation of the pound after Brexit. We need to generate growth. We have done relatively well, but to grow as a business you have to invest. You cannot cut your way to growth. The Minister spoke about productivity and how we lag in it. The Budget is right on investment in skills such as T-levels, but what about real investment in R&D and innovation? We invest 1.7% of GDP in R&D and innovation; Germany and the United States of America invest 2.7% and 2.8%. If we were to catch up with them, we would have to spend £20 billion more per year just to start off with, let alone to catch up with the lag.
Universities were not really mentioned in the Budget. The University of Birmingham, where I am proud to be Chancellor, has just had an impact report. We contribute £3.5 billion to the local economy. Just imagine if we supported universities more. What about international students? We had a big vote yesterday. Universities UK reports that international students bring £25 billion into the economy. That is huge, yet we have immigration rules that put off international students and a net migration figure that includes international students. Does the Minister agree that we should take international students out of net migration figures?
The noble Lord, Lord Gadhia, said that lower immigration in future will hamper our ability to grow. We have 5% unemployment. Less than 5% unemployment by any standards anywhere in the world is a very good performance and the highest level of employment—and that is despite having 3 million people from the EU and from outside the EU working here. Our public services would not manage without them. In fact, we would have a labour shortage without them. We as a House did the right thing from the point of view of morals and integrity by voting to give a unilateral commitment to EU nationals that they would have the right to stay. I am very disappointed that it was not agreed to by the other place.
Brexit, the elephant in the room, got one mention by the Chancellor. It got barely a mention. Leaving the single market. Then the Prime Minister talked about “going global”. Liam Fox said “going global”. Which dream world is Liam Fox living in? Free trade agreements are not just about tariffs but about goods and services and people. The Finance Minister of India, Arun Jaitley, was here and made it very clear that a free trade agreement with India would be all very well, but it would be not just about goods but about people. In November, when our Prime Minister went to India, the Indian Prime Minister Narendra Modi said very clearly that it was about Indian students being able to study abroad.
The Prime Minister said that no deal is better than a bad deal. Would 52% of the British public have voted to leave the European Union if they had been told that it meant leaving the single market—the 50% of our trade on our doorstep? By the way, it was a manifesto pledge by the Conservative Party to stay in the single market, so that is another broken pledge. Would those people have voted to leave on the basis of a hard Brexit and no deal? No way. Now we have seen in just nine months that Brexit has overshadowed everything—and this is just the end of the beginning. For the next two years, we are going to see. I do not agree with the Scots asking for another referendum, but it was utter hypocrisy for our Prime Minister to say to Nicola Sturgeon that she is focused on just one thing—leaving the United Kingdom—and is neglecting her economy and her country. What are we doing here? We are focused on one thing—Brexit—and as a result we might be neglecting our country and our economy.
To conclude: this Budget was cautious but it ignored the biggest issue, the elephant in the room. As was said in recent debate, our Article 50 Bill was the shortest suicide note in history.
Lord Northbrook (Con)
My Lords, looking at the UK economy in the light of the Budget Statement, as always I hope to give a balanced view. The good news is that forecasts for UK growth this year have been raised from 1.4% to 2%. Inflation remains low. The budget deficit continues to be forecast to be coming down. Corporation tax is being cut to a very competitive rate. Personal saving is being encouraged by a generous increase in the ISA allowance to £20,000 a year. The Government deserve good credit for all this.
It is also encouraging to see skills sitting at the heart of the Government’s plans to boost productivity and growth. The Chancellor’s plans to fund improving technical education for 16 to 19 year-olds and to introduce the new T-levels are most welcome following the Sainsbury review. This has been welcomed by the manufacturers group the EEF and the Federation of Master Builders.
So why has there been such an unfavourable reaction to parts of the Budget? The only major spring Budget spending policy decisions are £2.4 billion to pay for the cost of extra social care and £1.9 billion to extend the free schools programme and to implement the 16 to 19 technical education Sainsbury reforms. The Chancellor wanted to find ways of paying for this. An obvious route, in my view, would have been to take the money out of the overseas aid budget of £12 billion a year, my argument being that the dire crisis at home should take priority over overseas aid—but that was not to be. It was decided that a national insurance hike had to be made.
I have discovered from a friend who used to work in Downing Street recently that the Treasury has an obsession that the self-employed are paying too little by way of national insurance in particular. Examining the situation more, they do not get free company health insurance, paid holiday and automatic pension enrolment, so their national insurance rate deserves to be lower. Unfortunately the Chancellor pressed the button on this Treasury idea, despite a manifesto pledge that national insurance rates would not rise. The Federation of Small Businesses described it as,
“a £1 billion tax hike on those who set themselves up in business. This undermines the Government’s own mission for the UK to be the best place to start and grow a business, and it drives up the cost of doing business. Future growth of the UK’s 4.8 million-strong self-employed population is now at risk”.
To heap further pressure on the self-employed, the Chancellor cut the amount of tax-free dividends they can take out of their private companies. If we are trying to encourage self-employment, what sort of message do these two measures send? Why not instead go after some overseas companies that pay such a low rate of tax here? I sincerely hope that these measures will be reconsidered. They have already encountered a lot of criticism from MPs in the other place.
While on the subject of small businesses, I shall move on to the subject of making tax digital. I join the Treasury Select Committee and the FSB in welcoming the delay of one year in the implementation of mandatory quarterly tax reporting for smaller businesses with a turnover below the VAT registration threshold. I still question the principle of making tax digital and whether the £10,000 turnover exemption is nearly high enough. It would largely benefit part-time and hobby businesses. Will the Minister address this issue in her winding-up?
For individual taxpayers, while I welcome the increase in the tax-free personal allowance and the higher rate tax threshold, why cannot the top rate of tax come down to 40%, as lower rates, as proved by corporation tax forecasts, can bring higher revenue?
A measure I do not welcome, which was mooted in 2016 and confirmed this year, is the huge increase in probate fees. I accept that the Treasury may be getting unfair criticism for what was originally a MoJ proposal. In 2016, the MoJ Minister in 2016 said this was an,
“enabling investment which will transform the courts and tribunal service”.—[Official Report, Commons, 22/2/16; col. 1WS.]
However, in my view, having to pay £20,000 to get probate for a £2 million estate is really a death tax by another name. Only 2% of respondents in a prior consultation approved of this increase—but it is set to go ahead. There was a general outcry in last weekend’s press on this. The Times reported:
“Experts accused Mr Hammond … of mounting his own ‘classic attack on middle England’”.
George Hodgson, chief executive of the Society of Trust and Estate Practitioners, told the Daily Mail:
“The government calls it a probate fee. But it’s clear from the figures that it is just a backdoor tax on bereaved families”.
Where does this leave the economy after the Budget? Growth is forecast to be slower for the next three years and then to return to 2% after that. As usual, the elimination of the deficit is pushed out further, which does not seem to worry the markets at the moment, as long as international confidence remains during our Brexit negotiations.
In summary, the Government have produced a responsible budget and have sensibly not opened the spending taps too much. But when it comes to tax-raising measures, they must not allow their huge opinion poll lead to let them take the eye off the ball. They must consult more on potentially unhelpful business and personal tax proposals before going ahead with them. Overall, since Brexit, thanks to intelligent monetary and fiscal policy and strong consumer expenditure, the economy has, so far, remained strong. The future is much more uncertain.
Lord Palumbo of Southwark (LD)
My Lords, if my memory serves me correctly, the noble Baroness used the word “cautious” in the very first sentence of her extremely eloquent opening speech and “prudent” in the second. She then went on to talk about the budget deficit being reduced by two-thirds. With respect, I am not entirely sure that it is apposite to juxtapose what has happened with the budget deficit with the words “prudent” and “cautious”.
The noble Baroness then went on to say that we were “within sight” of bringing public spending under control. The numbers have already been very well rehearsed, so I will not go into them again, but will make two points. The noble Baroness will no doubt recall her predecessors saying more or less exactly the same thing on numerous occasions, and of course she will also recall that exactly the opposite has happened. Indeed, with Brexit, Europe and other world problems, I am not sure that one can confidently say anything is within sight. The other point, of course, is the difference between balancing the budget and reducing debt.
The noble Baroness went on to describe the tax hike on the self-employed as “responsible and balanced”. Of course, it can be seen as such; alternatively, one could say that the responsible and balanced thing to do is to encourage our army of entrepreneurs as much as possible as we sail into the choppy waters of Brexit. There was then a very helpful section on the treatment of ISAs, dividends and business rates—all welcome relief. The noble Baroness described this tax treatment as “sustainable and fair”. Of course, again, it can be seen as such, but an alternative approach might be a wholesale look at our tax code, which the noble Lord, Lord Bilimoria, spoke about very eloquently, with a view to simplifying it and making it easier to do business, especially with Brexit on the horizon.
The noble Baroness then talked about the welcome £2 billion for local councils to take the pressure off the NHS. She will perhaps recall similar fractional tinkering at the edges of vast budgets—with very similar amounts, as a matter of fact—but somehow problems with welfare and health seem to persist. An alternative approach would be to recognise the need for a wider, more uncomfortable debate on the future of public spending. The noble Baroness went on to talk about the National Productivity Investment Fund, referencing £130 million for traffic pinch points to drive national productivity. The fund is a welcome development, but how it is used and driven is another thing. In reference to housing, which is of course part of infrastructure, the recent White Paper was excellent in its analysis but silent on radical solutions such as authorities selling land with existing consents. One hopes that the very encouraging investment in vocational education will be driven and effective.
The noble Baroness concluded by saying that the Budget dealt carefully and proportionately with the problems we face. This leads to the point I wish to make. I entirely understand the need for caution and to focus on Brexit. I also acknowledge the Chancellor’s reputation for competence, hard work and decency. But I have also found that sometimes, a slow and steady approach risks creating the every conditions one is seeking to avoid. The Chancellor’s job is not just to manage competently and to let borrowing and other events take their course, but to meet the problems of Brexit, health and welfare funding, and the national debt, with courage and determination, to put forward new ideas which inevitably involve risk while accepting that some will fail, to move the national debate forwards and help change its tone and direction, to show a bold spirit alongside his many other qualities, and to create a culture which allows for fresh thinking and new hope and brave decisions. All of this would be to embrace the challenge of his great office and would allow him to be recognised in years to come as a truly reforming Chancellor. I appeal to the noble Baroness to subtract caution and add a little more boldness to the Chancellor’s thinking.
Lord Porter of Spalding (Con)
My Lords, first, I remind noble Lords of my registered interests. One of them was referred to earlier by the noble Lord, Lord Beecham, who is not in his seat, as I am chairman of the Local Government Association, but I need to remind Members that it is a cross-party group, and the only reason I am the chairman is that we are the largest group in it, and we have more councillors and control more councils than any other political party in this country. I should also apologise before I start, because I have sat through nearly three and a half hours of debate and for the majority of it have been really pleased that Members in this House are not members of the Treasury and not responsible for the Budget. No doubt, by the time I sit down, your Lordships will be equally glad that I am not a member of the Treasury or responsible for the Budget.
I want to be a little critical of the Government for missing out housing, which is the biggest item on the agenda but was not mentioned in the Budget. We should be encouraging councils to build more council homes. If the Government’s intention is to do large-scale system-build, the only way of doing that is through the state getting back into housing, and at some point, somebody in the Treasury will have to realise that. I also regret that the Budget did not take the opportunity to reverse the retrospective changes to the new homes bonus. That was counterproductive.
On the upside, the £2 billion is the biggest single lump of money going into adult social care for years, and we should not downplay that. The Local Government Association asked for £1.3 billion this year, and we got £1 billion. That is not the same as we asked for, but I have a sneaking feeling that we might have been asking for a little more than we actually needed, and that the Government have probably given us a little less than we needed, if I am being truthful about it. The reality with adult social care is that the Treasury could not print enough money for us to do the best job possible. This country’s fiscal system does not allow us to do what we would all in our hearts want to do, which is to make sure that our most vulnerable people do not go into hospital when they do not need to, because that costs us money and gives them a poorer quality of life.
I should also mention business rates. Local government loves the changes to the businesses rates: £300 million of relief to be handed out at a local level and our being able to choose which of the businesses that benefit our community the most are most deserving of the relief. That is another good move. I also like the £1,000 for pubs—I just wish somebody would let me take all the cheques round in South Holland, where I am the council leader, and hand them out personally to the businesses, but perhaps that is not going to be the way the system works.
However, now I start to be critical—of both sides. The noble Lord, Lord Beecham, said we need to do revaluations for council tax. We have just seen what happens when we do them for business rates. Do we want to drive every single citizen in the country through that level of pain again—for no real gain, because it is only redistributive and fiscally neutral? I cannot see the point of doing it. I cannot see why the Government did it with business rates and I certainly would not want us to do it with domestic taxation. A noble friend on this side talked about increasing fuel duty. I look after a very rural community, and if you increase fuel duty around there, you are impacting on people’s ability to have a decent quality of life. Just because people drive a lot, it does not mean they earn a lot. Fuel duty is the wrong way to increase revenue. If we are sure that we need to take more money off the population, it needs to be through proper taxation and not through stealth taxation.
