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Oral Answers to Questions
(7 years ago)
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James Morris (Halesowen and Rowley Regis) (Con)
The Secretary of State for Work and Pensions (Mr David Gauke)
Over 5,000 employers have signed up to Disability Confident since its launch in November 2016. The Disability Confident business leaders group, made up of prominent national businesses, is promoting the scheme to other employers. I am pleased to report that all the main ministerial Government Departments have now achieved Disability Confident leader status.
James Morris
Does the Secretary of State agree that Disability Confident will prove to be an effective way of breaking down barriers for disabled people to get into work, particularly by addressing the issues of stigma that a lot of disabled people still feel? In that regard, would he consider attending my Disability Confident event in Halesowen on 26 January?
Mr Gauke
I will certainly consider my hon. Friend’s kind invitation. I agree that a lot of Disability Confident events have been very productive in engaging employers at local level and encouraging them to see the benefits of employing disabled people. The Department for Work and Pensions continues to support local authorities and MPs in holding such events, so maybe I will have the opportunity to attend one in his constituency.
Melanie Onn (Great Grimsby) (Lab)
The truth is that this simply is not working. My constituent, Alan, has just graduated with a BSc honours degree in computing technology. He is blind and has a guide dog to assist him, but when he tells prospective employers about this in advance, they just do not take his applications. He has applied for 857 jobs but he has got absolutely nowhere. What is he going to do?
Mr Gauke
I am grateful to the hon. Lady for her question. We have undoubtedly made progress in the last few years. We have 600,000 more disabled people in work than was the case in 2010, but there is more to do, which is why the Government have an ambition to increase the number from 3.5 million to 4.5 million over the course of 10 years. It is also why we published our recent Command Paper on the subject. It is really important to bring about a culture change among employers so that people like Alan can have those opportunities.
Mr Philip Hollobone (Kettering) (Con)
How many of the FTSE 250 companies have signed up to this excellent campaign?
Mr Gauke
That is a very good question, and I will have to write to my hon. Friend with the answer. I can tell him that businesses small and large have participated in the scheme, including large organisations such as Microsoft, GlaxoSmithKline, Sainsbury’s and Channel 4, as well as many small businesses up and down the country.
Neil Gray (Airdrie and Shotts) (SNP)
May I take this opportunity on behalf of my colleagues on the Scottish National party Benches to offer our sincere condolences to Mr Deputy Speaker after the weekend’s tragic incident? Our hearts, thoughts and prayers go out to Lindsay and his family.
The Chancellor told the Treasury Select Committee earlier this month that
“far higher levels of participation by marginal groups and very high levels of engagement in the workforce, for example, by disabled people, may have had an impact on the overall productivity measurement”.
The Chancellor belittled the efforts and contribution of disabled people in the workforce. How disappointed was the Secretary of State by that unhelpful statement?
Mr Gauke
First, I should like to associate myself with the hon. Gentleman’s remarks about the Deputy Speaker, who has the thoughts of the whole House with him at this time.
In respect of the hon. Gentleman’s question, however, I disagree with him. The point that the Chancellor of the Exchequer was seeking to make is that we have made great progress in recent years on increasing the level of disabled people in work. That is a good thing to do, and he made it clear that he considered it to be a good thing. That is what the whole Government want to achieve.
Mark Pawsey (Rugby) (Con)
The small employment adviser at Rugby jobcentre has just signed up 15 new employers to become Disability Confident. Does the Secretary of State agree that the role of those officers in building links with small employers in local areas is crucial to ensuring that more disabled people get access to the workplace?
Mr Gauke
Yes, I do. My hon. Friend makes an excellent point. It is really important that that engagement happens up and down the country, and I am pleased that we are making progress. As I have said, we have over 5,000 Disability Confident employers, and I hope that we will continue to increase that number. My Department will certainly be doing everything it can to achieve that.
Marsha De Cordova (Battersea) (Lab)
In the recently published “Improving Lives: Helping Workless Families” paper, the Government said that they wanted to work in partnership with employers to help them to draw fully on the talents of disabled people. However, following the Chancellor’s recent comments scapegoating disabled people as being the reason for low productivity, does the Secretary of State agree that there is a need for a clear and coherent message from the Government that employing disabled people can enhance productivity and make a real contribution to organisations and businesses across the UK?
Mr Gauke
There is a clear and coherent message from this Government. We have seen significant increases in the number of disabled people in work, which is good for disabled people, but it is also good for the economy as a whole. That continues to be our message, and that is why we published our “Improving Lives” document. We will continue to work to improve the opportunities for disabled people in the labour market.
Martin Vickers (Cleethorpes) (Con)
The Parliamentary Under-Secretary of State for Work and Pensions (Caroline Dinenage)
“Improving Lives: Helping Workless Families” aims to improve outcomes for disadvantaged children and is making good progress. For example, from next Spring, Public Health England will run a trial of individual placement and support, and our vital work on reducing parental conflict was boosted by the Chancellor’s announcement of £39 million in the recent Budget.
Martin Vickers
I thank the Minister for her reply. As she will know, working households in coastal communities such as Cleethorpes face particular difficulties. There is much low-paid work, but not much to encourage young people to stay there. What additional support can she offer to those sorts of communities?
Caroline Dinenage
The Government are committed to supporting coastal communities, such as those in his constituency of Cleethorpes and my constituency of Gosport. That is why I am pleased that the claimant count in his area is already down by 49%. Last March, we saw 248 families in north-east Lincolnshire achieve significant progress through our troubled families programme, and I know that the Secretary of State was impressed when he visited my hon. Friend and saw a programme that is helping troubled youngsters. More widely, the council was awarded a Coastal Communities Fund grant in April worth £3.8 million towards a scheme to enhance Cleethorpes’ role as a high-quality place to work, live and visit.
David Hanson (Delyn) (Lab)
Does the Minister think that the fact that she is failing to support people who are workless and still in poverty is one of the reasons why Alan Milburn resigned as chair of the Social Mobility Commission?
Caroline Dinenage
We are actually doing more to get people into work than any other previous Government. We know that making a meaningful difference to people’s lives, including those of the most disadvantaged children and families, requires an approach beyond just welfare support. That means supporting people into jobs, because we know that employed people have much-improved chances and incomes. That also means focusing on the other key drivers of poverty, such as education, and on other things to support children.
Liz Twist (Blaydon) (Lab)
The Minister for Disabled People, Health and Work (Sarah Newton)
We are committed to improving the lives of disabled people, both in the UK and through our international development work, and we are constructively considering the UN’s recommendations going forward. We intend to provide an update to the UN next summer, as requested.
Liz Twist
The UN report specifically called on the Government to repeal the Social Security (Personal Independence Payment) (Amendment) Regulations 2017 and to ensure that eligibility criteria in assessments to access PIP, employment and support allowance and universal credit are in line with the human rights model of disability. Will the Minister commit to that today?
Sarah Newton
We are absolutely committed to disabled people. We are world leaders in disability rights. We were disappointed that the UN did not consider all the information that we provided, and we strongly rebut much of what it had to say. I am sure that the hon. Lady will join me in welcoming the excellent work on reviewing PIP that was published today by Paul Gray, which sets out a whole series of reforms showing that this Government are determined to ensure that we have a benefit system that really supports disabled people.
Justin Tomlinson (North Swindon) (Con)
Not only did the report seemingly fail to recognise that we now spend a record £50 billion on supporting people with disabilities and long-term health conditions, but it also failed to recognise the proactive work with charities and stakeholder groups that helps to shape policies. Will the Minister reconfirm her commitment to that proactive engagement?
Sarah Newton
I thank my hon. Friend for his question. I absolutely confirm that I will work with disabled people and organisations that work with disabled people. I pay tribute to the excellent work that my hon. Friend did when he held my position. I am sure that we will continue to build on the work that he did and will ensure that more disabled people have the opportunity to fulfil their full potential in our society.
Frank Field (Birkenhead) (Lab)
Will the Minister please consider a root and branch reform of PIP? Someone who came to Feeding Birkenhead was doubly incontinent due to cancer, but she received a nil rating for PIP. While she needed food, she also needed nappies. When she did not turn up after a few days, people went to see how she was, and she was washing babies’ nappies, because she wanted to get about and was too ashamed to come and ask us for more. Is there not something wrong with PIP assessments when those sorts of cases occur?
Sarah Newton
I thank the right hon. Gentleman for raising this very sad case. Clearly something went wrong in that individual case. I look forward to answering questions and spending time with his Select Committee later this week. I point him to the response to Paul Gray’s evaluation of PIP that I published today. I am sure we will have more time to look at that in detail, but we remain utterly committed to making sure that we continue to improve PIP.
Lucy Frazer (South East Cambridgeshire) (Con)
At my surgery last week I met Frances, who has cerebral palsy. She made an application to the clinical commissioning group to get e-motion wheels for her wheelchair, which has been denied. Does the Minister agree that ensuring that people have the equipment to enable them to go to work is incredibly important and increases their self-esteem and their ability to contribute to the economy?
Sarah Newton
My hon. and learned Friend raises an important point. Of course, PIP is a benefit that is available to people in work and out of work, and it is there to support everyone with the additional costs of their disability. Of course, mobility is really important. There is also the excellent Access to Work scheme, which each year is funding more people, enabling them to play their full part in society, including at work.
Chris Elmore (Ogmore) (Lab)
The Parliamentary Under-Secretary of State for Work and Pensions (Caroline Dinenage)
It is clear that work is the best route out of poverty, as the rate of poverty in working households is one third of that among workless households. Latest data shows there are 1.9 million working households in relative low income.
Chris Elmore
One of the real impacts of increasing levels of in-work poverty will be in the changes that the roll-out of universal credit will bring. In a written parliamentary answer I received today from the Minister for Employment, I was told that universal credit will be rolled out in my Ogmore constituency in March next year, which is incorrect. According to the House of Commons Library, universal credit will be rolled out in March, June and November. How can the public have any trust in what the Government are doing with universal credit if they simply do not know the dates of roll out in particular constituencies when they answer MPs?
Caroline Dinenage
We will certainly look into that information. It is important to point out that we know that work is the best route out of poverty, and that universal credit is helping people to move into work quicker, to progress through work faster and to stay in work longer. The smooth taper rate gives incentives to take on more hours because, unlike the old system, people see more money in their pocket for every extra hour they work.
Steve Double (St Austell and Newquay) (Con)
Does the Minister agree that one of the ways we can help those in work and on low pay is by introducing and increasing a national living wage, by increasing the personal tax allowance so that people keep more of the money they earn, and by helping with childcare costs? Is that not precisely what the Government are doing?
Caroline Dinenage
I could not have put it better myself. There are 300,000 fewer working-age adults in absolute poverty now than in 2010. As my hon. Friend says, we are making sure that work pays through the national living wage and lower taxes. The lowest earners have seen their wages grow by almost 7 percentage points above inflation over the past two years.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
On behalf of my party, may I add my condolences to those already expressed in this Chamber? I am sure that all our hearts go out to Mr Deputy Speaker’s family.
One of the biggest problems facing in-work households living in poverty is fuel poverty. Altnaharra, which is in the middle of my vast constituency, is the coldest place in the UK every year, so fuel poverty is a colossal problem for my constituents. Will the Minister have meetings with the Scottish Government to take forward ways of tackling this terrible problem, particularly in the remotest and coldest parts of the UK?
Caroline Dinenage
I associate myself with the hon. Gentleman’s comments about Mr Deputy Speaker.
The hon. Gentleman makes a good point about fuel poverty. The Government have been doing so much to ensure that people are aware that they can cut down on household energy bills by switching, and we have been making it easier for people to switch. We also know that the Scottish Government have devolved powers to support people more with their benefits, if that is what they decide to do, and they are free to develop their own approaches to addressing poverty.
Michael Tomlinson (Mid Dorset and North Poole) (Con)
Is it not time to have a grown-up conversation about the measure of poverty? Under the relative measure, thousands would be lifted out of poverty by a recession, by a significant number of job losses or by a reduction in the median level of household income. Surely that cannot be the best measure and it is right that we look to work as the best route out of poverty.
Caroline Dinenage
My hon. Friend is absolutely right to raise this matter. If we look at progress since 2010 across all four of the most commonly used measures of poverty—relative, absolute, before housing costs and after housing costs—without cherry-picking any of the statistics, we see that people are no more likely to be in poverty today than they were in 2010. Indeed, on three of the measures the likelihood of being in poverty has reduced, and the incomes of the poorest 20% have increased in real terms by more than £300.
Kate Green (Stretford and Urmston) (Lab)
Caroline Dinenage
The Government are committed to building an economy that works for everybody, which is why we have committed to raising the national living wage—we are talking about an increase of 33p. This will be equivalent to a 9% increase in the national living wage since its introduction in 2016. It represents an increase to a full-time minimum wage worker’s annual earnings of more than £600.
Margaret Greenwood (Wirral West) (Lab)
On behalf of Labour Members, I would like to express our condolences to Mr Deputy Speaker. Our thoughts are with him and his family.
Disabled people are twice as likely to live in poverty as non-disabled people because of the extra costs they face. The Equality and Human Rights Commission recently estimated the cumulative effect of Government cuts since 2010 at £2,500 a year for a disabled adult, but when the Government discovered that they had underpaid approximately 75,000 disabled people who transferred on to ESA support between 2011 and 2014, they announced in last Thursday’s written statement that they would only be repaying claimants from October 2014. How many of the 75,000 disabled people will receive an arrears payment? Given that attempted suicide rates among ESA claimants doubled between 2007 and 2014, what estimates have been undertaken on the impacts on claimants’ mental health as a result of this Department for Work and Pensions error?
Caroline Dinenage
I am sure that I can write to the hon. Lady with the details on that. As well as being very mindful of the impact on people’s mental health and wellbeing, we must apply the law. We have to value disabled people in our workplace, which is why the Government are making sure that many, many more disabled people are able to access work and get into work.
Margaret Greenwood
Recent data shows that 8 million working families are living in poverty. Despite Government rhetoric, work is not the route out of poverty.; four out of five people who are in low-paid work now are likely to be in low-paid work in 10 years’ time. But in his interview on yesterday’s “The Andrew Marr Show”, the Secretary of State failed to mention that, under universal credit, sanctions have escalated and are being applied to people who are actually in work. The Public Accounts Committee and the National Audit Office have both raised concerns about the impact of sanctions on debt, rent arrears and homelessness. So why is the Secretary of State intent on punishing people in low-paid work by sanctioning them?
Caroline Dinenage
Sanctions are applied only as a very last resort and there are mitigations in place to support people when this is done. The hon. Lady is wrong to say that people in work are more likely to be in poverty; a key driver of in-work poverty is the part-time work that people were trapped in when her party was in government—people were trapped working fewer than 16 hours a week. The Labour Government were literally paying them to stay poor, whereas our reforms are about supporting people to progress in work and keep more of the extra money that they earn.
Ms Karen Lee (Lincoln) (Lab)
Helen Hayes (Dulwich and West Norwood) (Lab)
The Secretary of State for Work and Pensions (Mr David Gauke)
There is no reason for people to go without support while they wait for their first UC payment. New benefit claimants starting on UC today will be able to access an advance. This is normally paid within five working days, but can be delivered in a day if needed. Changes announced in the Budget will allow claimants to receive larger advances and for advances to be recovered over a longer period.
Ms Lee
Given the waiting period for universal credit, people face a choice: they can have no money to buy food, so either use a food bank or starve, or they can get a loan, as the Secretary of State says. Does he agree that pushing people who are already on a low income because they are on a benefit into debt in this way is totally unacceptable?
Mr Gauke
I do not accept the hon. Lady’s categorisation at all. The complaint that has been made about universal credit is about the cash-flow point—that people have to wait a period of time before they get their first payment. To address the cash-flow point there is a system of advances in the universal credit system so that people have the flexibility to receive the money earlier. It is an advance, they get it paid earlier—they do not get it paid twice, I accept that, but they get it paid earlier—and it is a perfectly sensible way to address a cash-flow issue.
Helen Hayes
The Peabody Trust estimates that 60,000 households will have made a new universal credit claim in the six weeks before Christmas and will not receive their first payment before the holiday period. The need is already being felt in my constituency, where last week Norwood food bank provided food for an extraordinary 128 people in a single session. What is the Secretary of State’s advice to families who are trying to provide a happy Christmas for their children without the means to afford even basic necessities?
Mr Gauke
We should be clear: if people need cash before Christmas, they are able to get it under the universal credit system, which is designed so that they can do that. People trying to discourage claimants from taking an advance, which I am afraid is the tone that we hear too often from the Labour party, are causing unnecessary anxiety for claimants.
Margaret Greenwood (Wirral West) (Lab)
The chief executive of the Financial Conduct Authority has recently warned about high levels of debt among young people incurred just by their covering basic household bills such as rent. Young people aged 18 to 21 are not entitled to housing support under universal credit. Why did the Government ignore a Social Security Advisory Committee recommendation that young people on the edge of care should be exempted from that?
Mr Gauke
As the hon. Lady will be aware, there are a whole host of exemptions that do allow 18 to 21-year-olds to access housing benefit, if those exemptions apply to them. I have to come back to this point, which the Labour party does not seem to accept: the best way in which we can sustainably lift people out of poverty is to have a welfare system that encourages them to work and to progress in work. That is what universal credit does and it is what the legacy system failed to do, which is why we are making these changes.
Ms Nusrat Ghani (Wealden) (Con)
The Minister for Employment (Damian Hinds)
Unemployment among 16 to 24-year-olds is 523,000—down 60,000 on the year and down 416,000 since 2010.
Ms Ghani
I welcome that news from the Minister. I am a strong campaigner for apprenticeships, including in my constituency, where we have just 70 young unemployed people. Does the Minister agree that making apprenticeships far more available helps young people into jobs, not only in Wealden but throughout the country?
Damian Hinds
My hon. Friend has indeed been a great campaigner and a great champion for apprenticeships. Apprenticeships—including the 620 starts in Wealden in 2016-17—are one of the key policies that have contributed to our successful labour market, in which employment now stands at 75%.
Nic Dakin (Scunthorpe) (Lab)
What is the trend in unemployment for young people with learning difficulties?
Damian Hinds
We absolutely accept that of course young people with learning difficulties need additional assistance and additional understanding of conditions and so on, which is why we have very much focused on providing that in jobcentres to make sure that they get the support they deserve.
Sir Desmond Swayne (New Forest West) (Con)
The Minister for Disabled People, Health and Work (Sarah Newton)
The DWP does not set a target for processing PIP claims. The Department takes all reasonable steps to obtain evidence of claimants’ individual needs, including independent assessment. We make decisions as quickly as possible based on the available information in order to reach the right outcome. I am sure that my right hon. Friend will be pleased to know, as I was, that the median time from start to end is currently 13 weeks.
Sir Desmond Swayne
Notwithstanding further appeal by the Department, will the Minister restore benefits after a successful first-tier decision for the applicant?
Sarah Newton
My right hon. Friend raises a very important question, but the Department takes the view that, because we are appealing the decision and it is based on an error of law, that really would not be appropriate. I just want to reassure him and all hon. Members that there are always exceptions, and this could arise where a suspension would cause financial hardship. For most benefits, this is considered before suspension is imposed, but, in all cases, the suspension letter sent to claimants invites them to contact the Department immediately if they are in financial hardship so that we can help them.
Lilian Greenwood (Nottingham South) (Lab)
Sixty five per cent of PIP tribunals find in favour of the claimant, meaning that hundreds of disabled people are being denied the support to which they are entitled. This puts an intolerable strain on whole families, including my constituents Chris and Cathryn Stoney who, having coped with Cathryn’s bowel cancer surgeries, brain haemorrhage and cardiac arrest, now face a further ordeal appealing against an unjust assessment. Will the Minister agree to meet me, the Stoneys and Nottingham advice services to hear how the system is failing disabled people?
Sarah Newton
I would be very pleased to meet the hon. Lady and her constituents to talk about that case or to listen to their concerns more widely, but we really should put the situation in context: 8% of decisions are appealed and 4% of them are upheld. I am very aware that behind every statistic is a person, but it is actually a small percentage of the millions of people who do receive their benefits, and we are continuously focused on making the right decision, right from the outset, which is why we commission independent reviews. We welcome the findings of the latest independent review by Mr Gray, which has been published today, and we have accepted all his recommendations.
Marsha De Cordova (Battersea) (Lab)
Does the Minister agree that Paul Gray’s recommendations in the second independent review of personal independence payments that the routine provision of the assessment report to the claimant would both improve identification of error and incentivise better performance at the assessment stage, and will she fully accept that particular recommendation?
Sarah Newton
As I have said before, I am really delighted with the review and to have received its findings. We have accepted all the findings in the review. At the moment, those reports are available, so that everyone can request them. We do not think it is a good use of taxpayers’ money to provide them to people who are happy with the result, who will not be going on to make any further appeal and who are actually getting on with receiving their benefit.
Stephen Pound (Ealing North) (Lab)
The Minister for Employment (Damian Hinds)
The Department does not forecast numbers of sanctions that will be applied. We do not want sanctions to be incurred, but they do play an important part in reasonable conditionality.
Stephen Pound
Well, what an answer! Never would I accuse the Minister of dedolence, but I must say that that sort of Panglossian response shows an absence of empathy or understanding, particularly of the empirical evidence that we have had to date. My constituents see universal credit as a rock rolling down a hill next April. However, as this is Christmas and we are in the spirit of giving and generosity, will the Minister join me in my impetration to the Independent Parliamentary Standards Authority for additional secretarial support during those dark days when this awful universal credit is rolled out and over our constituents?
Mr Speaker
I think the hon. Gentleman is going to the west end to perform on the stage. He would feel so fulfilled. In fact, I think that he has already done so—perhaps just now.
Damian Hinds
I gently remind the hon. Gentleman that when I say that sanctions are considered to be a part of reasonable conditionality, it was also the approach that was taken up fully by the previous Labour Government. With regard to universal credit over Christmas, we have in place—as we do every year—robust processes to make sure that claims get paid. We can bring claims forward to make sure that things go smoothly, as we always seek to do before Christmas.
Mr Speaker
There is a matter of some dispute here between the Chair and the Table. I think that the hon. Gentleman is a representative of a petrocurrency, but Mycroft in front of me is not wholly convinced, so the matter remains as yet undetermined.
Grahame Morris (Easington) (Lab)
Thank you, Mr Speaker. I refer the Minister to the question I raised with the Leader of the House on Thursday. Will the Minister provide an assurance that when the Department makes mistakes in the administration of universal credit, claimants will be fully compensated in claims backdated to the point where they will be no worse off?
Damian Hinds
I welcome the hon. Gentleman’s question. I have written to him today on this specific case. I do not know whether the response has yet come to hand following his question on Thursday, but I am happy to meet him and discuss it in detail. I understand that there was an issue about some of the information at the time the claim was made, and that there has been some backdating. We will talk about the matter later.
Robert Jenrick (Newark) (Con)
The Secretary of State for Work and Pensions (Mr David Gauke)
The number of people in employment has increased by more than 3 million since 2010 to reach 32 million in the last quarter. The employment rate is close to the record high and has increased by almost five percentage points since 2010.
Robert Jenrick
Despite a small recent decline in total employment, unemployment has continued to fall. Does my right hon. Friend agree that this suggests that the Government’s policies and the work of our great jobcentres across the country are making all the difference in matching jobseekers with available jobs? As it is Christmas, would he thank Ian Spalding—the manager of the Newark jobcentre—and his fantastic staff for ensuring that unemployment in Newark is now at 1%?
Mr Gauke
I will very happily join my hon. Friend in thanking Ian Spalding and, indeed, Jobcentre Plus staff up and down the country, who do a fantastic job in helping to reduce unemployment. I think that the claimant count in Newark has fallen by 42% since 2010. In the meetings that I have had with jobcentre staff across the country, I have seen that they are enthusiastically implementing universal credit because they can see that it will help them to make further progress.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
Is the Secretary of State not aware that hundreds of thousands of people in this country are yearning for a good and well-paid job? Many are young people who cannot get an apprenticeship. Apprenticeship starts are down by 62% this year and further education colleges are in trouble. When is he going to do something about training young people and really giving them the chance of a good job on good pay?