Another downside of that is that we would end up increasing the cost of all the goods we buy and sell, because all of that travels by roads. Councils would have to pay more for their refuse collection and school transport, hospitals would have to pay more for hospital transport, and the police would have to pay more to go and catch criminals. Fuel taxation is not the way to do this, unless—if the Minister could take this back to the Treasury, I would really appreciate it—you let all state vehicles run on red diesel, on which there is no duty. Rural councils would do a much better job if they did not have to pay tax over to the Government on the fuel they use. You can do it if you run a tractor, and I do not understand why you cannot if you run a dustcart.
I want to sit down on a happy note. The noble Baroness, Lady Burt, right at the beginning of the debate, made one of the best suggestions I have heard in here, which is to allow girls on free school meals access to free sanitary products. If there is a way of exploring that, I would welcome it, and I hope my noble friend the Minister can at least ask whether it is feasible.
The Earl of Lytton (CB)
My Lords, I welcome much of what is in the Budget Statement, and I thank the Minister for giving us the opportunity today to discuss it. I want to concentrate on the treatment of businesses, particularly with regard to business rates and allied matters where I have some concerns.
I declare my interests. I am a former employee of the Inland Revenue Valuation Office, now the Valuation Office Agency. I have a professional involvement in aspects of non-domestic rates as well as being a business ratepayer and a vice-president of the Local Government Association. I express my gratitude for the help of the Library staff of your Lordships’ House, who have been splendid, and to the Royal Institution of Chartered Surveyors, the Institute of Revenues Rating and Valuation, the Rating Surveyors Association and the LGA for their advice to me.
The cost of taxation to people in business via rates, or for that matter employee/employer or self-employed NIC, has been a growing issue for some time. Rather than concentrate on just the self-employed NIC, I ask noble Lords to consider the combined employer/employee contribution before jumping to conclusions, because I think that is the driver. It is what has become the disproportionate irritant that sits behind all this.
Business rates are a fixed-charge system in which—however you view it, whether space used, property value or use of services—there is a somewhat unbalanced level of tax, especially compared with its one-time residential bedfellow, now subject to council tax. You cannot disguise this by pointing to other contingent advantages. Migration to cheaper space, whether former industrial space, domestic garages, spare rooms, garden offices or even the virtual world of internet trading, is in part the result. The advent of the new rating lists on 1 April and the sharp, even penal, rises in some assessments was a matter of considerable concern.
It is the delay in the revaluation by two years, which was paraded as giving businesses certainty, that I object to: objectively, it has been the certainty of continued unfair treatment and, perhaps more cynically, the protection of the tax yield. Meanwhile basic issues have not been addressed and anomalies have grown. The failure to deal with the backlog of appeals has meant difficulties for business finance and, I suggest, for billing authority revenues. The LGA tells me that nationally there is a £2.5 billion provision against rateable-value adjustments and that there are about 240,000 outstanding cases as of last autumn, with more appeals being lodged as we get near the end of the current list.
I feel compelled to point to other ongoing efforts by HMRC to, as I see it, impede due process. For instance, it cites the Commissioners for Revenue and Customs Act to block the disclosure of sources of information, thus compromising the fair discharge and transparency of an independent appeals system. That will include the removal of several previously available and important data fields from the entries on the VOA website.
HMRC is devising a system known as “check, challenge, appeal”—CCA, if you like—which requires the most tortuous and demanding ratepayer registration that could possibly have been devised and, separately but in parallel, an equally tedious system for rating agents to register. The “check” aspect is still at the beta testing stage with, I understand, lots of anomalies and glitches to be sorted out, while “challenge” and “appeal” have yet to run at all. In my opinion it is clearly designed to prevent appeals generally by obstructing access to them and it comes very late in the day, with the new rating list coming into force in a couple of weeks’ time.
Then there is the attempt, as I see it, to introduce through statutory instrument a novel formula of words governing valuation accuracy, a wording that is untested and quite unusual in any other tax environment. Of concern to ratepayers with multiple outlets, appeal registrations must each be dealt with individually, property by property; you cannot replicate the registration for multiple property ownership. This is likely to create an automatic inbuilt two-and-a-half-year lead-in period to get any appeal dealt with and the rateable value sorted out. Meanwhile, pursuing cases that overturn long-accepted practice—the latest being the case of Monk v Newbigin, which went against the Valuation Office Agency on a principle for which I and the noble Baroness, Lady Farrington of Ribbleton, who is not here today, set the scene in this House in 1999—creates adjustments that prejudice business certainty and billing authority cash flows alike.
The statutory instrument dealing with the appeals process is not yet laid before Parliament although it was supposed to have been laid earlier this month. As I understand it, industry queries on the valuation terminology, which I have referred to, the implications for business rate refunds where justified and, furthermore, the extent to which the draft statutory instrument appears to exceed its powers claimed under the relevant provisions of the Local Government Finance Act 1988, as amended by the Enterprise Act 2016, have not been answered. Businesses need confidence that they are being treated fairly and consistently, especially as business rates in this country are the highest of any European equivalent.
For billing authorities moving to 100% business-rate retention, uncertainty and the corrosive effects of an appeals system that is not slick, quick or predictable are damaging and pose significant risks. It is not surprising that many observers are saying the business rates system is unfit for purpose. The continued failure by the Treasury and HMRC to tackle these issues in order to create proper accountability, transparency, simplicity and accessibility for every class of business occupier, along with the ongoing tinkering, are simply not acceptable. HMRC is perfectly capable of designing and managing an online system for tax, VAT and PAYE that can be operated by non-specialist individuals. By this standard, the CCA system is an aberration that will simply add to the number of unscrupulous types already milling around and trying to get instructions from business ratepayers. We can and must do better than this.
Lord Carrington of Fulham (Con)
My Lords, I refer noble Lords to my interests in the register. I like boring Budgets—they tend to do less harm to the economy—and this one had all the makings of a very boring Budget. With Brexit, this is not the time to be making big changes; those will undoubtedly have to come when we see the shape of our economic future outside the EU. It was a boring Budget until some minor changes blew up and swamped the good news on the economy overall. Our economy is doing quite nicely so far; we just cannot know whether the economic cycle will get boosted or blown off course by Brexit.
There are a number of warning signs that may or may not prove serious, but one that certainly looks serious and needs addressing is our poor savings ratio. So I am concerned by the reduction, even if for understandable reasons, of the dividend allowance. It is bound to hit the willingness to save. If that tax increase has to come at all, it would perhaps be better at a time of rising interest rates in order to offset the negative impact on investment.
Interest rates need to rise; the depreciation of sterling, particularly against the US dollar, is certain to lead to inflation in the next 12 months. Rising inflation will be tough for everyone but the sooner that interest rates start on an upward path, the better. A very gradual increase would allow homeowners with mortgages to adjust and allow the Treasury itself to cope with higher interest payments to fund our overweening debt burden. On the plus side, a rise in interest rates would encourage more people to save and invest. I realise that the Bank of England and the Treasury have got so badly burnt in the past that they have an almost religious belief in not worrying about the exchange rate, but businesses would greatly value a more stable sterling than our present policy seems to allow. Volatility in the exchange markets is very good for bankers but not for anyone else.
I do not want to get into the sad tale of the NIC increase other than to say that breaking what most people think was a manifesto pledge is storing up credibility problems for the future. The real problem is not the NIC rate change—after all, the financial impact of that will be small—but the NIC system itself. It is a fantasy to suggest that NIC pays directly for state pensions or welfare benefits, let alone the NHS. It does not and has not done so since the 1930s. It is another form of direct taxation, partly on employers and partly on workers, whether employed or self-employed. In other words, NIC is what we all know it is: another form of income tax coupled with an employment tax. We should take the opportunity of this time of change to merge NIC with income tax. Such a change will be full of potential pratfalls but, as this row has shown, not changing the system is now surrounded with heffalump traps.
While the Chancellor is about it, a simplification of our tax legislation is long overdue. Our tax is overcomplex and full of avoidance loopholes created intentionally or unintentionally by Governments of all persuasions.
I do, however, welcome the transitional support for business rates. This may be predominantly a London issue. Business rates in central London are now very high: a small shop in a high street with a good footfall will be paying large amounts in rates relative to its turnover. It can of course be argued that, as business rates are calculated from the rents the shops pay, they would not pay them unless they had the profits to justify it. But that, of course, masks a much bigger problem. What has happened in London is that small independent retailers and artisanal workshops have been and are being forced to close or relocate out of town. I am a Londoner born and bred with no great wish to live anywhere else. I have seen the small specialist shops which used to abound in our high streets close, to be replaced with the chain stores which often remain on the high street for only a short time while they make a quick profit, often to be replaced with charity shops, which do not pay business rates at all. Many of your Lordships will be familiar with cities such as Paris or Rome, where small artisanal shops still survive. Indeed, New York is better off than London for small independent retailers.
This is a complex problem, much broader than business rates. The planning system and zoning for planning are crucial, as are the rents that landlords can reasonably expect in a free market. And I think we have to be very careful before limiting the right of landlords to manage their properties in the way they think is in their best interests. But I do think we need to look at the problem of small retailers and artisans in our inner cities. Since nothing tried in the past has worked, perhaps now is the time to look at all the factors causing this decline and to seek a cross-departmental solution.
Viscount Chandos (Lab)
My Lords, the Government have given your Lordships the opportunity to debate the economy in the light of the Budget, billed by the Minister as the last one in spring—until, of course, a future Chancellor switches it back again. But they then fielded a flyweight contender of a Budget whose likely fiscal impact will be minimal—going out with a whimper, as the director of the IFS has said. It is rather remarkable that the Government have been able to whip up such a political storm out of a mouse of a Budget. But that is perhaps more a reflection of the cynical and irresponsible triple-lock commitment in the Conservative Party’s manifesto—to which the noble Lord, Lord Macpherson, referred in more diplomatic terms—than of any radical streak in last week’s measures.
In the interests of time I shall confine myself largely to one issue—one which was only elliptically included in this year’s Budget. In table 2.2 of the Budget report there is a list of items announced in previous Budgets or Autumn Statements but only now taking effect. In passing, I note that by far the largest numbers are in column BG concerning the cost of the phased reduction in corporation tax to 18%: £17.7 billion in the five years to 2021-22—a figure dwarfed by the £64 billion estimated to have been given up by the Exchequer in the period from this year as a result of all corporation tax cuts enacted since 2010. I had understood the Prime Minister and the Chancellor to have only threatened to turn the UK into a corporate tax haven as part of their sophisticated negotiating tactics with the EU, but now I realise, of course, that the process is already well under way—even before we knew that we were leaving the EU, let alone before the only too possible breakdown of negotiations. As we struggle to pay for the NHS, social care, education and other public services, can we justify the corporation tax cuts already introduced, let alone contemplate any further reduction implied by the, frankly, incredible negotiating position suggested by the Government?
My principal theme, however, relates to one of the other significant line items, in column BE: the cost of the new inheritance tax nil-rate band for main residences —an estimated total of £2.8 billion over five years, which compares with a total IHT take in 2013-14 of only £3.4 billion. Other noble Lords and I highlighted in last week’s debate on housing the folly of introducing new distortions to an already overheated housing market. As the noble Lord, Lord Macpherson, said, a sensible tax system should not favour one group over another. But then this falls under two of the no-go areas he identified: residential property and inheritance. Even before this measure—and indeed the Government’s cack-handed introduction of a stealth tax in the form of hugely increased, albeit graduated, probate fees—the Nobel economics laureate Sir James Mirrlees wrote in his IFS review on taxation in 2011 that,
“the current UK system does not stack up terribly well against any reasonable set of principles for the design of a tax on inherited wealth”.
The “biggest barrier”, Sir James concluded,
“to the effective working of inheritance tax … is that it is levied only at or close to death, allowing the wealthy to avoid it altogether by the simple expedient of passing on wealth well before they die”.
My noble friend Lord Eatwell, five years ago, asked the then Commercial Secretary whether the Government would undertake a comprehensive review of inheritance tax and the case for moving to tax the lifetime receipt of gifts by individuals rather than the estates of those who have died. Since then the system has become only more unfair and more complicated. In addition to the simple expedient of giving assets away long before death, which of course only the very wealthiest can afford, there is also a plethora of reliefs to be exploited, further increasing unfairness and reducing the reasonable tax take for the Exchequer. Agricultural land and business reliefs alone amounted in 2013-14 to more than the total net IHT take.
A moment searching on the internet provides a plethora of fund managers offering AIM portfolios with the specific and principal aim of reducing individuals’ liability for IHT.
“Our Inheritance Tax Portfolio Service is a bespoke, discretionary service designed to reduce … IHT”,
says one firm.
“A plan to reduce your IHT liability”,
reads another.
“We adopt a conservative approach … in order to diversify the risk we seek to hold a minimum of 15 different companies”,
says another. Does the Minister not agree that that sounds very much like aggressive tax avoidance, and what are the Government going to do about it?