Mr Gauke
The hon. Gentleman will be aware that the recent apprenticeship numbers were affected by a spike at the end of the previous period, but the reality is that we have substantially increased the number of apprenticeships in recent years. We have introduced the apprenticeship levy, which puts apprenticeships on a sustainable financial footing. It is this Government, with our industrial strategy, who are ensuring that we create the highly skilled jobs that the country needs.
Jeff Smith (Manchester, Withington) (Lab)
The Minister for Disabled People, Health and Work (Sarah Newton)
The claiming process for personal independence payment was co-produced with disabled people, carers and organisations supporting them, including mental health charities. We will continue to explore opportunities to monitor and improve the process, making use of customer testing and engagement with disability groups.
Jeff Smith
The charity, Rethink Mental Illness, surveyed PIP claimants, and found that two in five felt that delays in decisions led to deterioration in their mental health, and that one in five had to take higher doses of medication to cope with the increased stress. Does the Minister think that that is acceptable, and will she look at the findings of the survey and review the assessment process in the light of them?
Sarah Newton
I pay tribute to Rethink and its campaign—I have read the findings of its survey with interest—as well as to Mind. These organisations are key stakeholders that help the Department to get these things right. No, I do not want people to be stressed by the process, which is why we are implementing a wide range of reforms that we have worked on with our stakeholders. We will make a paper-based decision wherever possible—wherever the information enables us to—and people also have the opportunity to be assessed at home.
Laura Pidcock (North West Durham) (Lab)
Constituents and support agencies in North West Durham have told me that the assessment to determine entitlement to PIP is too black and white, and is not able truly to capture a person’s day-to-day life with all the nuances that involves, especially when assessing mental health problems. This is leading to traumatic and humiliating experiences, and claims being refused to people who really need them. Will the Minister please look into this process in detail for those with mental health problems?
Sarah Newton
I thank the hon. Lady for her comment. We keep the process under constant review, and we have it independently assessed to make sure that, if there are any problems at all, we will work to overcome them. However, I can assure her that, compared with the previous benefit—disability living allowance—many more PIP recipients with mental health conditions are getting the enhanced rates.
Mary Creagh (Wakefield) (Lab)
The Minister for Disabled People, Health and Work (Sarah Newton)
We are committed to ensuring that claimants receive high-quality, accurate assessments. We monitor assessment quality through independent audit. Decision makers can return reports for rework or additional advice. A range of measures, including provider improvement plans, address performance failings when we experience standards below what we want. We continually look to improve the assessment process.
Mary Creagh
Forty people in Wakefield have written to me with their concerns that, at their employment and support allowance or PIP assessment, they were not seen by an appropriate person. That includes one person with mental health problems, who was assessed by a paramedic. The Work and Pensions Committee recently heard that Atos and Capita employ only four doctors between them, and statistics released by the Minister’s Department today show that those contractors have consistently failed to meet their targets for the number of unacceptable assessments, so how can sick and disabled people in Wakefield have any confidence in the assessment process?
Sarah Newton
I am looking forward to discussing this matter in more depth with the Select Committee when I come before it on Wednesday. However, I can absolutely assure the hon. Lady that all the assessors receive absolutely appropriate training for what they are there to do. These are functional assessments, and people are properly trained to make those assessments—there are doctors, nurses, paramedics and physiotherapists. We constantly keep the accuracy of the process under review, and that includes the experience of the claimants themselves.
Alan Brown (Kilmarnock and Loudoun) (SNP)
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
I receive a variety of representations, whether that is orally, in correspondence in writing, or in debates.
Alan Brown
I thank the Minister for that non-answer. Figures I received from the House of Commons Library show that tax giveaways on things such as inheritance tax and corporation tax will cost the Treasury over £60 billion by 2025. Should a caring Minister and Secretary of State not argue that, instead of giving money to the rich, they could use it for transitional arrangements and ending austerity?
Guy Opperman
I refer the hon. Gentleman to two particular points. The first is that we have differing views on taxation. The Government believe that cuts to corporation tax assist job creation—the jobs we need to pay for the public services we have. Secondly, I refer him to the fact that, under the letter of 22 June from Jeane Freeman, my opposite number, the Scottish Government have powers in terms of working-age people and to take action on the specific points that he keeps raising, but that the Scottish Government fail to do anything about.
Stephen Lloyd (Eastbourne) (LD)
As the Minister will be aware, it was clear in last week’s debate that a number of colleagues behind him on the Government Benches supported the call from a lot of colleagues on the Opposition side of the House for the Government to look at transitional arrangements for WASPI women. I therefore ask the Minister, as I did last week, why not call a binding vote so that the House can advise him to do the right thing for WASPI women?
Guy Opperman
In days gone by, the Liberal Democrats were a party of fiscal discipline. In 2011, when this matter last came before the House for debate, the hon. Gentleman and I accepted the need to take the decisions that were made, and he joined me in the Lobby to vote for them. It is a shame that he has forgotten those views now.
Kevin Foster (Torbay) (Con)
The Minister for Employment (Damian Hinds)
We carry out a range of implementation activities well in advance of activation to ensure that sites are well prepared, and we have successfully rolled out to 235 jobcentres to date.
Kevin Foster
I thank the Minister for his answer. Roll-out of full service universal credit in Torbay is due to happen in September 2018. It is vital that claimants fully understand the system and their options. Will the Minister therefore confirm what work his Department is doing with Torbay’s local advice services to ensure that claimants can easily get such support if needed?
Damian Hinds
Yes, we are ensuring that stakeholders, including the key advice services, have a proper overview of universal credit, and we work closely with the citizens advice bureau and others. A dedicated employer and partnership team engages directly with local authorities, landlords and others to ensure there is a joined-up approach to supporting claimants.
Mr Speaker
I will interpret the Minister’s answer as being wide and therefore admitting of other constituencies, although it is not clear beyond peradventure. I will give Members the benefit of the doubt.
Stephen Timms
Thank you, Mr Speaker. There will be problems in Torbay and elsewhere if the universal credit calculation is wrong. The Minister told me in a written answer that there is no specific initiative called Late, Missing and Incorrect, but it turns out that there is, run jointly by his Department and Her Majesty’s Revenue and Customs. Will he confirm that if real-time PAYE—pay-as-you-earn—information is late, missing or incorrect, then the universal credit calculation will be wrong?
Damian Hinds
We all admire the right hon. Gentleman for his deftness in getting from Torbay to that point. He and I have had quite an extended correspondence in parliamentary questions on the subject of real-time information in its various aspects. Of course we want to continue to make sure that every aspect of universal credit is working entirely as it should, and he has my commitment that we will do so.
Mr Speaker
The right hon. Gentleman will experience a long journey from East Ham to Torbay. We empathise with him on his long journey.
Laura Smith (Crewe and Nantwich) (Lab)
The Secretary of State for Work and Pensions (Mr David Gauke)
Since 2015, the level of social security spending for families on in-work benefits has reduced from £28.9 billion to £26.7 billion in real terms. This has happened during a period when we have introduced the national living wage, employment has reached record levels, free childcare has doubled, the personal allowance has increased and income inequality has continued to fall.
Laura Smith
With 8 million people living in poverty in working households and 28% of my constituents earning below the voluntary living wage, what action is the Secretary of State taking to address labour market inequalities with low-paid, low-skilled and insecure work?
Mr Gauke
Let me give the hon. Lady two examples. First, there is the industrial strategy. Secondly, if we want to address in-work poverty, one way in which we can do that is to ensure that people are able to work extra hours. We need a benefits system that does not trap them in working 16 hours a week, because if they can work extra hours, they can increase their income.
Tom Pursglove (Corby) (Con)
Looking back over these trends, has the Secretary of State drawn the conclusion that every Labour Government leaves office with higher unemployment than when they took office? What impact does he believe that that has on working families?
Daniel Zeichner (Cambridge) (Lab)
The Secretary of State for Work and Pensions (Mr David Gauke)
Since automatic enrolment was introduced in 2012, 9 million people have been enrolled in a workplace pension by over 900,000 employers. Today, I can announce the Government’s ambition to extend automatic enrolment to support more people to achieve greater financial security in later life. The Government’s 2017 review of automatic enrolment, published today, sets out the next steps we intend to take as we continue to develop a culture of routine pension saving. We will help young people to save by lowering the age for automatic enrolment from 22 to 18. We will also enable people to start saving from the first £1 of their earnings to provide a better retirement income for lower earners and for those in multiple jobs. I have today tabled a written statement setting out further detail, including trialling a number of targeted approaches to identify the most effective ways to increase pension saving among the self-employed.
Daniel Zeichner
The universities superannuation scheme is a strong pension scheme that recently closed its defined-benefits section, moving to a defined-contribution scheme and, in effect, transferring all risk to the employee. Many argue that over-cautious accounting rules drive these changes, creating a poorer scheme that leaves many people less well off in future and puts pressure on our universities. What is the Secretary of State doing to protect the future of our higher education sector?
Mr Gauke
Any changes that might be made to this scheme are a matter for the scheme’s joint negotiation committee, not for the Government. The independent Pensions Regulator remains in ongoing discussion with the USS’s stakeholders. Nothing has been brought to the DWP’s attention that we consider to be of concern. It would be improper for the Government to tell the joint negotiation committee how to run the scheme.
Luke Graham (Ochil and South Perthshire) (Con)
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
Since 2012, 7,000 employees in Ochil and South Perthshire have benefited from a workplace pension through automatic enrolment. Our thanks are also due to the 820 local employers. State pension has risen by £1,250 since 2010, but we want to do more. We are extending auto-enrolment to 18 to 21-year-olds in his area, where we also have targeted interventions for the self-employed that I believe will be of assistance.
Alex Cunningham (Stockton North) (Lab)
The Secretary of State will be aware of the crisis engulfing members of the British Steel pension scheme, with advisers cashing in by persuading them to sink their pensions into all manner of dodgy, high-cost schemes, and he will be aware of the Financial Conduct Authority’s apparent failure to deal with the situation effectively. He will know that today the negotiations on the future of the universities superannuation scheme are coming to a head, with the threat of industrial action—something that should be interesting the Government. I am surprised that he is simply sitting back and leaving these matters to those who are directly involved. Surely, he can tell us today how he is going to get involved and take action to protect members of both schemes.
Guy Opperman
The position in relation to both matters is that they are worked through with the Pensions Regulator and the Pension Protection Fund, particularly in relation to British Steel, to ensure that members get information on the effect on their pension rights of staying with BSPS or moving to BSPS II. That includes newsletters, a website and bespoke option packs. The Financial Conduct Authority has also stepped in and banned a variety of organisations, and it is providing proper advice.
Henry Smith (Crawley) (Con)
The Minister for Employment (Damian Hinds)
My hon. Friend raises an important point. There are more working people in older age groups now than there ever have been, but much more needs to be done, which is why we published our “Fuller Working Lives” strategy. Of course, many employers are waking up to the possibilities in jobcentres, and we are also making sure that we have more older worker champions to represent that group fully.
Neil Gray (Airdrie and Shotts) (SNP)
Reports suggest that the Foreign Secretary, the Environment Secretary and others used this morning’s Cabinet meeting to start the campaign to scrap the working time directive after Brexit. That directive protects us when it comes to hours worked and paid holidays, as well as giving extra protection to night shift workers. Can the Secretary of State confirm what representations he has made at Cabinet to ensure that his Brexiteer colleagues are not successful at ripping up our workers’ rights?
Stephen McPartland (Stevenage) (Con)
Mr Gauke
I can certainly assure my hon. Friend that we will continue to listen to constructive critics and those who want to make sure that universal credit works. In doing so, I thank him for his positive and constructive engagement. It is very clear that Conservative Members are united in ensuring that we deliver universal credit successfully.
Laura Smith (Crewe and Nantwich) (Lab)
The Minister for Disabled People, Health and Work (Sarah Newton)
I thank the hon. Lady for the opportunity to make this clarification. As I have mentioned before, 8% of decisions are taken to appeal, and only half of those are upheld. I appreciate that every one of those people is disappointed with the result, and we are working tirelessly to improve the process. But, overall, most people get a good decision on time, and their benefits.
Alex Burghart (Brentwood and Ongar) (Con)
On Friday, I visited my local jobcentre and saw the genuine enthusiasm that work coaches have for the new universal credit system. Will my hon. Friend confirm that additional help is available for users who are not too tech savvy?
Damian Hinds
Yes, indeed. My hon. Friend is quite right about the enthusiasm of jobcentre staff for universal credit, because it enables them to do more of what they want to do, which is to help people to get on and get into work. I can confirm to him that, yes, computers are available in jobcentres, and assistance is available when needed.
Carolyn Harris (Swansea East) (Lab)
With the uncertainty of universal credit payments following the roll-out in Swansea last week, my local paper, the South Wales Evening Post, has co-ordinated the collection of food and warm clothes to help those in need. Will the Secretary of State join me in congratulating the South Wales Evening Post on doing what the Government are failing to do, and making sure everyone has a good Christmas?
Mr Gauke
What I would say to anyone—Members of Parliament, newspapers, advisory bodies and food banks—is that we need to make sure that the facts are set out to new claimants: if they need to get access to support, they can get it quickly; they need to get in contact with their jobcentre; and they are able to access an advance, and they can get that money before Christmas.
Julian Knight (Solihull) (Con)
Does the Minister agree that auto-enrolment has been a success to date and it is right to lower it to the age of 18, but that politicians—of all hues—and the pensions industry must work together to meet the savings and pension challenges facing this country?
Guy Opperman
I could not agree more with my hon. Friend. I am delighted with the fact that we now have 9 million people signed up to auto-enrolment, utterly transforming workplace pension savings. In his constituency, 8,000 employees and 680 employers have signed up—and great credit to them.
Naz Shah (Bradford West) (Lab)
Sarah Newton
I assure the hon. Lady that we have a very robust quality assurance process. Clearly, the case she has highlighted today is unacceptable. If she would like to bring me that case and discuss it with me, I would be very happy to do so.
Steve Double (St Austell and Newquay) (Con)
Every year, billions of pounds of taxpayers’ money is lost due to fraud or errors in benefit claims. Will the Secretary of State say whether the introduction of universal credit will improve this situation?
Mr Gauke
My hon. Friend makes a very good point. One of the areas of good news about universal credit is the fact that it will enable us to reduce fraud by over £1 billion. That in itself is an important step, and there are of course many other very positive reasons why universal credit is a good thing.
Imran Hussain (Bradford East) (Lab)
The Parliamentary Under-Secretary of State for Work and Pensions (Caroline Dinenage)
We must ensure we have a welfare system that is fair not only to those in receipt of welfare, but to those who pay for it. The lower cap is fair to both working households and the taxpayer. Before the cap, the Department for Work and Pensions disproportionately spent £10 million a year on just 300 families.
Andrew Bowie (West Aberdeenshire and Kincardine) (Con)
For jobseekers in my constituency of West Aberdeenshire and Kincardine, it is overwhelmingly the “can do” attitude of professionals and the dedication of the work coaches, whom they value, that will help them to find work. Especially at this time of year, we as a House should definitely pay tribute to them. May I ask my hon. Friend how the new work coaches will boost the chances of jobseekers in West Aberdeenshire and Kincardine, as well as those elsewhere, to find work?
Damian Hinds
I can confirm that we have been recruiting work coaches in every nation and region of the UK. We are seeking to do more to provide support with universal credit, and to ensure that what in-work support is needed is available.
Patrick Grady (Glasgow North) (SNP)
Two constituents came to my surgery on Friday, concerned that the switch of support for mortgage interest payments will force them into the private rented sector and on to housing benefit, and will therefore cost the taxpayer more money. Will the Government review that policy? Is it not more evidence of Tory austerity hitting the poorest the hardest?
Caroline Dinenage
The conversion of SMI from a benefit into a loan is intended to retain support for owner-occupier claimants in a more sustainable way, while increasing fairness for taxpayers, many of whom cannot afford to buy a home of their own.
Tom Pursglove (Corby) (Con)
What steps is the Department taking to ensure that DWP staff are aware of military covenant issues, so that they are best able to support our brave men and women when they leave the armed forces?
Caroline Dinenage
My hon. Friend is absolutely right to raise that issue. Veterans make a considerable contribution to our country and it is right that we support them as they move on in their careers. DWP staff receive continual training to ensure that they can signpost veterans correctly. The “See Potential” campaign champions veterans and encourages employers to see the incredible skills they bring to the workplace.
European Council
(7 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Prime Minister (Mrs Theresa May)
With permission, Mr Speaker, I will make a statement on last week’s European Council.
Before turning to the progress on our negotiations to leave the European Union, let me briefly cover the discussions on Russia, Jerusalem, migration and education. In each case, the UK made a substantive contribution, both as a current member of the EU and in the spirit of the new deep and special partnership we want to build with our European neighbours.
Russia’s illegal annexation of Crimea was the first time since the second world war that one sovereign nation has forcibly taken territory from another in Europe. Since then, human rights have worsened. Russia has fomented conflict in the Donbass and the peace process in Ukraine has stalled. As I said at the Lord Mayor’s banquet, the UK will do what is necessary to protect ourselves and to work with our allies to do likewise, both now and after we have left the EU. We were at the forefront of the original call for EU sanctions and, at this Council, we agreed to extend those sanctions for a further six months.
On Jerusalem, I made it clear that we disagree with the United States’ decision to move its embassy and recognise Jerusalem as the Israeli capital before a final status agreement. Like our EU partners, we will not be following suit, but it is vital that we continue to work with the United States to encourage it to bring forward proposals that will re-energise the peace process. That must be based around support for a two-state solution and an acknowledgement that the final status of Jerusalem must be subject to negotiations between the Israelis and Palestinians.
On migration, when we leave the European Union, we will be taking back control of our own borders and laws, so we will be free to decide our own approach, independently of the EU. But as part of the new partnership we want to build, I made it clear at this Council that we will continue to play our full part in working with the EU on this shared challenge. We will retain our maritime presence in the Mediterranean for as long as necessary, we will work with Libyan law enforcement to enhance its capability to tackle people-smuggling networks, and we will continue to address the root causes of the problem by investing for the long term in education, jobs and services in countries of origin and transit.
On education, our world-leading universities remain a highly attractive destination for students from across the EU, while UK students also benefit from studying overseas. UK and EU universities will still want to work together after we leave the EU and, indeed, to co-operate with other universities around the world. We will discuss how to achieve that in the long term as part of the negotiations on our future deep and special partnership, but in the meantime I was pleased to confirm at the Council that UK students will continue to be able to participate in the Erasmus student exchange programme for at least another three years, until the end of this budget period.
Turning to Brexit, the European Council formally agreed on Friday that sufficient progress has been made to move on to the second stage of the negotiations. This is an important step on the road to delivering the smooth and orderly Brexit that people voted for in June last year. I want to thank Jean-Claude Juncker for his personal efforts, and Donald Tusk and my fellow leaders for the constructive way they have approached this process.
With Friday’s Council, we have now achieved my first priority of a reciprocal agreement on citizens’ rights. EU citizens living in the UK will have their rights enshrined in UK law and enforced by British courts, and UK citizens living in the EU will also have their rights protected. We needed both and that is what we have got, providing vital reassurance to all those citizens and their families in the run-up to Christmas.
On the financial settlement, I set out the principles for the House last week and the negotiations that have brought this settlement down by a substantial amount. Based on reasonable assumptions, the settlement is estimated to stand at between £35 billion and £39 billion in current terms. This is the equivalent of about four years of our current budget contribution, around two of which we expect will be covered by the implementation period, and it is far removed from some of the figures that had been bandied around.
On Northern Ireland, as I set out in detail for the House last week, we have committed to maintain the common travel area with Ireland; to uphold the Belfast agreement in full; and to avoid a hard border between Northern Ireland and Ireland, while upholding the constitutional and economic integrity of the whole United Kingdom. We will work closer than ever with all Northern Irish parties and the Irish Government as we now enter the second phase of the negotiations.
The guidelines published by President Tusk on Friday point to the shared desire of the EU and the UK to make rapid progress on an implementation period, with formal talks beginning very soon. This will help give certainty to employers and families that we are going to deliver a smooth Brexit. As I proposed in Florence, during this strictly time-limited implementation period, which we will now begin to negotiate, we would not be in the single market or the customs union as we will have left the European Union. But we would propose that our access to one another’s markets would continue as now, while we prepare and implement the new processes and new systems that will underpin our future partnership. During this period we intend to register new arrivals from the EU as preparation for our future immigration system. We will prepare for our future independent trade policy by negotiating, and where possible signing, trade deals with third countries which could come into force after the conclusion of the implementation period.
Finally, the Council also confirmed on Friday that discussions will now begin on trade and the future security partnership. I set out the framework for our approach to these discussions in my speeches at Lancaster House and in Florence. We will now work with our European partners with ambition and creativity to develop the details of a partnership that I firmly believe will be in the best interests of both the UK and the EU.
Since my Lancaster House speech in January, we have triggered article 50 and begun and closed negotiations on the first phase. We have done what many said could not be done, demonstrating what can be achieved with commitment and perseverance on both sides. I will not be derailed from delivering the democratic will of the British people. We are well on our way to delivering a smooth and orderly Brexit. That is good news for those who voted leave, who were worried the negotiations were so complicated it was never going to happen, and it is good news for those who voted remain, who were worried that we might leave without being able to reach an agreement. We will now move on with building a bold new economic relationship, which together with the new trade deals we strike across the world can support generations of new jobs for our people, open up new markets for our exporters, and drive new growth for our economy. We will build a new security relationship that promotes our values in the world and keeps our families safe from threats that increasingly do not recognise geographical boundaries. We will bring our country together: stronger, fairer, and once again back in control of our borders, our money and our laws.
Finally, Mr Speaker, let me say this. We are dealing with questions of great significance to our country’s future, so it is natural that there are many strongly held views on all sides of this Chamber. It is right and proper that we should debate them, and do so with all the passion and conviction that makes our democracy what it is. But there can never be a place for the threats of violence and intimidation against some Members that we have seen in recent days. Our politics must be better than that. On that note, I commend this statement to the House.
Jeremy Corbyn (Islington North) (Lab)
I thank the Prime Minister for an advance copy of her statement.
On Jerusalem, I also condemn the actions of the United States President. I welcome the Prime Minister’s commitment to maintaining a maritime presence in the Mediterranean, but as a humanitarian mission to save lives.
As I said last week in response to the Prime Minister’s previous statement, we welcome progress to the second phase of negotiations but that should not hide the fact that this agreement comes two months later than planned and many of the key aspects of phase one are still unclear. These negotiations are vital for people’s jobs and for the economy; our future prosperity depends on getting this right.
The agreement reached on phase one was clearly cobbled together at the eleventh hour after the Democratic Unionist party vetoed the first attempt, as is evident in the vagueness of the final text, which underlines the sharp divisions in the Cabinet. As we head into phase two, the truth is that the Government must change track. We cannot afford to mishandle the second stage. The Prime Minister must now sort out the contradictions. We were told last week that the Prime Minister’s humiliating loss on giving Parliament a final say on a Brexit deal made her weak, and the Daily Mail, which previously branded the judiciary “enemies of the people”, is now whipping up hatred against Back-Bench rebel MPs. Threats and intimidation have no place in our politics, and the truth of it is that it is division and in-fighting in her own Cabinet and their reliance on the DUP that makes them weak. So will the Prime Minister welcome Parliament’s vote to take back control?
We have already seen Ministers in the Prime Minister’s Cabinet, such as the Brexit Secretary and the Secretary of State for Environment, Food and Rural Affairs, give the impression that the agreement can be changed or ignored—that it effectively does not amount to a hill of beans. It is not very reassuring that this is the end product of eight months of negotiation. Will she set out which parts of the financial settlement agreed between the UK and the EU will be paid if a final deal between the EU and the UK cannot be struck? Given the delays to the phase one deal, can the Prime Minister now see that cementing in statute a time and date on which Britain will leave the European Union could hinder negotiations?