The current inheritance tax system is deeply flawed, sacrificing revenue for the public purse, and manifestly unfair, infecting the public trust in the tax system overall. I urge the Minister and her colleagues in the Treasury to overcome the taboos identified by the noble Lord, Lord Macpherson, and institute urgently the comprehensive review advocated by these Benches for so many years.
Lord Horam (Con)
My Lords, having been granted the enormous privilege, at least according to the Whips, of being the last speaker from the Back Benches, having dodged in and out during the course of the day I have enjoyed the debate enormously. It has been distinctly more objective and certainly more knowledgeable than the debates I used to take part in along with other noble Lords further down the corridor. My own personal verdict on the Budget was perhaps best summed up by Martin Wolf, the authoritative economics editor of the Financial Times—I always hide behind someone more distinguished—when he said that it was an,
“act of well-judged caution in risky times”.
I think that that is right.
I fully acknowledge the points made today by our terrible twins of economic debate here, the noble Lords, Lord Desai and Lord Skidelsky, who I think had a point when they said that you can certainly overdo the deficit issue. Absolutely—and all Governments have been guilty of that. Debt is 80% of our total GDP, and it costs no more to finance than when it was 30%, so low are our interest rates. It is a wonderful time to invest. The Government should understand that lesson very clearly.
I also agree with my noble friend Lord Porter, who said that the right thing to do is to invest in housing. Shovel-ready schemes for housing are absolutely the right thing socially and economically. He said that he does not want to be a Treasury Minister, but releasing my noble friend on the Treasury would be a very good thing: it would shake them all up and give a very good counterpoint to the conformist attitudes that I too often detect there. I hope someone takes note of that on the Front Bench—although, of course, I would never want to displace my noble friend Lady Neville-Rolfe.
I agree with my noble friend Lord Carrington of Fulham that the balance is right in the present circumstances, when we are waiting to see what happens about Brexit, although we should bear in mind what our economic friends said. But a theme throughout the debate, particularly mentioned by the noble Lord, Lord Bhattacharyya, whose work in this area I fully applaud, is the need for more technical education. We all know that this country has been very bad on this for decades, under all Governments. As my noble friend Lady Neville-Rolfe said, Germany has been particularly good. I see that Angela Merkel, the Chancellor of Germany, is today in America, talking to President Trump. I hope that she cuts through all this nonsense about protection and so forth and just whispers into his ear, “Vorsprung durch Technik”. It is the secret of German strength in the car industry—to lead through technology—and we should embrace it as much as the Germans do. As the noble Lord, Lord Bhattacharyya, kindly said, we are getting the outline of a new framework. There are criticisms of the details, but the broad picture is clear and young people are getting the message that it is cool to be an apprentice and cool to have a technical education, which is wonderful.
On the wretched subject of class 4 national insurance contributions for the self-employed, which has been much criticised, it is very interesting to me that the criticism has essentially been that it is a departure from the manifesto. I do not quite go along with Benjamin Disraeli’s view of manifestos. Famously, he said when asked what his view of manifestos was in a general election in the 19th century, that he relied on the “instinctive genius” of the “British people”. That is possibly a little too casual, but the last Conservative manifesto contained 31,000 words and 600 commitments. That is going too far the other way. A balance in manifesto writing should be adhered to, and the Government could well understand from its self-inflicted wound that that is necessary.
But on the underlying issue, the truth is that people are switching to self-employment, as my noble friend Lord Willetts rightly pointed out, because they are better off. They save money and they save on taxation, to the tune of hundreds of pounds per person and maybe thousands in some cases, and that is eroding the tax base at a phenomenal rate. The Office for Budget Responsibility reckons that the Government will lose £3.5 billion by the year 2020, which no Government, Labour, coalition or Conservative, could sustain. Furthermore, the Government have tackled it in a perfectly fair way, and I therefore hope that when Matthew Taylor conducts his review we can come to some more rational and well-supported and perhaps better presented conclusions.
My noble friend Lady Neville-Rolfe said in her opening remarks that this Budget is neither large nor flashy. I agree: it is a realistic Budget, and we need a realistic Chancellor in these perilous times.
Baroness Kramer (LD)
My Lords, I have had some moments of sympathy with the Chancellor as he has been variously described as decent and tidy minded—“realistic” was more complimentary. The debate this afternoon has been anything but dull. The House has been absolutely at its best across a wide range of issues on the economy. The terrible twins, as the noble Lords, Lord Skidelsky and Lord Desai, have now been named, have tackled some of the macroeconomic issues and the deficit issues. The noble Lord, Lord Haskel, focused on technical training and productivity. The noble Lord, Lord Palumbo, called for brave decisions, while the noble Lords, Lord Willetts and Lord Monks, talked about inter-generational fairness. I think that all of us on these Benches would like to see the noble Lord, Lord Porter, in the Treasury because he explicitly described our policy on council housing. The noble Lord, Lord Marlesford, called for an increase in road fuel duty, and I assume that by now he is being burned in effigy by the Road Haulage Association, perhaps supported by the noble Lord, Lord Porter. It has been a brave and fascinating gathering, and I am going to spend time reading many of the speeches, because there was so much content in them.
This has been the last spring Budget but in many ways we can look at it as the first Brexit Budget. We have seen a Chancellor with almost no room to manoeuvre, Brexit being added to the situation he faced with borrowing. Also, on the core economy, the Chancellor will be very well aware that in 2016, four-fifths of the growth came from consumer spending, as so many in this House have said, supported by eating into savings or, more significantly, by going into further debt. Consumer borrowing is now at levels we have not seen since 2008. It is entirely unsustainable, especially given the inflation that will surely follow from the 17% devaluation in sterling. The noble Lords, Lord Beecham, Lord Bhattacharyya, and Lord Gadhia, my noble friend Lord Wrigglesworth and many others focused on those issues. Others looked at the business context. Although the Chancellor did not call this the Brexit Budget, in today’s debate almost half the speakers focused on the impact of leaving the single market and the customs union—hard Brexit—and the consequences for our economy, with bad news for jobs, living standards and opportunities. All that is well reflected in the OBR figures.
I think it was the noble Lord, Lord Higgins, who said that the Chancellor did not outline the challenges, which is true. I am sure that the OBR has come up with many more scenarios than the one that ended up in our Printed Paper Office; they would have given us a far better feel for the range of options we face and the things we have to take into consideration as we try to define how to manage the economy over the coming years. I wish we had an opportunity to see those additional scenarios.
Many noble Lords have spoken tonight of the pressure on public services and focused on the NHS and social care, which are in a state of near crisis. The noble Lord, Lord Porter, said that £2 billion to support social care was really welcome. That amount in one year would have been really good, but over three years it does not meet the problem. We are going to have to bite the bullet. I am not going to get into the internal Conservative Party wranglings over the increase in national insurance contributions for the self-employed, except to say that this has not been much of a Budget for business—I will comment on that in a moment. To the noble Lord, Lord Willetts, I say that there might have been a far better reaction had the Government broken their pledge in a way that put additional levies on companies that deliberately push employees out into self-employment as a tax arbitrage, rather than focusing on people who are themselves self-employed and face the risk of unreliable income, among other challenges and burdens.
In the autumn, I called for an emergency £4 billion injection this year—half for social care and half for the NHS—to deal with this crisis. I am beginning to think that the Chancellor might wish he had heeded that call. I agree completely with the right reverend Prelate the Bishop of Chester: we have to look at a completely different way of structuring and funding the NHS and social care. Similar issues were raised by the noble Baroness, Lady Altmann, and the noble Lord, Lord Desai. They will be glad to know that Norman Lamb, my colleague in another place, has constructed an independent commission, which is well ahead in its work. It is made up of leading figures in the relevant fields of expertise and is looking at that exact issue. We will have something very significant to say on how this fundamental issue can be dealt with going forward. Other noble Lords have pointed out that the National Health Service and social care are far from the only public services that are feeling this wide range of pressures. My noble friends Lord Shipley and Lady Burt and the noble Lord, Lord Beecham, discussed many of those issues.
This has not been much of a business Budget. The noble Viscount, Lord Chandos, was the last to speak on this issue and I join with him and other noble Lords who say that the cuts in corporation tax and inheritance tax are completely inappropriate in the circumstances that we face. Cuts in corporation tax below 20%—some would say 22% was a better number—have absolutely no impact on changing the minds of companies on where they invest and what they do. If it does not have that factor, the argument for cutting makes no sense. Large businesses will have seen a benefit from those corporation tax cuts but, as we see in this Budget, it is small businesses that have been getting it in the neck. For the self-employed this is through NICs, or the changes in business rates. The transitional payments are only for one year: a small relief but nothing like sufficient. Danny Alexander, as Economic Secretary to the Treasury, put in place a review of the whole business rates system, addressing the issue of online retailers who use out-of-town premises. It makes me absolutely furious that after the last general election, when the Conservatives came into government alone, the review was gutted. Had it gone ahead, we could now make changes and small businesses would never have faced the problems they face today. I forget which noble Lord raised the issue of quarterly digital returns but I agree completely—they should be entirely voluntary for small businesses.
In conclusion, this has been a limited, low-risk, fairly minimalist Budget because the Chancellor has been painted, and has painted himself, into a corner, and that is not a particularly healthy situation to be in.
Lord Davies of Oldham (Lab)
My Lords, I agree with the noble Baroness that this has been an exceptionally insightful debate. With 39 speakers, it is very difficult to give a comprehensive response to it. I will limit my remarks in one obvious respect: I have no intention of pursuing the issue of the taxation of national insurance contributions at this time. The Government are in enough difficulty over it. If the noble Lord, Lord Higgins, gives a warning on it and decries the fact that the Prime Minister intervened, it is just as well that the Government have got sufficient time before legislation is necessary and will be able to sort the matter out. We all have sympathy for the Chancellor: he was putting forward a pretty limited Budget anyway and it has been utterly and totally swamped by one issue as far as the press are concerned.
I will concentrate on the main features of the economy and particularly the failures of the Government over the last decade. Growth is being downgraded again, with no prospect of the Government hitting the 2.3% normal growth rate which we had before the financial crisis. The OBR forecasts that growth might reach 2% in 2021. The Government are squeezing as much positive publicity as they can from that. However, after all the sacrifices that the British people have made, with the colossal squeeze on incomes and resources of ordinary people, it is worrying that we are going to see another five years of austerity. This is going to be the third consecutive Parliament of austerity activity. Is it surprising, therefore, that we have some difficulty in analysing why people are responding in the way that they are? There have been no pay rises for large numbers of people in the public sector for nearly a decade and they can see no prospect of that situation being remedied in the near future. Look at the onslaught on the least privileged in society by cuts in benefits and support, reducing a greater number of our children to poverty. The cuts have still not presented their full force. The previous Chancellor’s agenda still has to be delivered from April this year. No wonder that large sections of our population feel that the system is against them. Although it was suggested that my noble friend Lord Howarth was being somewhat apocalyptic—there was certainly naught for our comfort in his contribution —he is reflecting the fact that, for an awful lot of people, that bleakness is fully justified by the economic actions of this Government over the last seven years and the prospects for the future.
In 2010, the previous Chancellor promised to remove the deficit and balance the books by 2015. We now find that the present Chancellor is prepared to run a deficit of £21.4 billion five years from now. This massive priority, which alone could save the economy, has cost the British people so much yet it is regarded by a Conservative Chancellor as a lower priority than it has been in the past. This brings us to what the priority should have been. There is no doubt about that in this debate. It has been made clear that the key to growth is productivity. It is that which should have been concentrated upon.
I congratulate the Government on the aspect of the Budget and those proposals that show an interest in improving technical education and providing direct resources to equip our people with skills suitable for a changing environment—the world of work is changing —to enable them to achieve the level of skills required if we are to be a competitive economy. I was very grateful to the noble Baroness, Lady Wheatcroft, for referring to that aspect in her contribution, as did several of my noble friends. The only thing is, this Government have annihilated large numbers of technical colleges and technical teaching under the previous Chancellor. The proposals in this Budget come nowhere near making up for the devastation that the Government have caused in the recent past. Therefore, we welcome their conversion, albeit we think that it is on a very limited level compared with the cuts that have taken place in the recent past. Nevertheless, we welcome it.
My noble friend Lord Bhattacharyya, as ever, made the most thoughtful of contributions on industry’s need for skilled technicians, skilled technologists and people who are able, like the Germans, to make “Vorsprung durch Technik” a reality so that we enhance our capacities too. I have participated in many economics debates where people have lauded the contribution of higher education in this area. That has never been an issue for higher education as it has the necessary resources and has produced high-level, technologically skilled people. The problem in education has always been at the next level down. At last, the Government seem to have realised that fact to a degree. That is certainly an important step forward.
As the right reverend Prelate indicated in his contribution, we are concerned about certain areas of public services which have now reached absolute crisis point. It is clear that the NHS is in dire circumstances. It is even clearer that social care requires immediate additional funding. The suggestion was that the Government should provide £2 billion for this coming year. The Chancellor has adopted the figure of £2 billion but it is to be spread over three years—in other words, the figure for this year is a third of the amount regarded as necessary. Therefore, it is understandable that our society feels greatly ill favoured towards politicians, the body politic and the actions we set out to carry through.