I am glad that the Prime Minister now seems determined to follow Labour’s call for a transition period to create stability—[Interruption.] In case Government Members do not want to hear it, Mr Speaker, I will repeat the sentence. I am glad that the Prime Minister now seems determined to follow Labour’s call for a transition period to create stability as we leave the European Union. It is necessary that we remain in the single market and customs union for a limited period, allowing a smooth transition for British business. However, there was more Government confusion on this over the weekend. Will the Prime Minister clarify whether we will remain subject to the rules of the single market and the customs union during this transition period? Does she envisage that the UK will also remain a member of the common agricultural policy and common fisheries policy, and can she clarify whether it will be possible under the phase one agreement to sign trade deals during the transition period?
There were also worrying reports over the weekend about what some senior Cabinet Ministers will demand from the Prime Minister to support a phase one deal. These demands were reported to include that Britain should leave the working time directive. Can the Prime Minister state now, categorically, that she will face down this push from some in her Cabinet and that Britain will maintain the standards of the working time directive both during a transition period and beyond? Will she also guarantee that the Government will not seek to use Brexit to water down any other working or social rights in this country? Will she commit to maintaining access for UK students to the Erasmus programme beyond the current budget period?
These issues are important to people’s jobs and living standards. It is becoming clear that many on the Government Benches want to use Brexit to rip up rights at work, environmental standards and consumer protections, and to deregulate our economy. For many of them, Brexit is a chance to make Britain a tax haven for the super-rich. Let me be clear: Labour will do everything in our power to stop that.
The choice is becoming clear: a Tory Government who will use Brexit to protect the very richest, slashing corporation tax and the regulations that protect working people, or a Labour vision that would protect jobs, the economy and investment by building a relationship with our closest trade partners, and not starting a race to the bottom in which people’s jobs and living standards will suffer.
The Prime Minister
First, I welcome the fact that the Leader of the Opposition has said that threats and intimidation should not form part of our political life. I agree with him, but what he said will seem a bit rich to those of my colleagues who were candidates in the general election, and who suffered from the Labour party.
The right hon. Gentleman asked a number of questions about the date of our leaving and phase 1. He said that the phase 1 agreement was vague. In fact, it is the result of significant work over a number of months. If the right hon. Gentleman looks at it carefully, he will see that it is detailed in relation to citizens’ rights. It gives reassurances to EU citizens here in the United Kingdom and UK citizens living in the EU 27 that they can carry on living their lives as they have done, and that their life choices will be respected.
The right hon. Gentleman claimed that the transition period—the implementation period—was somehow a Labour idea. He should look at the Lancaster House speech, in which I was very clear about the need for a smooth departure from the European Union. The financial settlement that we agreed in phase 1 is in the context of agreeing the final deal and reaching the final agreement. He talked about dates for our leaving. I note that he said that we should have triggered article 50 the day after the referendum. That would have meant that there was no time to prepare our negotiating position and we would be leaving the EU in six months without having done the proper work to make sure that there was that smooth and orderly progression, and that we did not disrupt our economy in the ways that the right hon. Gentleman has talked about.
The right hon. Gentleman asked whether trade deals could be signed. I referred to that in my statement. He asked about the transition period, and about the common fisheries policy and the common agricultural policy. We will be leaving the European Union on 29 March 2019, and we will therefore be leaving the common fisheries policy and the common agricultural policy on that date. The relationship that we have with the European Union on both those issues continuing through the implementation period will be part of the negotiation of that period, and work will start very soon.
Then, of course, the right hon. Gentleman asked about workers’ rights. Again, I set out in my Lancaster House speech, and have confirmed on a number of occasions since, that this Government will not only maintain but enhance workers’ rights. If the right hon. Gentleman is so worried about workers’ rights, why did the Labour party vote against the very Bill that brings workers’ rights in the EU into UK law?
Mr Iain Duncan Smith (Chingford and Woodford Green) (Con)
I agree with my right hon. Friend that attacks on MPs’ family members, particularly in vulnerable conditions, should be absolutely outlawed from the very beginning.
May I ask my right hon. Friend whether she has read Mr Barnier’s statement—made in the last couple of days—in which he set out the EU’s position in the run-up to the next two phases of discussion? Can she confirm that the Government have neither discussed that nor agreed it, and that therefore it is not Government policy?
The Prime Minister
I had noticed Michel Barnier’s comments, particularly in relation to the negotiations on the trade deal. We will start the negotiations on that as a result of the decision taken last Friday by the European Union Council. I can tell my right hon. Friend that one of the senior members of the negotiating team has today made it clear that the United Kingdom can indeed have its own bespoke agreement for a future trade relationship with the European Union. Indeed, that point was also made by the Prime Minister of Italy, Paolo Gentiloni, in an article he wrote in the Financial Times last week. If anybody cares to think about it, every trade agreement is a bespoke agreement between the parties concerned—they have similar elements, but are specific to the various countries concerned. That is certainly what we will be looking for in our negotiations with the EU.
Ian Blackford (Ross, Skye and Lochaber) (SNP)
I thank the Prime Minister for advance sight of today’s statement.
Scottish National party Members welcome the progress to phase 2 of the negotiations, as agreed by all EU member states, but Council President Donald Tusk was not kidding when he commented that phase 2 will be “dramatically difficult”. It is imperative that the devolved Administrations are included in phase 2 negotiations, and I call on the Prime Minister to agree to that today.
Much of the conclusion from last week’s summit should be welcomed across the House. We on these Benches especially welcome the EU’s reiteration of its firm commitment to a two-state solution in the Israeli-Palestine conflict. We should all unreservedly condemn Donald Trump for his recent actions.
I must give special attention to the agreement on the social dimension, including commitments by member states to implement the European pillar of social rights and to follow up on the priorities of the EU action plan to tackle the gender pay gap.
Decisions on education and culture are also extremely welcome. An extended and more inclusive Erasmus+ programme, the creation of a European student card and stronger partnerships between higher education institutions across Europe, allowing students to obtain a degree by combining studies in several EU countries, are great moves forward for European collaboration. These decisions will not only bring much social progress to national politics across all member states but, more importantly, provide enormous opportunities for future generations. Erasmus is one of the EU’s biggest success stories, and it has benefited hundreds of thousands of young Scots. Will the Prime Minister take this opportunity to reassure young people on Erasmus now, and those aspiring to take part in the programme, that the UK will maintain participation in it?
The Prime Minister
As the right hon. Gentleman knows, we have been in discussions with the devolved Administrations through the process of phase 1. We will continue to engage with them as we move into the second phase of negotiations. My right hon. Friend the First Secretary meets the Scottish and Welsh Governments regularly to discuss issues of concern to them and how the negotiations are proceeding. Indeed, the last meeting of the Joint Ministerial Council was held on 12 December.
As I have said, we have committed to the Erasmus programme for the period of the current budget plan. Erasmus is exactly the sort of programme that we will be discussing in the second phase of these talks.
Anna Soubry (Broxtowe) (Con)
I commend the Prime Minister for her success in the negotiations and the statement. I remind the Leader of the Opposition that the merits of a transition period were first advanced on this side of the House, notably by the Chancellor of the Exchequer. On that note, as a former Business Minister, may I say to the Prime Minister that what business really wants is certainty? How soon does she think that we will be able to announce that the transition period has been agreed so that we can give that certainty to business?
The Prime Minister
My right hon. Friend makes an important point from the point of view of business. Significantly, it was accepted at the December Council not only that there should be such an implementation period, which in fact reflects the guidelines set out by the EU Council last April, but that we would start negotiating that very soon. We are looking to have those negotiations concluded in the first quarter of next year.
Hilary Benn (Leeds Central) (Lab)
On 10 December, the Brexit Secretary described the phase 1 joint agreement as
“more a statement of intent than it was a legally enforceable thing.”
However, last Friday’s European Council guidelines state:
“negotiations in the second phase can only progress as long as all commitments undertaken during the first phase are respected in full and translated faithfully into legal terms as quickly as possible.”
Can the Prime Minister therefore confirm that all the commitments she made in the phase 1 joint agreement, including in respect of the border in Northern Ireland, will be written into UK law?
The Prime Minister
As the right hon. Gentleman knows, there will now be a process of completing some of the details behind the withdrawal agreement such that the withdrawal agreement can then be put to this House, to this Parliament and to the European Parliament. We have always been clear that there will be a meaningful vote for this House. Subsequently, as we have stated to the House, we will have the EU withdrawal agreement and implementation Bill, which will put the various provisions of the withdrawal agreement legally into UK law. That was a key element in relation to citizens’ rights in the phase 1 negotiations.
Sir William Cash (Stone) (Con)
May I urge my right hon. Friend to give equal consideration, in the Cabinet and elsewhere, not only to the vital issues of our trading relationships and regulatory divergence, but to the perpetual, ever-escalating, undemocratic centralisation of the EU itself, which remoaners, reversers, status quo-ites and the Opposition seem incapable of grasping, and which absolutely proves how right the voters were in June last year in voting to escape from the European Union?
The Prime Minister
I can assure my hon. Friend that in the negotiations that we hold with the European Union, we will ensure that the British national interest is represented and that we come away with a deal that is in the interests of the UK. I believe that that will also be in the interests of the EU. How the European Union develops once we have left is, of course, a matter for the EU27. As he suggests, a number of recent speeches have suggested an increased centralisation of the European Union, but that will be a matter for the 27, not for us.
Sir Vince Cable (Twickenham) (LD)
As the Government embark on far-reaching trade negotiations with the European Union and beyond, will the Prime Minister explain who will provide independent arbitration in legal disputes, given that the Government have rejected the jurisdiction of the European Court of Justice and that her friend, President Trump, is rejecting the authority of the World Trade Organisation and making its dispute panels unworkable? Is this not a recipe for anarchy in international trade?
The Prime Minister
As the right hon. Gentleman will know, dispute resolution is part of any trade agreement negotiations, and that will be exactly the same with all the trade agreements that we will negotiate now.
John Redwood (Wokingham) (Con)
Will the Prime Minister confirm that no binding offer about the money will be made until there is a general agreement that Parliament accepts, because I do not see how else we can proceed?
The Prime Minister
The joint progress report, which was published by the UK and the European Union prior to the December Council, made it absolutely clear that the settlement within it was set out in the context of going forward and having agreement on the future relationship.
Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)
Does the Prime Minister now agree that the meaningful vote to which she referred should take place on a statute, as set out in the terms of amendment 7 to the European Union (Withdrawal) Bill, before any withdrawal terms can be implemented? Does she also agree that those who voted for amendment 7 did so in good faith to ensure that power would not be too heavily concentrated in the hands of the Executive, and that it was completely wrong to do what the Daily Mail suggested and accuse them of treachery?
The Prime Minister
If we look at our debates on the European Union (Withdrawal) Bill, and indeed on other matters in this House relating to Brexit, such as article 50, it is clear that the will of Parliament overall has been to deliver on the vote of the British people. We were always clear with the House that there would be a meaningful vote on the question of the withdrawal agreement—[Interruption.] Yes, we were always clear that there would be a meaningful vote on that but, as I have just indicated to the right hon. Member for Leeds Central (Hilary Benn), there will subsequently be the process of this Parliament agreeing the withdrawal agreement and implementation Bill. It will be that which will bring the withdrawal agreement into UK law.
Mr Owen Paterson (North Shropshire) (Con)
Further to the Prime Minister’s reply to the right hon. Member for Leeds Central (Hilary Benn) on the guidelines issued by the European Council on 15 December, will she confirm categorically that nothing is agreed until everything is agreed, and that it will be the final settlement, combined with phase 1, that she will bring forward as legislation for us to approve in this House?
The Prime Minister
The fact that nothing is agreed until everything is agreed is actually in the joint progress report that was published by the UK and the European Union. There will be various stages at which this Parliament will be able to vote on matters relating to our leaving the EU. I just referred to the withdrawal agreement and implementation Bill, and there will be other pieces of legislation as well. Separate from the formal withdrawal agreement that will bring those matters into UK law, we will of course be able legally to sign our new trade agreement with the EU once we leave the EU.
Kate Hoey (Vauxhall) (Lab)
If we will no longer be in the internal market and the customs union during the implementation period, why can we not negotiate, sign and implement new trade deals before the end of that period?
The Prime Minister
The purpose of the implementation period is to ensure that businesses and individuals do not have to make two sets of changes because of a new relationship that is put in place as part of our future partnership with the EU. That is why, as we look at the implementation period, I and the Government are clear that although we will be formally out of the customs union and the single market, we expect to be able to operate on the same terms as we currently do. That is what limits the ability to implement new trade deals elsewhere.
Vicky Ford (Chelmsford) (Con)
I congratulate the Prime Minister and the entire negotiating team on the progress made to date. However, given that leaving the EU without a deep and special relationship on trade and security would also bring risk, does she agree that we should be using all our political energy in the months ahead to find that new relationship and that we should not get distracted by other squabbles?
The Prime Minister
My hon. Friend is absolutely right. The Government’s focus will clearly be on ensuring that we can negotiate that deep and special partnership for the future. That is not just in our interests; it is in the interests of the EU and the EU27 as well. That is why I am optimistic and ambitious about the trade deal that we can achieve.
Chuka Umunna (Streatham) (Lab)
Last year, the Prime Minister wrote to me giving the same general assurance on workers’ rights that she just gave to the Leader of the Opposition. She did not actually answer his specific question today, however, so I ask her again: given that her Cabinet colleagues are now agitating for some of those rights to be done away with, will she guarantee that none of the working time regulations—importantly, the 48-hour working week—will be done away with by her Government after we leave the European Union?
The Prime Minister
We are bringing those rights into UK law though the European Union (Withdrawal) Bill. I have said that we will maintain, and indeed enhance, workers’ rights.
Mr Jacob Rees-Mogg (North East Somerset) (Con)
Will my right hon. Friend clearly reject the negotiating mandate handed out by the European Council, paragraph 1 of which undermines the principle of nothing being agreed until everything has been agreed, and paragraph 4 of which would make the United Kingdom in the transition phase no more than a vassal state, a colony, a serf of the European Union—[Interruption.]
Mr Speaker
Order. I want to hear the hon. Gentleman, who is in full flow. I want to hear the fullness of the flow.
Mr Rees-Mogg
I urge my right hon. Friend to model herself on her predecessor, the late noble Baroness Thatcher, and to show real mettle and steel in rejecting the EU’s rather hostile negotiating terms.
The Prime Minister
The negotiation is between two parties. We will be very clear about the future partnership we want to have with the European Union on both trade and security matters, and I set out the framework for that in my Florence speech.
My hon. Friend has asked me before about the relationship between the UK and the European Union during the implementation period. As I have just indicated in response to the hon. Member for Vauxhall (Kate Hoey), the purpose of the implementation period is to ensure that businesses and individuals can continue to operate, and to be reassured of the basis on which they operate, while the necessary changes are put in place that will lead to the future trade agreement that we will have achieved.
I have also said before in this House, and in my Florence speech, that there may be elements of the arrangement that we will be able to bring forward. For example, if we are able to bring forward a dispute resolution mechanism during that period, we will look to do so.
Mr Chris Leslie (Nottingham East) (Lab/Co-op)
I urge the Prime Minister to reject the notion that we should get all the way to exit day and not have the full details of the future trade arrangement between the EU and the UK. If all we have is a sketch of the framework of a possible trade deal, it would not be acceptable to the public or to businesses. It is simply unacceptable to have something that looks like less than a half-baked arrangement.
The Prime Minister
We are working to ensure that we are very clear and have details of our future arrangement with the European Union at the point at which we leave.
Several hon. Members rose—
Richard Drax (South Dorset) (Con)
Mr Speaker, I am speechless.
Will my right hon. Friend the Prime Minister confirm to me and the country that, when we leave the EU in March 2019—yes, there will be an implementation period; I understand why—we will have left the EU in its entirety?
The Prime Minister
We will have left the European Union. We will have the implementation period, and I would expect us to be able to continue to trade with the European Union on the same basis as now in order to ensure that businesses and individuals have the reassurance of knowing where they stand and how they operate while the practical changes that will need to be made as we move to our future relationship, such as our new immigration rules, are put in place. We will be leaving the EU on 29 March 2019.
Nigel Dodds (Belfast North) (DUP)
The Prime Minister will have heard some confusing and conflicting statements from Opposition Members about the need for a second referendum and their desire to have one—some say one thing; others say another. Does the Prime Minister agree that a second referendum is the surest way of finding that the European Commission and the European Union make the hardest and most difficult deal possible for the United Kingdom? What people want is to get on with delivering on the first referendum.
The Prime Minister
I understand that, in the space of one day over the weekend, the shadow Home Secretary rejected a second referendum and the deputy leader of the Labour party said that a second referendum was still on the table. My right hon. Friend the Member for Belfast North (Nigel Dodds) is absolutely right about this particular issue. The best way to get the worst deal would be to suggest that we are going down the route of a second referendum, but it is more than that—I think it would actually be betraying the British people. This Parliament gave the British people a vote, and it is up to us to deliver on the result.
Mr Peter Bone (Wellingborough) (Con)
Will the Prime Minister give the British people a huge Christmas present by stating that, on 29 March 2019, we will leave the European Union, end the free movement of people and remove the jurisdiction of the European Court, and that the £39 billion we plan to give the European superstate to squander will be spent instead on the NHS, social care and maybe even cutting taxes?
The Prime Minister
We will be leaving the European Union on 29 March 2019. We will now be moving quickly to negotiate the details of the relationship during the implementation period which, as I have said, we expect to last for up to, or around, two years. The reason why we will have that implementation period, and why we would expect to continue to trade and operate with the EU on a similar basis to today, is to give businesses the certainty of knowing the basis on which they will be able to operate and so that they will not have to make two sets of changes to their arrangements, such as in relation to customs. There will only be one point at which businesses move to the new partnership. I think that that is a practical matter that most people will understand and appreciate.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
The Prime Minister has admitted today that we are looking at a £40 billion bill for Brexit. The Chancellor is already spending billions on contingency preparations, and we have two Cabinet Ministers jetting around spending lots of taxpayers’ money. Has she seen the analysis today from the Financial Times showing that rather than getting the £350 million for the NHS that was promised on the red bus, there will be a cost of £350 million per year—[Hon. Members: “Per Week.”] That would be the cost to the British economy, as economic output is 0.9% down?
The Prime Minister
When we have left the European Union—I have set out the commitments that we have negotiated as far as the financial settlement is concerned in the negotiations in phase 1—we will no longer year in and year out be spending vast sums of money in the European Union and sending those vast sums to the European Union. That is in direct contrast to the Labour party, which would pay any price and carry on paying to the EU, year in and year out.
Rachel Maclean (Redditch) (Con)
I congratulate my right hon. Friend on all the hard work she has put in to get us to this point—I think it is fantastic. We know there is a lot of hard work ahead, but does she welcome this opportunity to focus on her priority agenda of social justice, including higher educational standards and housing for our country, now that we can see that Brexit is moving ahead?
The Prime Minister
I thank my hon. Friend for her comments. She is absolutely right. We have just heard a reference to sums of money being paid to the European Union. When we do leave the EU, the money that we will no longer be paying year in and year out to the EU will be available to us to spend on our priorities, such as housing, education and the NHS. I was clear at the EU Council about the importance of the university sector. We want to ensure that we continue to have good-quality higher education in this country.
Joanna Cherry (Edinburgh South West) (SNP)
Last week, the Spanish Prime Minister, Mr Rajoy, said that as well as having a veto over any future agreement between the EU and the UK over the issue of Gibraltar, he also wants one over the issue of Gibraltar for the transitional period. Will the right hon. Lady give a firm commitment to the people of Gibraltar that she will not countenance any agreement for the transitional period that will not preserve their existing rights and arrangements?
The Prime Minister
We have been very clear throughout, and indeed in the discussions and continued interaction that we have with the Government of Gibraltar, that we are seeking the best deal for Britain and that deal must work for Gibraltar as well. They will be part of the exit negotiations. They will be covered by our exit negotiations and we will fully involve them as we leave the EU.
Robert Neill (Bromley and Chislehurst) (Con)
I congratulate the Prime Minister on the very real success she achieved in Brussels last week and urge her to stick to the pragmatic approach to these negotiations that brought that success about. Let me follow up on the point just made. As well as committing firmly to Gibraltar being included in these arrangements, will she undertake that her Government will work to strengthen, to the maximum extent possible, the trading arrangements between Britain and Gibraltar, both in the implementation period and after we have left the EU?
The Prime Minister
Let me say to my hon. Friend, who has long championed the interests of Gibraltar in this House, that when we negotiate our exit from the EU, when we negotiate the trade deal that we will have, we will be considering Gibraltar as part of our negotiations. So they will be there. We will be discussing with them as we move through those negotiations to ensure that we get a deal that is right for not only the United Kingdom, but Gibraltar.
Chris Bryant (Rhondda) (Lab)
If I have this right, the agreement says that nothing has been agreed until everything has been agreed, so the agreement is not an agreement at all—it is just a kind of pending operation. May I ask the Prime Minister about Russia? She rightly said at the beginning that, “We were at the forefront of the original call for EU sanctions”. Britain has wanted to be tough in relation to Russia, and I praise her for that. But how are we going to do that in the future if we are no longer in the room?
The Prime Minister
It is perfectly possible for this country to maintain our position on Russia. I have set out the UK’s position on Russia—I did it in my speech at the Lord Mayor’s banquet. We will continue to work with our European colleagues on the approach that we take and we will continue to work through other international organisations, such as the United Nations, on these matters.
Sir Desmond Swayne (New Forest West) (Con)
How likely is it that the Prime Minister would ask the EU27 to extend the article 50 deadline?
The Prime Minister
Sorry—I did not hear the beginning of my right hon. Friend’s question.
The Prime Minister
I think everybody is now looking very clearly at the timetable that has already been set. Donald Tusk, the President of the European Council, has expressed the view that we need to accelerate the progress because we need to get the agreement in place and the arrangements negotiated very speedily. We will be leaving on 29 March 2019.
Angela Smith (Penistone and Stocksbridge) (Lab)
Will the Prime Minister give a simple answer to a simple question? Will the working time directive be transposed and embedded into British law—yes or no?
The Prime Minister
The European Union (Withdrawal) Bill brings the workers’ rights that are currently in EU law into UK law, which is why that sort of thing is a bit rich coming from Labour MPs who voted against bringing them into UK law.
Simon Hoare (North Dorset) (Con)
Does my right hon. Friend agree that as the process evolves, the terms hard Brexit and soft Brexit seem increasingly redundant? The cocktail that the Prime Minister seems to have deployed—her personal pragmatism coupled with some rather good Tory common sense—seems to be winning the day. I encourage her to continue.
The Prime Minister
I thank my hon. Friend for his comments. As he may recall, I have said in this House before that I do not accept the terms hard Brexit and soft Brexit. We are negotiating the best possible deal for the United Kingdom.
Ann Clwyd (Cynon Valley) (Lab)
The Prime Minister has agreed with me three times over the past year about the important role the European Parliament has in the negotiations, because it has the power of veto at the end of the day. Eighty-six MPs have signed a letter that urges the Prime Minister to address a plenary session of the European Parliament. When will she do that?
The Prime Minister
We have been in discussions with the President of the European Parliament about the interaction that I will have with that Parliament. I had hoped to be able to speak to the Conference of Presidents at the end of November, but unfortunately that proved not to be possible from a European Parliament point of view. Nevertheless, we are still discussing a date on which I can go, and I keep in regular contact with President Tajani.
Rebecca Pow (Taunton Deane) (Con)
Might I say what a fillip the good news from the Prime Minister and Mr Juncker on Friday gave to all the people I met around Taunton Deane over the weekend? It really did change the temperature. The businesses I spoke to do not want to be disrupted, so will the Prime Minister confirm that in the transition period they will be able to carry on trading as they do now, and that they will also be able to think about negotiating deals for when we leave?