This has been a distinguished debate. We are proud of the fact that the House of Lords is able to bring together a range of contributors who provide real insights into our discontent. However, it is action that the people need. This economy is far from being on the road to recovery. We have five more years of austerity and of continuous burdens on many who can least bear them. It is clear that the Government still have an underpinning ideology of shrinking the state. They want to reduce public expenditure and the price has to be paid by the ordinary people of this country. This Budget merely reinforces that position. Despite the ameliorative factors that I applaud, the underlying position of this Government is to leave the British people profoundly dissatisfied.
Baroness Neville-Rolfe
My Lords, this has been a wide-ranging debate. I do not think that I will mourn the spring Budget; my noble friend Lady Wheatcroft said that she would not do so either. This is the last spring Budget and the last Lenten Budget, as the right reverend Prelate the Bishop of Chester reminded us. That I will not mourn it is perhaps surprising because I endorse what the noble Baroness, Lady Kramer, said—it has been a fascinating debate today. As the new Commercial Secretary to the Treasury, I have certainly learned a great deal.
We had a major debate yesterday, and indeed on previous days, on Brexit. I think that we can feel the influence of that debate here today. As has been said, this Budget must provide a strong and stable platform for the upcoming exit negotiations. As the Chancellor has made clear, we must be prepared for short-term economic shocks, so prudence with the public finances is even more called for than usual.
I can agree that in the negotiations with the EU we should avoid a disruptive cliff edge, which would be to no one’s advantage. We will work hard to get the best deal for the UK. We want the greatest possible access to the single market and the minimum possible disruption for business, so we will provide as much certainty as we can. We want the change from being an EU member to our new partnership to be as smooth and orderly as possible. We believe that a phased process of implementation would be strongly in the interests of both the UK and the EU, and it will allow businesses to plan and prepare.
The vote last June to leave the EU was a vote for change—to make Britain stronger and fairer. Although it was a vote to leave the EU, I emphasise that it was not a vote to leave Europe. We want to continue to be reliable partners, willing allies and close friends with European countries.
In these circumstances, we have adopted a prudent approach and given ourselves significant headroom in the public finances—£26 billion—to provide the flexibility to deal with shocks, given the wider global uncertainties, while supporting a fiscal plan to reduce the structural deficit to below 2% of GDP this Parliament. My noble friend Lord Gadhia rightly supported this contingency.
My noble friend Lord Crickhowell and the noble Lord, Lord Monks, talked about Scottish independence. As I see it, Scotland voted decisively to remain part of our United Kingdom in a referendum which the Scottish Government defined as a once-in-a-generation vote. The evidence clearly shows that a majority of people in Scotland do not want a second independence referendum. The Scottish Government should focus on delivering good government and public services for the people of Scotland.
I should add that within the EU we have always been the strongest advocate for free trade. As the noble Lord, Lord Bilimoria, said, we need to continue to invest in exports. He will be glad to know that I shall be speaking at the UK India Business Council this week. As he knows, we will continue to attract the brightest and the best to work or study in the UK, but there must be control. I can confirm that agreement on the future of EU nationals is an early priority for the Brexit negotiations.
In response to the points on customs and tariffs made by the noble Lords, Lord Razzall and Lord Wrigglesworth, I say that we want Britain to have the most frictionless and seamless trading arrangement possible with our European neighbours. We have no preconceived notions about the way in which we can achieve this but what matters is the end, not the means. This whole area is a key priority for my Treasury colleagues. I reassure noble Lords that we are working very hard on this and indeed with the industries that could be affected.
I respond to the noble Lord, Lord Monks, by saying that being out of the EU but a member of the single market would, to all intents and purposes, mean not leaving the EU. However, as I said, we want the greatest possible access to the single market.
The noble Lords, Lord Livermore, Lord Shipley, Lord Hain and Lord Palumbo, talked about our debt and our deficit, and there has been an interesting exchange on this subject. We have made progress in reducing the deficit from 9.9% of GDP in 2009-10 to 3.8% in 2015-16. Government spending as a share of GDP reduced from 44.9% to 40%. To reply to the noble Lord, Lord Bilimoria, I tell him that total government spending is forecast to fall to 37.9% of GDP in 2021-22. Returning the public finances to balance is the most reliable way of getting debt to fall and reducing our debt interest payments.
We have made real progress on reducing our deficit—it is down by two-thirds. This safeguards our economy for the longer term and keeps mortgage rates low. However, Labour left the UK with the deficit at a post-war high, at 9.9% of GDP in 2010, and—in response to the noble Lord, Lord Davies of Oldham—that is why we had to have austerity. The OBR now forecasts that the Government will reduce the deficit by almost three-quarters by 2016-17 at 2.6% of GDP. Therefore, we are making progress, but of course we need our cautious and prudent Budget.
I turn to the need for a fairer Britain. Whatever your background, you should have the opportunity to learn well, to earn well and to live a good life. Many contributions from noble Lords have implicitly supported that point, whether in discussing the challenges of social mobility, raising living standards or combating inequality. This is very much the Government’s objective, and we have taken a range of actions to support working people in their everyday lives. We have introduced the national living wage and will be raising the personal allowance to £12,500 in this Parliament and reducing the universal credit taper. By the end of this Parliament, we will be spending a record amount on childcare support, rising to over £6 billion a year. The statistics show real disposable household income going up. This rose per person in 2015 at its fastest rate in 14 years, reaching its highest ever level, and it is forecast to rise further over this Parliament.
We must also ensure that the tax system is fair. I take the positive points made by my noble friend Lord Lupton, who talked about global taxation. He knows that this Government have led international efforts to address tax avoidance by multinationals through the OECD, and the efforts on BEPS will continue.
Let me tackle head on the charge that changes that we have made to the tax system benefit the wealthiest at the expense of the poorest. The fact is that, as the IFS has stated recently, the highest earners have seen significant tax increases. In fact, the top 1% of taxpayers are expected to pay more than a quarter of all income tax this year.
On NICs, I agree that self-employment is vital to any dynamic economy, but the self-employed are taxed less than employees and the growth in the numbers of self-employed is eroding our tax base. Our proposals are relatively modest and fully justified in terms of fairness. I do not agree with my noble friend Lady Altmann. She said that business was being hit twice. People cannot be hit by the class 4 NICs increase and the dividend allowance cut in respect of the same business. People are affected by the dividend allowance cut if they are working through their own company because they are not paying class 4 NICs—unless of course they have a substantial investment portfolio. I was therefore very grateful to my noble friends Lord Horam and Lord Willetts and the noble Lord, Lord Macpherson, for their support in this matter of NICs. My noble friend Lord Willetts brought the Resolution Foundation’s research to our proceedings, which was very helpful. I also enjoyed the comments of the noble Lord, Lord Macpherson, on the difficulty of raising tax revenue, which I have already discovered in only two months.
My noble friend Lord Flight also warned of the limited scope for increasing taxes and highlighted the value of the self-employed as being vital to enterprise and growth. He is right. They are certainly not all tax dodgers, as I think the noble Lord, Lord Desai, almost began to suggest. My noble friend Lord Crickhowell called for evidence, consultation and continuity, and the changes will be the subject of a Bill that we have said we will introduce in the autumn when associated work has been progressed. We have also cut corporation tax to support businesses. I say to the noble Viscount, Lord Chandos, that this helps the country to be competitive. It has been cut from 28% seven years ago to just 20% today and it will fall to 17% in 2020.
The noble Lord, Lord Lupton, also talked about the benefits of venture capital and business support, of which the British Business Bank, which was mentioned, is part. My noble friends Lord Northbrook and Lord Flight and the noble Baroness, Lady Kramer, will also be glad to hear that we are giving 3.1 million small businesses and landlords an extra year until April 2019 to prepare for keeping digital tax records.
The long-term problem in social care has been widely acknowledged today. Although the Care Quality Commission currently rates about three-quarters of adult social care services as good or outstanding, the system is clearly under pressure, and this in turn puts pressure on the NHS. We have therefore provided extra funding for social care and for the NHS to deal with pressures on A&E. In a rather negative intervention, the noble Lord, Lord McKenzie, supported the extra funding for social care and for skills, as did my noble friends Lord Porter and Lord Horam.
But beyond managing short-term challenges, we are also looking to the longer term. We will set out our proposals for putting the social care system on a more secure and sustainable long-term footing in a Green Paper later this year.
Indeed, long-term planning has been a broader theme of this Budget. For example, we are looking in the medium term at how to find a better way of taxing the digital part of the economy and at how to make our tax system fairer and more certain with a commitment to set out proposals for smoother, more frequent revaluations for business rates in the autumn. I am sure that the noble Earl, Lord Lytton, will be glad to hear that, given the debates that he and I have had on rates on previous occasions.
One of the most important challenges for our long-term economic advance is improving productivity. It is the tide that lifts all ships and something on which the noble Lord, Lord Davies, and I seem to be in strong agreement. The Autumn Statement focused on investment in infrastructure and innovation and the new national productivity investment fund. This Budget outlined further details. We have, for example, announced funding for 110 more new free schools. Some will be selective, as has been pointed out. I see no reason to apologise for that.
I should also say a word about technical education, which I talked about at length in my opening speech, and about apprenticeships, which were mentioned by the noble Lord, Lord Haskel. I know from my own experience that these are valuable to businesses and we are working with employers to make them even better. As he said, better skills and training, and better people, will make firms stay in the UK. The apprenticeship levy is a necessary part of delivering 3 million apprenticeships. Crucially, our system puts control of funding into the hands of employees.
I was also asked about school inspections. Ofsted considers how well prepared pupils are for the next stage of their education, training and employment when it inspects schools nowadays. I think that was a concern expressed by the noble Lord, Lord Shipley, who rightly emphasised the importance of housing investment to productivity. We issued a White Paper on 7 February, setting out ambitious, lasting reforms to get more houses built faster. He and the Chamber have debated that with my noble friend Lord Young, who is on the Front Bench now and has given me such good support during this debate. My noble friend Lord Porter will be glad to know that more than 300,000 affordable homes have been delivered since 2010 and that more than double the amount of council housing has been built in the seven years since 2010 than in the 30 years before.
My noble friend Lord Willetts and the noble Lord, Lord Bhattacharyya, added useful suggestions on how we tackle the productivity dilemma, rightly referring to the work now being done by BEIS and by Greg Clark. My noble friend Lord Willetts also drew our attention to the intergenerational unfairness of younger workers having to pay to plug pension schemes. I will certainly look at the DWP consultation that my noble friend mentioned.
My noble friend Lady Altmann shared the benefit of her experience in pensions and social care. I took her point about pensions and insurance assets being possible vehicles for infrastructure and housing investment. The Green Paper on social care that I mentioned will give us an opportunity to look at some possibilities. I hope noble Lords will contribute.
My noble friend Lady Wheatcroft emphasised the importance of management to better productivity. That is certainly true in the retail trade. Sir Charlie Mayfield, whom she mentioned, is helping us with the productivity puzzle. Under his inspiration there was £13 million in the Autumn Statement to support firms to improve management skills. That work needs to cut through in the industrial strategy.
I have a little more time. The noble Lord, Lord Monks, whom I worked with for many years, talked about investment in people and in businesses. We have published a Green Paper on governance inviting views on how to have better engagement with workers in companies, as he will know. The noble Lord, Lord Skidelsky, gave his own personal perspective on productivity, but I was glad that he welcomed the investment in infrastructure that we are now beginning to make.
The noble Baroness, Lady Burt of Solihull, talked about equality. The Government are committed to fairness and the promotion of equality. That is why the old and disabled will benefit from the £2 billion to councils in England for social care services that we have discussed, and the young from investment in schools and skills. As she said, we have provided some very welcome seed funding for women returners. This is an area that I am very keen on too. I know that it can make a substantial difference.
My noble friend Lord Marlesford asked why the Chancellor had not taken any action on fuel duty. The Chancellor is mindful that fuel prices are a major cost-of-living issue for a very large number of drivers. It is an important input for business.
Various other suggestions have been made, from red diesel for council lorries to better uses for the tampon tax, to help for small shops from my noble friend Lord Carrington.
This has been a very good debate and I look forward to reading Hansard with great care. I say to the right reverend Prelate the Bishop of Chester on the NHS that the Government are supporting those geographic areas with strong cases for transforming the way that services are delivered to provide better care for patients and to put the NHS on a more sustainable footing, including investing a relatively small sum of £35 million over the next three years to back the first set of sustainability and transformation plans, which are so important.
To conclude, this is a prudent and fair Budget, with investment in skills, infrastructure and social care and with the longer-term perspective we need for sustained success. It paves the way for a truly global Britain and a country that works for everyone.
End of Life Care
(7 years, 9 months ago)
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Baroness Finlay of Llandaff
To ask Her Majesty’s Government how they intend to ensure that Clinical Commissioners respect the undertakings made in Our Commitments to You for End of Life Care: The Government Response to the Review of Choice in End of Life Care.