The Prime Minister
I am happy to give my hon. Friend that reassurance. As I have said before, the point about the implementation period is to give that reassurance to businesses in particular that they will know the basis on which they can carry on trading. That is why we would expect the arrangements for the trading relationship during the implementation period to be much as they are now. Although we will be outside the customs union, the single market, the common agricultural policy and the common fisheries policy, as I said earlier, we need to be able to continue to operate during the implementation period as we prepare for whatever the new arrangements are going to be at the end of that period.
Mike Gapes (Ilford South) (Lab/Co-op)
Further to the Prime Minister’s answers to the hon. and learned Member for Edinburgh South West (Joanna Cherry) and the hon. Member for Bromley and Chislehurst (Robert Neill), will she confirm that the implementation or transition phase will be exactly the same for Gibraltar as it will be for Northern Ireland and the rest of the UK?
The Prime Minister
I thought I had made it clear that as we negotiate these matters we will be negotiating for the UK, but that includes negotiating to ensure that the relationships are there for Gibraltar as well. We are not going to exclude Gibraltar from our negotiations for either the implementation period or the future agreement.
Giles Watling (Clacton) (Con)
Given that 72% of my constituents in Clacton voted to leave the EU, will my right hon. Friend give an assurance to them that there will still be a smooth and seamless exit despite the vote on amendment 7 last Wednesday, thus giving them and many others a very happy Christmas indeed?
The Prime Minister
I am happy to confirm to my hon. Friend, as I did a little earlier, that we will be leaving the European Union on 29 March 2019 and that we will be negotiating a smooth and orderly process, so that people can carry on living their lives and conducting their business with confidence about that and about the future relationship that we will negotiate with the EU.
Holly Lynch (Halifax) (Lab)
Last week, I understand that the Fisheries Minister, who was representing the Government at the annual Fisheries Council in Brussels, was recalled to Westminster as early as Tuesday to take part in the votes on the European Union (Withdrawal) Bill. I am incredibly concerned that this Government prioritise seeking to deny Parliament a final vote on the Brexit deal over representing our fishing interests in Europe, missing crucial talks on sea bass and Celtic sea cod. Can the Prime Minister confirm that that was the case and will she explain who took over as the UK’s lead negotiator in those vital discussions?
The Prime Minister
There are many occasions in this House when Members on the hon. Lady’s Benches, and indeed sometimes on my Benches, stand up and promote the primacy of this House and of Parliament. As Members of Parliament, obviously, we have a responsibility to be here in this House, although my hon. Friend the Minister balanced the requirements of being able both to represent the United Kingdom and to be present in this House.
Alex Chalk (Cheltenham) (Con)
This weekend, I met representatives of the Romanian community in Cheltenham. On their behalf, may I thank the Prime Minister for her determination to secure an agreement on the rights of EU and British nationals, which has provided enormous reassurance? Does she agree that this shows, first, what can be done and, secondly, that whatever deal is struck, our values of respect and tolerance for foreign nationals in our country will endure?
The Prime Minister
I am very happy to agree with my hon. Friend, particularly on that final point. What we have seen over the phase 1 negotiations is that, with commitment and perseverance on both sides, we can achieve agreement. That should give reassurance to EU citizens living here and indeed to UK citizens in the EU 27. As we move forward, we will indeed continue to abide by our values, particularly our values of tolerance and respect.
Mary Creagh (Wakefield) (Lab)
Is not the result of this European Council that there will be no negotiations with the EU until March next year and no deal concluded between now and March 2019? The tragedy is that there is no deal that the Prime Minister can get with the EU that will be as good as the one that we have now.
The Prime Minister
I am afraid that the hon. Lady is wrong in her question. In fact, the discussions with the European Union will be starting very soon, both on the implementation period and looking ahead to the future partnership.
Wendy Morton (Aldridge-Brownhills) (Con)
I welcome the progress that the Prime Minister has made in moving the negotiations forward. In speaking to my constituents over the weekend, I know that they welcome that progress, too. When it comes to security, can she confirm that we will continue to work with our allies to protect ourselves both now and when we leave the EU?
The Prime Minister
I am happy to give my hon. Friend that reassurance. We envisage negotiating a separate treaty to cover the security arrangements. There are a number of programmes and operations in which we are involved in the European Union that we think it would be beneficial for us to continue to be able to access precisely to maintain the security of people here, but also in the EU 27.
Stephen Kinnock (Aberavon) (Lab)
Referring to the transition period, the conclusions of the European Council make the position clear. It says:
“In order to ensure a level playing field based on the same rules applying throughout the Single Market, changes to the acquis adopted by EU institutions and bodies will have to apply both in the United Kingdom and the EU.”
Will the Prime Minister please confirm, therefore, that the jurisdiction of the European Court of Justice will apply in precisely the same way now as it will during the transition period?
The Prime Minister
I have answered a question on that in previous statements that I have made in relation to the matter. We would expect, yes, that the European Court of Justice jurisdiction would start very similarly at the beginning of that implementation period, but as I said in response to one of my hon. Friends earlier, we are also clear that, if it is possible to negotiate, for example, the dispute resolution mechanism at an earlier stage and introduce it at an earlier stage, we would do precisely that.
Geoffrey Clifton-Brown (The Cotswolds) (Con)
I congratulate the Prime Minister on having got the negotiations so far. Will she confirm that two of the announcements that she has made today—namely, that we will have a humanitarian presence in the Mediterranean and will continue to provide official development assistance to Africa—signal this country’s intention to work with our European allies as closely as possible once we have left the EU?
The Prime Minister
My hon. Friend is absolutely right. The area of migration is a good example of how we will be continuing to work with our friends and allies in the European Union, even after we have left. This issue affects us all. We can have a greater impact if we all work together and we will continue to do that.
Mr Pat McFadden (Wolverhampton South East) (Lab)
The dog that has not barked so far in these discussions has been the voice of the service industries. They dominate our economy and make up 45% of our exports, and we trade in surplus with the rest of the EU in them. Does the Prime Minister accept that any future agreement aimed only at tariff-free access for goods would be selling Britain short, and that the benchmark for judging success must be the same market access that we have now for our global, world-leading service industries such as education, the creative industries and the financial services?
The Prime Minister
The Government and I have said all along that we are looking for an agreement that is right for both goods and services because we recognise the important role that services play in the economy of the United Kingdom. We will be going in and negotiating for services and for goods.
Will Quince (Colchester) (Con)
I very much welcome the Prime Minister’s statement, particularly her comments on workers’ rights and our intention to enhance them post-Brexit. Does she agree that, despite the bluster from the Labour party, this Government backing the Parental Bereavement (Leave and Pay) Bill is the first step in getting not just European-wide workers’ rights, but the best workers’ rights in the world?
The Prime Minister
My hon. Friend makes a point about a matter that I know is of particular interest to him. He has campaigned on the issue and been a champion of these rights, and he is absolutely right. We will be looking to enhance workers’ rights. The Government have already taken steps to enhance workers’ rights in a number of other areas, including by commissioning the Matthew Taylor report. That is our commitment. It is not just words; we actually act.
Mr Alistair Carmichael (Orkney and Shetland) (LD)
If we are to leave the common fisheries policy in 2019 and if we are not then going to trade away access to UK waters for non-UK fishing vessels, what else is there left to talk about as far as fisheries are concerned?
The Prime Minister
We will be leaving the common fisheries policy—and, as I indicated, the CAP—on 29 March 2019. The arrangements that pertain to fisheries during that implementation period will, of course, be part of the negotiations for that implementation period. Leaving the CFP and the CAP gives us the opportunity, post-implementation period, to introduce arrangements that work for the United Kingdom. The Environment Secretary is discussing with the fishing and agriculture industries what those future arrangements should be.
Mr Simon Clarke (Middlesbrough South and East Cleveland) (Con)
People in Middlesbrough South and East Cleveland will give a warm welcome to the progress that has been made with the talks, and I thank the Prime Minister for that. They will also have noticed the scarcely concealed disdain from the Opposition for the progress that has been made. Does she agree that we are actually paving the way to delivering precisely what we want, which is good trade access without compromising control of our borders and laws?
The Prime Minister
My hon. Friend is absolutely right. He puts it succinctly and very well indeed. We want to maintain good trade access, but we also want to be able to take back control of our borders and laws, and that is what we will do.
Dr Rupa Huq (Ealing Central and Acton) (Lab)
I congratulate the Prime Minister on the applause she got at the EU dinner—something that even George Osborne would never have predicted. But would not the assurance on the rights of EU nationals have been more useful 18 months ago? As we now hear that a compromise is being cooked up to stave off yet another rebellion, were humble pie and fudge on the menu?
The Prime Minister
A number of Members of this House urged me and the Government unilaterally to make declarations about EU citizens’ rights for those living here in the United Kingdom. I was always clear that a UK Prime Minister and a UK Government should have a duty of care to UK citizens living in the EU. The key to the agreement that has been reached is that it is reciprocal, so we can give confidence not only to EU citizens living here, but to UK citizens living in the EU 27.
Martin Vickers (Cleethorpes) (Con)
One reason 70% of my constituents voted to leave was their concern about the free movement of people. The Prime Minister referred to registering new arrivals from the EU. During the implementation period, will we be able to control those numbers? If that is not the case, will she be arguing that point during the negotiations?
The Prime Minister
Obviously, at the end of that implementation period, we will have worked up to putting into place fully the new immigration rules that we will have. So it will be possible for EU citizens to come to live and work in the UK during that implementation period, but there will be some differences in relation to that, registration being one of those. So there will be building blocks being put in place. This is exactly one of the sort of practical measures that I am thinking about when I say we need the implementation period, to be able to put practical steps in place that lead up to what our future arrangements and future rules will be.
Emma Little Pengelly (Belfast South) (DUP)
The Democratic Unionist party has long been a strong supporter of the people of Gibraltar. Can the Minister give a strong and clear commitment today that the people of Gibraltar will not be excluded from any transitional arrangements that may be agreed between the United Kingdom and the European Union?
The Prime Minister
I will say this again: we will be ensuring that decisions that we take at the various stages of these negotiations cover Gibraltar as well as the United Kingdom.
Mr Philip Hollobone (Kettering) (Con)
Do the reciprocal rights for UK citizens in the EU extend simply to the country in which they reside or across the whole of the EU27?
The Prime Minister
The question of onward movement is one that will be looked at further in the second stage of the talks. This is reciprocal in terms of EU citizens’ rights here in the UK and UK citizens’ rights in the country in which they live in the European Union. There are further elements of that that we will be discussing in the later stages.
Wes Streeting (Ilford North) (Lab)
One of the most frequent criticisms of this place is that politicians are unable to give straight answers to straight questions, so can I give the Prime Minister another opportunity to answer the questions from Streatham and from Penistone and Stocksbridge? Can she guarantee that, after we leave the European Union, there will be no attempt to water down the 48-hour limit on the working week, provided for by the working time directive? It is a very simple yes or no question.
The Prime Minister
I have said on a number of occasions this afternoon that we will be bringing those workers’ rights that are in European Union law into UK law, so those rights will continue to exist. The party in this House that has voted against bringing those rights into UK law is the Labour party.
James Morris (Halesowen and Rowley Regis) (Con)
May I commend the Prime Minister for her statement? As she will be aware, the west midlands economy has been an export powerhouse for the UK, so as she moves towards vital trade talks in relation to us leaving the European Union, does she agree that it is important that west midlands business and west midlands regional government are engaged very much in those discussions so that the west midlands can maximise the benefit of Brexit?
The Prime Minister
I absolutely understand and recognise the importance of international trade to the west midlands, and I am very clear that, as we go forward in these negotiations, we will be ensuring that we are negotiating for the whole United Kingdom. We will be taking the interests of all parts of the United Kingdom, including the west midlands, into account.
Rachael Maskell (York Central) (Lab/Co-op)
For absolute clarity, will there be no watering down of the working time regulations and the ECJ judgments that relate to those regulations?