Baroness Finlay of Llandaff (CB)
My Lords, I thank the Government for having provided time for this important debate and declare my interests in palliative medicine, particularly as national clinical lead for Wales from 2008, chair of the National Council for Palliative Care and a vice-president of Marie Curie.
Cicely Saunders founded the modern hospice movement 50 years ago, with activity underpinned by evidence. It was she who said:
“You matter because you are you, and you matter to the last moment of your life. We will do all we can to help you, not only to die peacefully but to live until you die”.
That scientific evidence has shown that morphine, given regularly at the right dose at the right time, can safely get on top of pain. Sometimes, other effective interventions, ranging from expert use of modern sophisticated analgesics to nerve blocks, are needed. Acute breathlessness and acute anxiety can now be managed. Open, calm and honest conversations with patients about their illness, their needs and what lies ahead can transform their experience as death approaches.
Care of the family, including children deeply affected by a person’s death, is core to good person-centred care. It means thinking ahead, planning for “just in case” rather than simply responding. Those facing the uncertainty of life-threatening illness must not feel abandoned, must know that continuity of care at all times will meet their needs, and that unexpected crises will be responded to urgently. Disease does not respect the clock nor the calendar. Help and support must be available whenever and wherever people need them.
I have had thousands of difficult, honest conversations with patients, listened to the grief and pain of parting, to fears and to deep, unresolved guilt. I have seen how those in despair can live well again with appropriate care, often amazed at finding meaning again in their lives when they had given up all hope.
However, it is not easy. Palliative care is not like taking a course of antibiotics that either works or does not. It requires constant review, carefully helping people as they adapt to their new reality. It means “being there”, and patients knowing that help is there for them at home and not just being rushed to A&E.
Relatives who have experienced gentle dying are not usually moved to tell the world of their reassuring experience, but a small number of bad deaths make headlines. Media coverage dramatises difficult situations as “human interest” stories. They sell papers, but they also paint a misleading picture of death and dying normally. Bad care should never happen. The failures identified in the ombudsman’s 2015 report will be addressed only by adequate service provision, tasked with driving up improvements everywhere.
Palliative care has gradually become mainstreamed. In 2008, the Department of Health’s End of Life Care Strategy set England’s plan to improve end-of-life care. A similar planning group, led by Viv Sugar, set out Welsh goals for palliative care services. This created a natural experiment.
In Wales, an investment of £6 million per annum recurring allowed a funding formula to be developed that targeted services to plug gaps and ensure fair access to specialist palliative care wherever a person lived. It has provided face-to-face specialist palliative care across seven days a week and consultant advice to all health and social care professionals on a 24/7 basis. Services into hospitals are proportionate to the number of beds and, across the community, proportionate to the population size. Recent outcome evaluations in Welsh hospitals suggest that this is bearing fruit and that communication is better managed. Pain is being managed. In the last five years, more than 8,000 patient and family evaluations have shown outstanding ratings of their specialist palliative care experience overall. The average is high.
In any one year, 0.75% of the population overall will have palliative care needs. Death is ubiquitous and inevitable. In 2015, almost half a million people died in England and more than 33,000 in Wales.
Reports since 2008 include the NICE quality standards, an independent funding review and One Chance to Get It Right. Then in 2015 a collaborative of providers published six high-level goals in Ambitions for Palliative and End of Life Care. In 2015 Claire Henry, commissioned by the Government, published What’s Important to Me—A Review of Choice in End of Life Care. People have clearly stated that they want the right care, at the right time, from high-quality, well-trained staff. They want honest conversations, not unrealistic expectations. They know that disease does not respect the clock or the calendar. People want to be involved in discussions about their care; they want to make sure that staff know their wishes and that all needs—physical, emotional, social and spiritual—are addressed. People facing dying want to know that their families are supported and involved.
The Government’s response last year addressed much of the report, showing synergy with the main themes of both the choice review and the ambitions framework. However, the review called for an investment of £130 million. The Government declined, stating instead that end-of-life care was to become a core priority within the NHS transformation programmes:
“Improvements to end of life care should not occur in isolation. They should be threaded through the most effective New Models of Care that will deliver the new, transformed NHS. Sustainability and Transformation Plans (STPs) should fully take into account the contribution that sustainable, efficiently designed end of life care services can make to achieving better outcomes for dying people”.
I was unconvinced that this was happening, so in 2015 my researcher and I analysed responses from all 209 clinical commissioning groups to a freedom of information request about their specialist and other palliative care services. We found wide variations across England in the core data that they collect and a disparity in the responsibility of service provision between clinical commissioning groups, trusts and local voluntary sector hospices. The decision-making devolved down to clinical commissioning groups suggests that palliative care is not being considered as a core service in some parts of England, despite much evidence of its cost-efficacy.
Two important randomised controlled studies of specialist palliative care input have shown that patients have a higher quality of life and better moods. Not only do they live better, but they also, surprisingly, live longer with good palliative care support, at no additional overall cost. Good palliative care saves money.
The Government’s vision in 2009 created Dying Matters to empower people to talk, live and plan. A national conversation started with a focus on wills, how to get help, and how to ensure that someone can speak up for you if you cannot. Compassionate communities are growing, encouraging people to look out for each other, do what they can, and not shy away from those who are ill or bereaved.
But then came the sustainability and transformation plans. Preliminary analysis looks grim: they do not reflect the Government’s stated intention. Almost half make no mention of end-of-life care at all, or only transiently, and only six of the 44 STPs actually embed end-of-life care as a strategic priority.
Public Health England has just published guidance on Cost-effective Commissioning of End of Life Care. It is a worthy review, but it does not provide a clear template to plug gaps. The Government’s commitment of last July was that,
“every person nearing the end of their life should receive attentive, high quality, compassionate care, so that their pain is eased, their spirits lifted and their wishes for their closing weeks, days and hours are respected”.
However, gaps remain. Today’s King’s Fund report shows the impacts of financial constraints on patient care, particularly in the community. So I respectfully ask the Government whether they will now look again at a framework funding formula that works in conjunction with voluntary sector providers—who do so much—to make sure people everywhere can access the care they need rather than depend on the lottery of commissioners’ views.
Lord Judd (Lab)
My Lords, it is always challenging to follow the noble Baroness. Her knowledge and expertise are well heard in this House, and are informed by a direct, personal engagement in the front line that is outstanding. We all pay tribute to her on both scores.
We are dealing with a gigantic cultural and social problem. Modern, high-tech society has many benefits that we spend a lot of time debating but it has many casualties, too. Life goes faster and faster, pressure on families is greater and greater, and it is more and more difficult for them to provide the care which might have been more readily available in a more steady age when life was less frenetic. This is a reality we must face.
However, we must also be very careful about loose press reporting. Sometimes the pressure on staff trying to deal with these issues is immense. Perhaps understandably, sometimes things that go a little bit wrong can be played out of all proportion. Anyone who has been through a situation of this kind within the family knows very well that things are not always perfect. People are human and sometimes cannot live up to their own standards because the pressures are too great. So we need a great deal of understanding about the pressures being borne, carried on behalf of society.
I just want to raise several points. First, I am a vice-president of Hospice at Home West Cumbria and was previously president. I cannot speak highly enough of the quality and commitment of the volunteers and staff alike, and what they do not only in their immediate work but in relating to the wider community in a really remarkable way, drawing it into a sense of responsibility for the hospice at home movement and feeling that it is their movement to sustain.
Are we yet doing enough in our training and preparation of doctors for their profession to ensure that the care of the elderly, vulnerable and dying is central to their concerns? All of them will face this issue, and some will specialise in it. It should be a central part of medical training and preparation to take into account the needs of the dying and the elderly, and how that can be covered. Demography demonstrates the high and growing proportion of our population that this will affect. It is sheer madness not to make this a priority in the profession at all levels.
Still there is too much evidence of postcode lottery in the provision of services but the sort of thing that worries me when talking about the work of Hospice at Home West Cumbria, for example, is that it can have remarkable results when the health service co-operates and they work together.
But does the health service, as a matter of course, take that expertise and insight into consideration in the preparation of its plans, not only nationally but locally, and join all that up as part of the whole process of developing its work?
At the moment it is alarming that one in three health and well-being boards does not consider the needs of dying people when assessing health and care needs in its local population. Almost six in 10 health and well-being boards do not include the needs of dying people in their key strategies. More than one in four—27%—of clinical commissioning groups do not have a strategy for addressing end-of-life care. More than seven in 10 do not have a strategy for children and young people with life-shortening conditions.
These are alarming statistics. A tremendous amount has to be done. The Government have stated their intentions but the road to hell can be paved with good intentions. What matters is what is actually done and what resources are actually arriving to give effect to the intentions that are expressed.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, I congratulate the noble Baroness, Lady Finlay, on securing this very important debate. My contribution is specific and restricted entirely to children who have life-limiting conditions, in particular those under the age of three. Young children with complex medical conditions receive no support from the state. They may require specialist equipment. They may need adapted buggies, beds or cots. There will be considerable strain on the family, especially if there are other siblings. However, there is no support for these hard-pressed families.
In January, the BBC’s “Spotlight South West” featured the case of a two year-old boy from Devon with Tay-Sachs disease. This arose from his family not having the financial means to secure the specialist vehicle they needed to transport him in a wheelchair. Because he is under three, his family are denied access to the disability living allowance mobility component. Had they been able to claim this benefit, it would have enabled them to achieve some simple but important objectives, such as going to the park. Most families take this activity for granted, but this family were not able to enjoy the fresh air, feed the ducks or watch the birds.
In 2016 there was a 61% cut in funding for children’s palliative care charities from upper-tier local authorities, despite these having a statutory duty to provide short breaks. However, their annual statement of provision gives no detail on this particular provision. Short breaks provide important relief for families. The lack of a break could lead to family break-up, and other siblings may suffer.
Adult hospices receive 33% of their funding from clinical commissioning groups but children’s hospices receive only 25% funding. Some CCGs do not fund children’s hospices at all, on the basis that their ethos means they are unlikely to turn children away. It is, as the noble Lord, Lord Judd, said, a postcode lottery. Best practice is to be found in Luton, where the NHS, local authorities and GPs are collaborating. Some areas do nothing, not recognising the problems that these families face. Can the Minister say how the Government will support CCGs to recognise the benefits of funding vital, cost-effective, non-clinical child palliative care services for the whole family to enable them to cope more effectively with their situation, and thus deliver both short-term and long-term savings for CCGs?
The charitable organisation Together for Short Lives has been pressing the DWP to change the DLA rules so that children under three who depend on access to a vehicle for a variety of reasons can access the mobility component. They are already recognised by the DfT as having specific mobility needs through access to the blue badge parking scheme—so why not by the DWP?
The families of children with very complex needs deserve support. They wish to do the very best for their child’s short life—to make the most of their time with their child and have happy memories to comfort them when their child has died. This is not just about the quality of life for such children; it is also about the quality and dignity of their death.
The number of children and young people with life-limiting conditions is increasing. Children’s palliative care charities want to provide vital care for every child who needs it, but state funding is not keeping pace with demand. A 2015 report showed a 50% increase over 10 years in the number of children with life-limiting conditions in Scotland—from over 4,000 in 2004 to over 6,000 in 2014. If this was replicated across the UK, the number of children with life-limiting conditions could be much more than the current estimate of nearly 50,000.
The number of these children has never been monitored. As a result, the Government, the NHS and local councils are failing to plan accurately and budget to meet the needs of children and young people in this category. What action can the Minister commit to in order to better understand the number and needs of children with life-limiting and life-threatening conditions? I look forward to his response.
Baroness Lane-Fox of Soho (CB)
My Lords, I too pay tribute to the noble Baroness, Lady Finlay, and I look forward to some exciting debates about digital and dying matters.
Doteveryone, the charity that I founded to make the internet work for everyone, spent six months last year looking at how technology can help improve the care of people with life-limiting conditions. Even in the complexity that inevitably plagues the end of life, dramatic improvements can be made to people’s lives through relatively simple use of digital, thereby—to answer the challenge from the noble Lord, Lord Judd—allowing for more time to live and more time for human care.
I shall share three of Doteveryone’s recommendations. First, on the problem of NHS legacy technology, as many noble Lords will know, each trust is supported by hundreds of systems. On average, each hospital has over 600 IT systems that may or may not usefully speak to each other. Much communication still relies on fax, and a small number of big suppliers dominate essential services such as booking appointments. So the gap between innovation and legacy continues to grow, leaving patients and professionals to work with technology that is not fit for purpose.
Resourceful people, however, always find ways round these problems. Doctors message each other using WhatsApp, and I have found hundreds of people who have commissioned apps to solve small bits of the clinical problems. Doteveryone’s research has shown that carers and people with multiple long-term conditions therefore become full-time administrators, supporting the NHS with unpaid work to manage these information flows, appointment bookings and all the other things that follow from bad IT. This is entirely to the detriment of healthcare outcomes. The burden falls disproportionately on those who can least afford it.
Doteveryone built a prototype for a collaborative healthcare record that allows people, carers and clinicians to see the same data and information. This was not a tortuous project: it was a quick, responsive and cheap one based on hundreds of research interviews with people at home and in care homes, hospices and hospitals. There are, however, not enough of these ideas and services out there, and not enough that are being allowed to scale through the system.
As one person we met—Joe, who is living with severe heart conditions—told us:
“I panic when I am listening to doctors and I don’t hear it all … I need a better way to record our conversations or make sure I always have someone with me”.
There can always be someone with you: they just do not always have to be a person.
Our second recommendation was around wi-fi. We need beautifully designed wi-fi in care homes. I use that word “beautiful” carefully. Some 70% of care homes have no wi-fi at all; and 80% of people living in care homes say that they are scared to leave their room. How brilliant would it be if by having better wi-fi across the estate, they could chat to someone just down the corridor, or even better perhaps, back home or even in another country? Sometimes, simple tech solutions can provide imaginative leaps for problems that people are not seeing.
The overarching point of all this is that there is so much opportunity to implement technology that enables people facing the most difficult of times with more hope, more joy and, crucially, more time. Infrastructure and services are vital, but so is experience, imagination and skills within the system.
The third recommendation we made is that we must make digital skills a priority or we will have no chance of meeting the mammoth social challenge we face. This is not about learning to code but about a digital understanding that enables you to make better decisions.
I was at my grandmother’s funeral yesterday. She was lucky: she lived until 96 with plenty of family and support around her. But even she faced 12 months of hideous loneliness when my grandfather died. Despite being able to stay in her own home until the last few weeks, she was desperately unhappy in the very well-run local care home she moved into. Along with quantities of cheese, the only thing she took pleasure in was seeing videos of her grandchildren and great-grandchildren on my iPad. We recorded messages from her and to her, and her face would light up. This is not a complex technical solution or a crazy innovation. It is a humane and obvious use of digital.
I urge the Minister to look at older people with multiple conditions as superusers of the NHS. Improving service delivery for them at the end of life will lay the foundations of an improved service for everyone. End-of-life care is not a specialist clinical issue but a building block for a better NHS.
The Lord Bishop of Durham
My Lords:
“The medical side of a patient’s health is not always the key to treating them”.
So said a medical student recently, describing what he had learned from a leading end-of-life care specialist at St Benedict’s Hospice and Centre in Sunderland. Another medical student said:
“Palliative care is not just end-of-life care. It is a very holistic approach which supports the patients’ needs very well”.
End-of-life care must be about the whole person, so the Government’s commitments in this regard are to be welcomed. While The Government Response to the Review of Choice in End of Life Care does not explicitly mention the word chaplain, it is clear that the contribution of chaplains is central to holistic end-of-life care. I am sure that all in this House will join me in paying tribute to chaplains in the NHS and independent hospices for the work they do in walking alongside people at the end of life.
Well-resourced chaplaincy, involving paid professionals and trained volunteers, plays a role in meeting every part of the commitments detailed here. But I want to focus particularly on the commitment that says that people should,
“have honest discussions about your needs and preferences for your physical, mental and spiritual wellbeing, so that you can live well until you die”.
Spiritual well-being is neither an add-on nor the monopoly of these Benches. No matter who you are, end-of-life care would be incomplete without space for reflection on the meaning of death and life. This point was underlined forcefully to me by the staff, medical and administrative, of St Cuthbert’s Hospice in Durham when I recently visited there. They also raised with me the struggle they face in providing care to those of specific faiths. In particular, they wanted to highlight the difficulty of resourcing end-of-life religious care for those from smaller faith communities. Rightful consideration that everyone has a spiritual well-being must not crowd out an attentiveness to the particularity of one’s religious convictions, and the requirement on clinical commissioners to provide religious care to those of all faiths.
A family coming to terms with a diagnosis recently got in touch with an NHS chaplain in my diocese to express how much of a comfort it is to know that she is simply there for them. It struck me how vital it is that the NHS makes sure that in each and every context where end-of-life care takes place, there is someone there for them. Action 5 of the report states:
“We will ensure we have the right people with the right knowledge and skills to deliver high quality personalised care”.
This makes it clear that it is the responsibility of the NHS to provide chaplaincy services. In partnership with faith and belief groups, yes, but the responsibility for adequate religious and spiritual care lies with the NHS. This is a point underlined in quality statement 6 of the 2011 NICE quality standard for end-of-life care for adults, which requires that:
“People approaching the end of life are offered spiritual and religious support appropriate to their needs and preferences”.
The NHS chaplaincy guidelines 2015 also underscore the importance of NHS chaplains in providing pastoral, spiritual and religious care. I therefore look forward to hearing more on how the Government will ensure that clinical commissioners will provide well-supported chaplaincy for those of all faiths and none as part of integrated care for those at the end of life.
In closing, I add my support for the call by the noble Baroness, Lady Finlay of Llandaff, to ensure that palliative care is truly seen as a top priority for all CCGs and that the Government ensure that they are held to this and provide specific funding to enable it.
I leave my final word to a consultant from St Benedict’s Hospice, Sunderland:
“Many palliative care professionals will tell you of a time that the involvement of the chaplain was the key intervention in a person’s care. Not so much the drugs, the nursing care, the therapy support or the hospice bed. Instead it was the confession, the sacrament, or the calm and unhurried listening ear that brought a person peace at the end of their life”.
Lord Suri (Con)
My Lords, in his foreword, the Parliamentary Under-Secretary of State, now the Minister for the Cabinet Office, quoted Dame Cicely Saunders, who said,
“we should see the last stages of life not as a defeat but as life’s fulfilment”.
I wholly subscribe to the spirit in this report of ensuring that everyone who dies in England can have a peaceful and compassionate death. It is one area where the Government can do some good and have a direct impact upon people’s quality of life, or, indeed, death.
In the government response to the report, point 2 lays out a commitment to put in place measures to improve care quality for all across different settings. This is an aim to which I wholly subscribe, and I wish to draw attention to one area in particular. In Wales, managed clinical networks are used to create a strategic and joint approach to children’s palliative care across local areas. This is a recommendation from the National Institute for Health and Care Excellence’s clinical guidelines on end-of-life care. Will the current Parliamentary Under-Secretary of State say whether they plan on implementing this recommendation, and if so, what steps are they taking? If not, why not? A recent Written Answer stated that this is a responsibility of English commissioning groups, which I understand, but I wish to know the plans in place moving forward.
Another important issue also rests on point 2, and on point 7: the commitment to strengthen accountability and transparency. The commissioning map of children’s palliative care produced by Together for Short Lives reveals a worrying lack of consistency across commissioning groups. One in six groups commissions children’s hospice services, and more than one in four groups does not commission out-of-hours community children’s nursing. I understand and support the arguments for devolution and for handing greater budgetary control over to the bodies closest to the patient, but some level of basic consistency must be maintained. Many of the clinical commissioning groups which fail to commission the aforementioned services are across the north of England and the south-west, and some have simply failed to answer freedom of information requests, which I hope the Minister can look into. Given that, my question is quite simple. Will the Government ensure that local commissioning groups are held accountable to NHS England for delivering comprehensive children’s palliative care to end this worrying inconsistency in palliative services?
There is, however, much to applaud in the report. The beefing up of the Ambitions for Palliative and End of Life Care website is to be welcomed, as it will become a more valuable and accessible source for patients, physicians and managers. I would recommend it host more blogs to share the first-hand experiences of physicians more directly. I also hope the new suite of metrics to measure progress in end-of-life care will cover the availability of support for young people, given that the current reporting mechanisms do not appear to provide immediately accessible information.
Baroness Masham of Ilton (CB)
My Lords, I congratulate my noble friend Lady Finlay of Llandaff on all she does for end-of-life and palliative care and thank her for having secured this debate. In a few days’ time this month, it will be the anniversary of when my husband died, on a Sunday. In the few minutes I have, I want to relate to your Lordships the experience I had with my husband’s end of life, so that, I hope, it will improve the lot of others when it happens to their loved ones, and to put some suggestions forward.
I was married for 47 years, and my husband would have preferred to die at home, but this was not to be. One day, while sitting watching cricket on the television, he had a stroke, which triggered diabetes and Parkinson’s disease. For about 10 years, he had many complex problems, such as bleeds and a cancer tumour; the wound did not heal. As time went on, swallowing became a problem, and care had to be taken when eating. One Friday, he had a chest infection, and in the evening, an out-of-hours doctor came out and prescribed an antibiotic which had to be in liquid form. As we lived in rural north Yorkshire, it took time chasing around to find a supermarket which had the antibiotic in liquid form. The next day, his condition had not improved. I telephoned the out-of-hours doctor, but it being a Saturday, a different doctor was on call and refused to come out. Had it been one of my sheep, the out-of-hours vet would have been out within the hour. My husband needed the antibiotic in a drip, but it was impossible, even though I tried, and tried very hard. My husband’s carers could have managed it.
On the Sunday, my husband wanted me to represent him at a lunch he would have attended. On my return, his condition had worsened, and I telephoned again. Another out-of-hours doctor sent an ambulance, and my husband was taken to A&E in the hospital which was receiving patients that weekend. I followed in my car. In A&E, there was a doctor, a charge nurse and me. As this was not the hospital which had looked after my husband before, there was no way in which the doctor could access his medical notes, and the GP’s surgery was shut. The doctor could not get a cannula in a vein, and given my husband’s very complex condition, the situation became untenable.
I feel there should be some system so that vulnerable people who may become very ill are known by the local health bodies. The hospital chaplain of my husband’s faith was late. My husband died with me holding his hand while his life ebbed away, and the doctor and nurse could do no more. Afterwards, as it was classed as a sudden death, two young police officers arrived, but no one seemed to know what was happening. The GP came and saw me on the Monday so he could sign the death certificate.
More help should come into the home, and there should be the ability to have a drip. Records should be with the patient and there should be better planning at weekends, as things can happen so quickly. Out-of-hours doctors should be understanding and compassionate. There should be a system with good communication for end-of-life situations. I hope the Government, CCGs and all concerned can come together and commit to finding a way of providing compassionate end-of-life care.
Lord Carlile of Berriew (Non-Afl)
My Lords, I am sure the whole House will have been moved and instructed by the courageous speech that we have just heard from the noble Baroness. I look forward to the Minister’s response to it.
I pay my tribute to my noble friend—and indeed my very good friend—Lady Finlay for obtaining this debate and opening it with such skill. We in this House all benefit from her knowledge of palliative care, and indeed many of us have deferred on many occasions to that knowledge in quite specific circumstances.
It is a very good thing that we are able to debate the subject in this House and that so many noble Lords wish to take part. Indeed, I pay my tribute to the Government producing a document called Our Commitment to You for End of Life Care: The Government Response to the Review of Choice in End of Life Care. I cannot imagine that such a document would have appeared from a Government 10 or even seven or eight years ago. We are now beginning to talk properly about death and end-of-life care.
There must be many in this House—many of us have lost our parents, for example—who have witnessed the death of someone we love and have long loved. We heard the phrase “the quality of death” earlier in this debate. For me, one of the greatest privileges I have had was to witness a quality death in people whom I loved. Witnessing the death of someone you love and have long loved is a profoundly moving experience if it happens to you. To my mind, it is capable of being as profound an event as witnessing the birth of someone you are about to love as a parent. For death to be an event of that quality, however, good end-of-life care is essential.
I turn to children’s end-of-life care, a subject very eloquently spoken to by the noble Baroness, Lady Bakewell, and the noble Lord, Lord Suri. At the end of the 1990s and the beginning of this century I was a trustee of a children’s hospice, as it then was, on the Wales/Shropshire border. It made an enormous contribution to the lives of sick children and the lives of their families, who sometimes desperately needed respite from the difficulties that their dying children brought to the whole family, including their siblings, who often find that situation very difficult to cope with. It provided a process of death for children that was effective and moving and meant that everyone in the family was able to look back on that death as one of the most significant and historic events in the life of the family.
What worried me then, and worries me still, is that the statutory sector was reluctant, and remains reluctant, to recognise the contribution made by charitable organisations that provide hospice care for children. At the time when I was a trustee, there was barely any funding coming from the statutory sector to charities that were running children’s hospices. The situation is better now. Nevertheless, nearly one in five of commissioning groups do not commission children’s hospices at all, and seven commissioning groups refuse to commission children’s hospices to provide care just because they are charities. That is part of the very useful information that I and other Members of your Lordships’ House have received from Together for Short Lives and the Rainbow Trust, which I applaud for the assistance they have given to us towards this debate.
I shall simply ask the Minister one or two of the many questions posed by those charities. Given that it is the Government’s stated intent to make sure that commissioners prioritise children’s palliative care in their strategic planning, will the Government now take steps to make sure that clinical commissioning groups understand that they are responsible for commissioning for children’s palliative care and that they embrace the work that is done in the third sector? Will the Government also make sure that they are accountable to NHS England for delivering comprehensive children’s palliative care to end the postcode lottery that has been mentioned?
The final point I shall mention, because the hospice that I was a trustee of was in a rural area, is to ask the Government to try to ensure that rurality is not a handicap for families with dying children.
Baroness Massey of Darwen (Lab)
My Lords, I am indeed grateful to the noble Baroness, Lady Finlay of Llandaff, for raising the issue of end-of-life care and for introducing the debate in such a knowledgeable and sympathetic manner. I also thank the House of Lords Library for setting out the issues for debate in such a clear manner, following the report of the programme board’s review and the Government’s response. I come at this debate from personal experience as my brother died in a hospice last October, having been diagnosed with cancer of the tongue, followed by secondary cancers, in January.
There are many positives about end-of-life care in the UK in all settings, and the intentions expressed to improve it are to be admired. I note the recommendations on offering choice of care; on honest conversations with healthcare staff; on recording of a chosen plan of care; and on having a named responsible senior clinician in charge, and a care co-ordinator. I note the recommendation that carers for people at the end of life should have their needs for support met and that family members, carers and those important to the individual should be involved in discussions about care preferences. Joint working between palliative care specialists and other clinical staff, and between secondary and primary care staff to identify need, is highlighted, as is breaking down organisational boundaries to allow staff working in acute settings to play a role in community settings. There is a welcome reference to NHS and social care organisations working together with the voluntary sector to support hospices in response to the concept of a national framework.
Those issues ring very true when I consider my brother’s path through care in east Cheshire. The staff at all levels were superb, from diagnosis through to treatment and finally to death. The GP visited the home and was understanding and caring of the needs of both my brother and my sister-in-law, who was caring for him at home. The district nurses were wonderful, as were ancillary staff. One of them recommended a hospice respite twice as my sister-in-law, a complete star, was doing a difficult job with resilience and strength but under immense pressure. She was becoming exhausted, caring day and night for my brother. A suction pump for mucus in the mouth and throat caused him to have panic attacks. By this time, he could not speak.
I turn now to some more negative issues. One is about communication. Sometimes there was a letter indicating the next hospital appointment, sometimes there was not. There were phone numbers to contact in case of emergency. This mainly worked—but, occasionally, there was a long wait. For example, my brother collapsed twice, and twice a suction tube became blocked—once at night. Some nurses did not appear to know how to use a suction pump.
But to go back to the positive, services such as physiotherapy were automatically brought in for my brother. I was impressed by the directness of the staff whom I met; there was no dissembling about the serious and inevitable nature of the illness, which helped all of us.
I come, finally, to hospices and their funding. The East Cheshire Hospice was superb. My brother received treatment not only for the clinical aspects of his condition—he received massage, art therapy, reiki, acupuncture and other alternative therapies. He also had wi-fi. There is a centre called the Sunflower Centre attached to the hospice, where my sister-in-law could get advice and treatment if she wished. At my brother’s death, the chaplain ushered the family into the garden, brought tea and biscuits and chatted. None of our family is religious; she simply offered quiet reflection and advice on what next. She knew all the religious bodies in the area, and the humanists, and offered to contact whoever we wanted to take charge of the funeral ceremony. A nurse offered counselling sessions to my sister-in-law. All these non-medical interventions were so important and so life-enhancing in the midst of death. Often, it was little gestures that counted.
It seems that NHS funding does not follow a patient into a hospice, although it would into a nursing home. Hospices, seemingly, have to fundraise to provide their services. Could the Minister explain this situation? Just before he died, my brother wrote me a note which said, “You have to do something about hospice funding”. Well, I am doing what I can. Can the Minister help?
Baroness Meacher (CB)
My Lords, I am most grateful to my noble friend Lady Finlay for initiating this debate. I declare my interest as chair of Dignity in Dying, the sister organisation of Compassion in Dying, which is a slightly separate charity. Ensuring that people have genuine, meaningful choice at the end of life is central to improving care. Over the past decades, much of our NHS has shifted significantly from a somewhat paternalistic model of care, where the doctor is assumed to know best, to one where the patient’s wishes are paramount. This trend was strikingly evident in mental health care, where I worked for about 25 years. End-of-life care is lagging behind far too often.
Ben Gummer MP, Parliamentary Under-Secretary of State for Care Quality, in his foreword to the government response to the review of end-of-life care pointed out that,
“our care of dying people is … variable, haphazard and at times shockingly poor”.
The Government’s response also says:
“We know that too many people are not involved enough in decisions about their care … care is not sufficiently focused on the person’s individual needs and preferences”.
That seems profoundly true.
Dying people must be aware of their legal right to plan ahead for their own care and, crucially, their right to exercise their choice step by step along the way. Polling shows the enormous job that lies ahead to achieve those objectives. According to a YouGov poll in 2014, 82% of us have strong views about end-of-life care, yet only 4% of us have made an advance decision or appointed a lasting power of attorney. The Macmillan briefing points out that 73% of people with cancer would prefer to die at home, yet only one-third actually do so. Healthcare professionals and providers still too often impose their own views about what is best for their patients. My principles for end-of-life care come very much from the five years I spent chairing a clinical ethics committee. The principles of compassion and patient choice dominated then and, for me, they dominate today. A very important tool for patients and their end-of-life clinicians is, of course, the advance care planning process. One key message from this debate is surely the importance of commissioners funding the promotion and implementation of that process.
What are the benefits of advance care planning? Why does it really matter? Research shows that, when people are able to make informed decisions about their own treatment and care, those patients are far more satisfied. A 2015 YouGov poll revealed that when a patient’s wishes are not documented, 53% are likely to receive treatment they do not actually want—a complete waste of money. Academic research shows the potential of patient choice to produce significant financial savings to the NHS, a reduction in unplanned hospital admissions and the length of time spent in hospital in the last 12 months of life when, of course, most hospital care takes place. A real culture change towards patient choice, which involves planning ahead, is not only better for individuals but absolutely vital if the NHS is to cope with the financial pressures ahead. It is disappointing that only a minority of sustainability and transformation plans have laid out clear plans for addressing improvements at the end of life. Can the Minister assure the House that NHS England will insist that plans which fail to address end-of-life care—and preparation for advance care planning in particular—will be revised?
It is encouraging that the Government asked for advance decision-making to be central to the remit of the National Mental Capacity Forum. A recent study by the charity Compassion in Dying again emphasised the importance and benefits of making advance decisions. The report received widespread public support. Patients need information if they are to make informed decisions. Compassion in Dying recently commissioned qualitative research interviews with dying people. The results are worrying. One respondent—we will call her Sally—had ovarian cancer. She said:
“There are so many people out there who are certainly not getting the information they need from the professionals they’re dealing with, not about benefits, not about prognosis, not about symptoms, not about support, not about end of life care or the choices. Nothing. Nothing, unless you bring the subject up”.
The Government’s response to the choice review pledged that people would be able to have honest discussions about their needs and preferences. Clearly, this is often not happening. Commissioners need to ensure that doctors are trained to have difficult conversations with patients, and that doctors understand that patient choice is not a luxury add-on to good care but central to it.
Lord Rees of Ludlow (CB)
My Lords, I add my thanks to the noble Baroness, Lady Finlay, for introducing this debate with such authority on an issue of inescapable relevance to us all.
We already have some options. We can ask not to be resuscitated if we have heart failure; we can decline invasive cancer treatment. We can legally formalise such wishes via an advance decision to refuse treatment, or via lasting powers of attorney. It is dismaying that only 4% of people who should take such measures have actually done so, and of course this has to be done before they lose the capacity to make choices for themselves.
A clear signalling of our wishes for end-of-life care will become even more important as medical science advances, creating, in consequence, a widening gulf between what could be achieved by extraordinary measures and the way in which most of us would prefer to end our days. This leads me to a parenthetic comment prompted by the short debate only last week on assisted dying. That debate focused on those who, even with the best palliative care, spend their last days in a predicament where they feel that life is no longer worth living.
I realise that this is viewed as a separate issue and that many people are deeply opposed to legalising assisted dying, but there will be an increasingly fuzzy boundary between assisted dying and the consequences of having signed a directive to refuse treatment. There will be cases when doctors will be prevented from acting even in cases when they feel confident that they could achieve genuine improvements in someone’s quality of life. The blurred distinction between killing and letting die is familiar to anyone who has had courses in philosophy and ethics.
Paragraph 13 of the end-of-life care review urges that,
“by the end of 2019, every local area should establish 24/7 end of life care for people being cared for outside hospital, in line with the NICE quality standard for end of life care, which supports people’s choices and preferences”.
The Government’s response, as far as its sentiments go, ticks all the right boxes. However, what causes anxiety is the gap between the aspirations and what can realistically be provided in a policy regime where austerity and the small state are the mantras, and where the demands are growing because more people are surviving to an advanced age with consequent more complex needs. What is surely uncontroversial is that far more resources should be deployed to care properly for those nearing their end, either in hospices or at home.
If we were in Japan, we would hear futurologists extolling the role that robots will play in caring for the old. Automatons can indeed help with household tasks and with mobility. As the noble Baroness, Lady Lane-Fox, has emphasised, digital technology is of crucial value. However, let us not kid ourselves that they are an acceptable substitute for genuine carers—real human beings, with empathy and time to talk with, and comfort, those who are dying. Robots may surpass humans in precision surgery and medical diagnostics, but they will never replace humans as carers. Even if a vulnerable person—say, with advanced dementia—is comforted by a machine or even a soft toy, their human dignity is being betrayed if that is all they have. We would be short-changing the old if we offered them just a mechanical simulacrum of sympathy.
Not only are there now too few jobs for carers, but these jobs are poorly paid, insecure and carry low status. This is surely a signal that we need a change in public attitudes, in the deployment of funds and in the labour market. We are told that workers in whole segments of the economy will be displaced by automation. Huge numbers of people, mainly themselves in middle age, may become less employable in traditional economic roles. However, many of them will have just the qualities needed to be excellent carers. That is why there needs to be a policy rethink, leading to innovative ways of funding in both the public and charitable sectors an expansion of upgraded, esteemed and secure employment for carers so that we can all feel confident, when our time comes, that we will have access to the support, both physical and spiritual, that is now available only to some.
Baroness Walmsley (LD)
My Lords, as the King’s Fund report Understanding NHS Financial Pressures commented yesterday, terminally ill patients have very little political voice. Therefore, I am delighted that the noble Baroness, Lady Finlay, has spoken up for them this evening. Indeed, I am very grateful that I live in Wales and will probably die there.
Over the last five years, we have seen several reviews of palliative and end-of-life care with multiple recommendations. Therefore, I hope that, at the end of this debate, the Minister will be able to provide us with an update on progress towards meeting those recommendations. For example, the Government’s response to the review of choice made two commitments that are particularly relevant to the topic we are debating today—namely, to,
“engage with clinical commissioning groups and Health and Wellbeing boards on improving end of life care provision through local strategic planning and commissioning”;
and,
“to provide commissioners with data, tools and palliative care currencies to help identify palliative care needs in local areas and the best ways to commission services to meet those needs”.
I hate jargon, so I looked up what “palliative care currencies” means. I found that it refers to payment models for palliative care. As the Minister will know, the majority of community palliative care providers in England, which are largely in the voluntary sector, are currently commissioned by block contract, and a lot of hospices in particular have been working within the same cash envelope for many years. Indeed, yesterday’s report from the King’s Fund commented that one of the factors that make some services particularly vulnerable is that block contracts have not been adjusted to match rising demand, and that demand is continuing to rise.
In 2010, Marie Curie’s review of funding recommended that the NHS move to a per-patient funding model, defined by phase of illness, so that providers would be paid more for patients with more complex care needs. One of the major difficulties encountered was the fact that most voluntary sector providers have a mixture of NHS and charitable funding, so it was difficult to identify which aspects of care were NHS-funded and which were charitably funded. Therefore, moving every provider to per-patient funding has its problems. Can the Minister now confirm that NHS England will provide a number of different palliative care currencies so that commissioners can choose which method is right for their locality? If that is the case, how will value for money be audited and by whom?
We have heard that palliative care in this country can be the best in the world. However, successive national care for the dying audits have found wide variations in the quality of care in different hospitals. I welcome the fact that end-of-life care is now a key area for assessment in the Care Quality Commission’s inspections of hospitals, but can the Minister update us on the plans in place for those that perform badly to learn from the best?
However, poor patient and family experiences are often due to poor commissioning, planning and co-ordination, as well as insufficient provision for family support, rather than poor delivery. Clinical commissioners have a vital role in co-ordination because it is increasingly rare that individuals’ needs will be met by one service alone and they often need to be moved from one location to another as their needs change. Co-ordination is particularly crucial when terminally ill patients wish to die at home. Last year I spoke in your Lordships’ House about a particularly distressing case that I know of where that all went wrong. Obviously it makes sense to get services right in the community rather than have the patient admitted to hospital when the family can no longer cope.
Despite the numbers needing these services, according to Marie Curie, just over half of health and well-being boards in England made no mention of palliative care in their strategies, only a third had comprehensive plans, and 30% of STPs made no mention of end-of-life care at all. Given that NHS England says that it requires local leaders and professionals to ensure that a strategy for end-of-life care is in place, this is pretty disgraceful, and, having made that statement, it does not audit what is in place, so there is no accountability. Therefore, I ask the Minister how CCGs and health and well-being boards are being held to account for this state of affairs.
Finally, I want to raise clinical training. A professor of palliative care who is a friend of mine told me recently that some medical graduates have no more than one day of training in end-of-life care. In other places, such as Royal Liverpool University Hospital, students spend three weeks in local hospices, which equips them much better. Although we need palliative care specialists, we also need generalists with enough knowledge of pain management and other issues linked to end-of-life care, including how to help the bereaved. I understand that Health Education England’s end-of-life care core skills education and training framework—what a mouthful—is soon to be published. Can the Minister say how soon it will be implemented?
Baroness Wheeler (Lab)
My Lords, I too congratulate the noble Baroness, Lady Finlay, for her usual forthright and expert introduction to what has been an excellent debate, coming at a crucial time as STPs are taking shape and underlining the need for strong national and local leadership to achieve the improved care that we all wish to see. The publication of the BMJ’s CCG research, which she was involved in, could not have been better timed for our debate, and I thank her for that too.
I also commend the excellent work of the End of Life Care Coalition on the independent choice review and the ambitions framework. The national choice offer of what should be offered to everyone who needs end-of-life care, backed by dedicated funding, better training for healthcare professionals and better research and data collection around the care given, provides a clear way forward and is fully supported by these Benches.
Today’s debate makes it clear that if STPs are to be the route for implementing the Government’s national commitment, local plans have to be backed with the money to implement them. CCGs that are failing to prioritise and appropriately commission end-of-life care that meets people’s needs must be called to account both locally and nationally and supported to do better.
The context for the debate has been clear—a familiar story of many examples of excellent quality and compassionate care in community, voluntary sector and hospital settings, but examples of considerable variation in the nature and quality of services provided both between and within geographical areas and between different medical conditions. Instead of national leadership from NHS England and the Government, however, we have the deafening silence in the Government’s response to the choice review’s call for an extra £130 million to deliver choice by the end of this decade. Like other noble Lords, I look forward to hearing from the Minister how he expects to seek improvements in end-of-life care without committing to the additional funding called for in the review. What action will be taken to address the failure in so many STPs to see end-of-life care as a core service and to prioritise funding and planning? As the Marie Curie charity puts it:
“It is unclear to us how the Government intends to support more people to get out of hospital at the end of life without additional money to boost capacity”.
Delayed transfers of care jumped by 29% between September 2015 and September 2016, and about 30% of those people are in the last year of life.
Providing national choice in end-of-life care means increasing out-of-hours hospital care and co-ordinated, integrated services and close partnership working between the NHS, voluntary sector and community services and social care. Excellent care at home programmes such as Macmillan specialist care deliver a proactive model that we all support of early patient referral to a multidisciplinary team, clinical interventions at home where possible, close and proactive working between primary and other service providers, flexible teamwork between specialists, generalists and trained volunteers and the close involvement of family and carers.
End-of-life care has well-established systems for working together, particularly in hospital, hospice and home care, but some STPs do not fully recognise the importance of third sector involvement in the delivery of end-of-life care plans and there is particular concern that hospice services, which rely heavily on charitable donations to cover full running costs, are especially vulnerable, as my noble friend Lady Massey stressed. Will the Minister give us reassurances on this?
On STPs, the King’s Fund’s recent progress assessment, while not specifying end-of-life care, asked highly relevant key questions about how it can be improved in the current NHS and social care climate. How are plans to be funded? How will integrated care be delivered in the concept of having to “work around” the,
“fragmented and complex organisational arrangements in the NHS created by the 2012 Act”—
its words not mine—and when the NHS is under huge pressure to make efficiency savings and improve performance? These questions all need to be answered if the vision set out in the national commitment is to be delivered. What is the Minister’s response to that?
We have heard particular concern about CCGs’ poor commissioning of children’s and young people’s palliative and end-of-life care in England. The noble Baroness, Lady Bakewell, raised the issue of the care of under-three year-olds and the noble Lord, Lord Carlile, spoke about hospices in that context. Together for Short Lives has found that 7% of CCGs do not commission palliative care for out-of-hours children’s nurses to support families and carers and avoid unnecessary, often traumatic, hospital admissions. The Rainbow Trust, which provides emotional and practical support to parent carers and families whose children have a terminal or life-threatening illness, received no funding from CCGs in 2015-16 and just 3% from local authorities. Hospice UK’s survey found that seven in 10 CCGs do not have a strategy for children and young people living with life-shortening conditions. I hope that the Government will undertake to work with charities such as Together for Short Lives to produce guidance for CCGs that outlines best practice and makes their responsibilities clear.
The ambitions framework stresses that every CCG board should have a clear vision of what package of services locally will deliver the goals of high-quality, professionalised end-of-life care and should actively seek out commissioning resources to achieve this. I look forward to hearing from the Minister how the Government intend to make sure that that happens.
The Parliamentary Under-Secretary of State, Department of Health (Lord O'Shaughnessy) (Con)
My Lords, I thank the noble Baroness, Lady Finlay, for precipitating the debate. In many ways this is the most difficult of all subjects to discuss. I pay tribute to her courage and leadership in the work she has done to bring it to the fore and to make it an issue of such public policy importance.
As the noble Lord, Lord Carlile, said in his speech, in recent years there has been a much greater focus on improving the quality of people’s experiences of end-of-life care—to help them, as my right honourable friend the former Health Minister, Ben Gummer, put it in his foreword to the Government’s response, to experience a “good death”, or as the noble Baroness, Lady Finlay, put it, gentle dying. As the noble Baroness said, bad care should never happen. We know that many people in England already receive good end-of-life care and internationally we continue to lead in the overall quality of end-of-life care provided. That is the result of sustained effort over recent years to improve people’s experiences of end-of-life care. I join all noble Lords in thanking the staff who work in our health and care system, and the many charities that have been mentioned tonight and others besides that support people at the end of their lives.
However, as we recognised in our response to the independent review of choice in end-of-life care, and as all noble Lords have rightly argued, there is too much unacceptable variation in quality and provision. This can have real consequences for the care that some people receive at this all-important time in their lives. I thank deeply the noble Baroness, Lady Masham, for sharing the moving story of her husband’s death and the noble Baroness, Lady Massey, for sharing the story of her brother’s death. I and, I know, the whole House will agree wholeheartedly with them that the description of what end-of-life care should be like, with compassion at its heart, is what motivates us. That is what sits behind everything the Government are trying to do and is what motivates people who work in this important sector.
To address the issue of variation and to provide the kind of patient choice that the noble Baroness, Lady Meacher, called for, last year we set out our ambition for everybody approaching the end of life to receive high-quality care that reflects their individual needs, choices and preferences. I thank my noble friend Lord Suri and other noble Lords for welcoming these plans. The plan is based on six commitments, setting out what all people at the end of their life should be able to expect from care. They include honest discussions between care professionals and dying people, and dying people making informed choices about their care. The noble Baroness, Lady Meacher, brought out a helpful statistic that while 82% of people have strong views, they may not be informed of the choices available to them. The third commitment is personalised care plans for all; then there is discussion of personalised care plans with care professionals, the involvement of family and carers in dying people’s care, and a key contact so dying people know who to contact at any time of day.
These commitments apply to all end-of-life care, whether delivered in a hospital, a hospice, or as part of a community service in a care home or a person’s own home. They apply to all parts of the country and underpin local plans to deliver end-of-life care in every clinical commissioning group.
The national end-of-life care programme board has been set up to oversee the implementation of this plan. It is chaired by Sir Bruce Keogh, NHS England’s medical director. We have also called on local health and care leaders, including commissioners and all health and well-being board chairs, to prioritise improvements to end-of-life care in their plans to improve local services. We are taking a number of specific actions to support these commitments. I will give a few examples.
To improve the quality of care in hospitals, all NHS trusts that have a poor CQC end-of-life care rating been visited by NHS Improvement to support them to improve their offer.
Several noble Lords have highlighted the importance of training. Health Education England is changing its training standards so that care workers have the right skills mix, including, I hope, digital skills, as the noble Baroness, Lady Lane-Fox, pointed out. I will check that that is the case. They should have the right training to support honest conversations and personalised care. NHS England is currently working with two new care model sites in Airedale and Southend to test an innovative approach to serious illness conversations, in which clinicians are trained to support people with serious illnesses to discuss what is important to them.
I thank the right reverend Prelate the Bishop of Durham for highlighting the important and very powerful impact that chaplains have on people at the end of their lives. They provide an invaluable service. I will write to Sir Bruce Keogh, who, as I mentioned, is chairing the national board, to emphasise the important role that chaplaincy can and must play in provision of end-of-life care for people with or without a religious belief.
On greater personalisation of care and care planning, NHS England is working to ensure that shared digital palliative and end-of-life care records will have been rolled out to the majority of local areas by 2018 and all areas by 2020 to enable preferences to be recorded, shared and achieved more easily. As the noble Baroness, Lady Lane-Fox, highlighted, good data and digital provision can help enormously to improve end-of-life care. I am encouraged by the work that she is doing, although alarmed by the statistics that she mentioned about care homes not having wi-fi—that has been addressed in hospitals but not in that setting, and is something that I will investigate.
To improve access to urgent clinical advice and support for end-of-life care, including expert advice on specialist palliative care, NHS England is ensuring that each clinical advisory hub across the country will include clear and explicit processes for access to palliative care and will be accessible to individuals who need the service, their families and professionals involved in their care.
Several noble Lords mentioned the importance of good commissioning, including the noble Baroness, Lady Meacher, who demonstrated the impact that good commissioning can have on improving outcomes and quality of life. In line with the plans we are setting out in the government response, we are also taking a number of actions to improve the way in which care is planned and commissioned. This includes work between NHS England’s regional offices and local commissioners to put end-of-life care at the centre of activity as part of local sustainability and transformation plans.
The noble Baronesses, Lady Wheeler, Lady Meacher and Lady Walmsley, all mentioned sustainability and transformation plans—indeed, the noble Baroness, Lady Finlay, mentioned them both today and in an earlier debate on this issue. The plans are now being consulted on, so this is now an opportunity to make sure that they properly represent all the imperatives that they should. The national programme board, chaired by Sir Bruce Keogh, is preparing a support offer to those STPs that have not yet planned for it well to make sure that it is done properly.
The noble Baroness, Lady Walmsley, asked about care currencies. She was quite right about the tendency to jargon in this area; it is described as a specialist palliative care currency model, I am afraid, so it is worse than she feared. But the idea is a good one—she highlighted the importance of it—which is to provide a level of transparency and certainty on the kind of funding that will follow. It will not be precisely payment by results or payment by outcome, because of the importance of the charitable sector, but it will provide greater transparency and certainty on the funding of hospices. We aim to publish that shortly.
The government response has made key commitments on holding the system to account for the improvements that we want to see, including addressing unacceptable variation. It includes introducing a separate priority area within the CCG improvement and assessment framework for end-of-life care, as the noble Baroness, Lady Walmsley, pointed out. We are also developing new metrics for end-of-life care that have been put forward for potential inclusion, which will allow us to hold CCGs to account for their performance in this area.
Several noble Lords referred to children’s hospices. In a difficult subject, the heart-breaking idea of tiny children with short lives and life-limiting conditions makes it even harder. I agree with all noble Lords about the importance of palliative care for children. Some £11 million is available through the children’s hospice and hospice-at-home grant which goes to support children’s hospices on top of what clinical commissioning groups do. NHS England is engaging in consultation with Together for Short Lives on its 2017-18 grant allocation. It is intended that this new palliative care currency will also help to provide greater transparency, clarity and consistency for the funding of all hospices, both for adults and for children.
The noble Baroness, Lady Finlay, asked about better outcomes for dying people. There are now new NHS clinical guidelines that those working in the sector must follow, as I am sure she will know. We have also commissioned the charity Sands to develop a standard bereavement pathway so that there is greater consistency across the country. The noble Baroness asked about a framework funding model. I hope that I have addressed her questions on that in describing the palliative care currencies, which will be published shortly.
The noble Lord, Lord Rees, asked about more resources. There was of course an announcement in the Budget of additional support for social care, which I realise is not the same as end-of-life care, but does incorporate people who are at the end of their lives if they are in a care setting. I hope this was welcome. We also have an important commitment to a long-term solution for care, and a further Green Paper to follow on that issue. For that to be truly comprehensive and sustainable, it must also incorporate a sustainable regime for end-of-life care within those kinds of settings, so I hope noble Lords will welcome the announcement that that will be coming later this year.
To conclude, I thank the noble Baroness, Lady Finlay, for highlighting this incredibly important issue. I remember as a teenager reading A Happy Death by Albert Camus. As a teenager, I think you veer between being horrified by the idea of death and thinking that it will never happen to you; and then you grow up. While I may no longer be an existentialist, I still agree that a happy death—gentle dying—is the right outcome that we want to achieve universally in this country. We are starting from a point of variation and, as the noble Baroness said, there is bad care and there should not be bad care. We are fully committed to working with all people in the care sector, with carers, to ensure that anyone with a terminal illness has access to the high-quality, personalised care that they deserve.