The Prime Minister
These rights are enshrined in EU law at the moment. They will be brought forward into UK law in the EU withdrawal Bill, which we are putting through this House at the moment. This Government are committed to workers’ rights and are committed to enhancing worker’s rights. That is why I commissioned Matthew Taylor’s report.
Jeremy Lefroy (Stafford) (Con)
May I congratulate the Prime Minister on the progress made? May I ask her, following the question from the right hon. Member for Wolverhampton South East (Mr McFadden), to state again that the best possible deal will include trade both in goods, in which we have a large deficit, and in services, which are vital to our economy and in which we have a surplus?
The Prime Minister
I am happy to reiterate that confirmation to my hon. Friend. What we will be looking for in our future partnership is obviously a trade arrangement and a security arrangement, but in the trade arrangement we will be talking about both goods and services. We recognise the importance of services to the UK economy.
Paula Sherriff (Dewsbury) (Lab)
In her statement, the Prime Minister pointedly referred to the abuse that her election candidates received. Unless she and everybody else in this House, and the Daily Mail, accept that abuse comes from all sides and from all political parties, we will not make any progress. If she so wishes, I can accommodate her this week by showing her the litany of abuse that I have received during the election and since. Please will she accept that unless we accept that this comes from all areas, we will not move forward?
The Prime Minister
What I said in the statement was this: “there can never be a place for the threats of violence and intimidation against some Members that we have seen in recent days. Our politics must be better than that.” I stand by that. All political parties in this House must be aware of the need to ensure that our politics is conducted in the right way and there is no place for threats and intimidation.
Kelly Tolhurst (Rochester and Strood) (Con)
I congratulate the Prime Minister on the way that she has worked with the EU over the past few weeks and how she has moved things on to the next stage. Does she agree that during any implementation period, it is important and right that we do indeed negotiate trade deals with other parts of the world to make the most of these new opportunities, to benefit British business, our economy and, most importantly, the British people?
The Prime Minister
My hon. Friend is absolutely right. Of course, the work on negotiating those trade deals—on looking to see what is possible—has already been started within the Department for International Trade by my right hon. Friend the Secretary of State and the Ministers there. Only earlier last week, I was discussing with the President of Mexico that country’s desire to have a trade deal negotiated with us. It is one of the first countries to say that it wanted that. The point of the trade deals is exactly as my hon. Friend says: it is about bringing jobs, bringing prosperity and improving people’s lives.
Mr Ronnie Campbell (Blyth Valley) (Lab)
Is the Prime Minister sure and confident that the EU negotiators will not put more obstacles in her way on the second agreement, because quite honestly I would not trust them as far as I can throw them?
The Prime Minister
I am very clear about what we want to achieve in our negotiations. We will be working with our European friends and allies to ensure that the result of that negotiation is indeed a good deal for the United Kingdom. [Interruption.] Well, I think they will, because a good deal for the UK is a good deal for the EU as well.
Paul Masterton (East Renfrewshire) (Con)
Does my right hon. Friend agree that her phase 1 deal was a victory for pragmatism over purist ideology? Will she commit our Government to continuing in the same vein throughout these negotiations, putting jobs and economic prosperity at the heart of Brexit Britain?
The Prime Minister
I am very happy to give that commitment. What is important as we go through these negotiations is that we are very clear about what is in the British national interest, but willing to be very pragmatic and practical about that because we want to ensure that we get a good deal. I believe not only that we will get a good deal with the European Union, but that we have an ambitious and bright future for this country outside the European Union.
Nick Thomas-Symonds (Torfaen) (Lab)
On workers’ rights, the Prime Minister promised in her Lancaster House speech that she would ensure
“that the voices of workers are heard by the boards of publicly-listed companies for the first time.”
Why, in the past year, has she not introduced the changes to company law that would make that happen?
The Prime Minister
As the hon. Gentleman will know, the Department for Business, Energy and Industrial Strategy has published proposals to do exactly that.
Robert Courts (Witney) (Con)
I congratulate the Prime Minister on this agreement, particularly with regard to reciprocal rights for UK and EU nationals. Does she agree that both for UK nationals abroad and for much-valued European members of our communities here, such as those in west Oxfordshire, this agreement represents security and reassurance?
The Prime Minister
I am very happy to say exactly that to my hon. Friend. A number of hon. Friends have commented on comments that have been made by their constituents who are EU citizens that they do now feel reassured as a result of the phase 1 negotiation. I was clear that citizens’ rights should be one of the early issues that we addressed. We have done just that, and we have given people confidence for the future.
Peter Kyle (Hove) (Lab)
The Prime Minister has spent inordinate amounts of time reconciling the divisions within her own Cabinet, but no time whatsoever doing so for the public. Now that we are entering the most difficult part of these negotiations, what will she do specifically not only to deliver on the aspirations and excitement of those who voted leave, but to take into account the anxieties of people who voted remain?
The Prime Minister
Regardless of whether somebody voted leave or remain, I think the key focus for us all now is to ensure that we get the best possible deal for the United Kingdom as we leave the European Union. That is what the Government are focused on, and that is what we are going to do.
Robert Jenrick (Newark) (Con)
Never have my constituents in Newark been so grateful to wake up to Jean-Claude Juncker as they were a week ago on Friday, when they saw the Prime Minister shake hands with him. Looking to the future, as she goes to strike a comprehensive free trade deal, does she agree that although businesses in Newark would like a seamless transition, they would also like us to strike out and have enough capacity to become a more innovative country, rather than aligning solely with the European Union?
The Prime Minister
I think that there are many areas in which we in the UK are already showing our ability to innovate. We have great, world-leading businesses at the cutting edge of technology in, for example, the automotive industry, and in other areas. Of course, once we leave the European Union, I want to encourage that innovation and that creativity, because I want to ensure that we see a brighter future for this country, and exactly that sort of innovation and creativity can help to encourage that.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
It is nearly a year since the Lancaster House speech, but the British Government have not published the detail of their preferred trade framework to replace membership of the single market and the customs union. Why has it taken the Prime Minister so long to summon the Brexit war Cabinet to start that work? Is it not the case that the Government and the Conservative party are split about what happens after transition?
The Prime Minister
No. There have been various stages to the negotiation. I set out the framework for that future trade relationship in my Florence speech in September, and we will of course now negotiate the further details of it.
Kevin Foster (Torbay) (Con)
I welcome the Prime Minister’s statement, and the progress that has been made in the negotiations. I was particularly pleased to hear reference to Russia and to the fact that we are looking to continue our co-operation. At the European Council, did she reassure our European partners that we maintain our absolute commitment to the defence of Europe, based on the bedrock of the north Atlantic treaty?
The Prime Minister
I can absolutely give that reassurance to my hon. Friend. We are unconditionally committed to maintaining Europe’s defence, and we will continue to play a key role in Europe’s defence. We will do so, obviously and crucially, through NATO, but we also want to continue to work with our European friends and allies.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
The Prime Minister has been toiling away in Brussels, trying to get on to the second stage. But when she came back, she must have seen, as my constituents did, her senior colleagues—including the Foreign Secretary—saying in the Sunday papers that she is leading us towards being a “vassal state”. Will she give my constituents, and people up and down the country, a crystal clear answer to this question: is she leading us towards being a vassal state, with a subservient role in Europe? If that is not the case, will she sack her Foreign Secretary?
James Cartlidge (South Suffolk) (Con)
I warmly congratulate my right hon. Friend on securing progress, which was strongly welcomed by businesses in South Suffolk. On the point raised by the right hon. Member for Wolverhampton South East (Mr McFadden) and my hon. Friend the Member for Stafford (Jeremy Lefroy) about services, does she agree that not only do we need to have services in the future agreement, but—given that our surplus with the EU is £15.5 billion and rising rapidly—we need to have the very best possible access for that dynamic part of our economy?
The Prime Minister
I absolutely agree, and I fully recognise not only the importance of the role that services play in our economy, but the fact that the balance of relationship with the European Union in services is different from that in goods. Services are a great part of our economy. I want to ensure that we continue to have good trading relationships in services and that we look at how we can enhance our trading relationships in services around the rest of the world.
Tom Brake (Carshalton and Wallington) (LD)
In the press this morning, there were reports that in advance of the meetings today and tomorrow, Ministers have received assessments of impact of the different models of Brexit—or, indeed, impact assessments. Can the Prime Minister confirm whether that is correct, and, if so, would she be willing to put them into the public domain?
The Prime Minister
We have been very clear that, as the right hon. Gentleman knows, what he refers to as impact assessments do not exist. The answer to his question is simply no.
Mr Nigel Evans (Ribble Valley) (Con)
I know I can be a little slow at times, but I am finding it incredibly difficult to discern what the policy of Her Majesty’s Opposition is to Brexit, as it changes depending on whom I am listening to—
Mr Speaker
Order. I did not think that the hon. Gentleman, who is a very experienced Member of the House, was that slow, but he knows perfectly well that the policy of the Opposition is not a matter for the Government of the day. [Interruption.] No, no—hopeless. I call Stephen Timms.
Mr Speaker
Order. Do not shake your head at me, Mr Evans. I have told you what the position is. [Interruption.] Order. You ask an orderly question, or you do not ask a question. Given your long experience, you ought to know better than to start a question inquiring about the policy of the Opposition. Over Christmas, you can rehearse.
Stephen Timms (East Ham) (Lab)
To avoid, rightly, a hard border between Ireland and Northern Ireland, the Prime Minister has committed the UK, if necessary, to
“maintain full alignment with those rules of the internal market and the customs union”
that are necessary. Will such full alignment apply just to Northern Ireland, or to the UK as a whole?
The Prime Minister
As the right hon. Gentleman knows, we believe that we can actually deliver on having no hard border between Northern Ireland and Ireland through the overall relationship that we negotiate between the UK and the European Union. Failing that, we will look at specific solutions that match the unique circumstances of Northern Ireland, and failing that, we will move to the concept of full alignment, which is about having the same objectives on both sides. If he carries on reading the progress report, it makes it clear how that would operate: it could be UK-wide or, with the agreement of the Northern Ireland Executive and Assembly, it could be specific to Northern Ireland.
Edward Argar (Charnwood) (Con)
I welcome the sensible and pragmatic agreement on phase 1 that my right hon. Friend has secured. Opposition Members confidently, and wrongly, suggested she could not do that, and yet again, as on so much, she has proved them wrong. Just as she has delivered for the UK on phase 1, will the Prime Minister reaffirm her determination to prove them wrong again and secure a good trade deal in phase 2, in line with her Lancaster House speech?
The Prime Minister
Yes, I can confirm to my hon. Friend that the principles set out in the Lancaster House speech continue to apply. Obviously, I elaborated on those in the Florence speech, and we will be continuing to do so as we move forward into those negotiations. I believe we will achieve an ambitious comprehensive free trade agreement with the European Union, because I think it is in their interests as well as ours.
Chris Stephens (Glasgow South West) (SNP)
I will try to be the seventh Member of the House to receive a crisp answer on workers’ rights. Will the Prime Minister confirm that there have been no discussions with the European Union or in her Cabinet, and that there are no planned discussions with the European Union or in her Cabinet, on scrapping the working time directive, the agency workers directive and the pregnant workers directive, as advocated by her Ministers in the recent past?
The Prime Minister
The negotiations that we have been having with the European Union have not covered workers’ rights. Workers’ rights as they exist in EU law will be brought into UK law through the Bill that is going through Parliament. We already have a situation in the United Kingdom where, in some areas, we have better rights for workers than exist in the European Union, and we will continue to enhance those rights.
Matt Warman (Boston and Skegness) (Con)
For the Prime Minister’s negotiations to be meaningful, they must of course include considering the possibility of a no-deal scenario, but does she agree with me that the pragmatism shown by both sides last week demonstrates that such an outcome is now considerably less likely?
The Prime Minister
My hon. Friend is right. We have to prepare for all contingencies and continue to include among them the possibility of no deal, but what has been shown by the phase 1 negotiations is that, with perseverance and commitment on both sides, we can reach agreement.
Ruth Cadbury (Brentford and Isleworth) (Lab)
The majority of UK citizens would now prefer us to remain in the EU, because they are realising what many of us knew for a long time, which is that leaving the EU means greater costs to the economy and to UK taxpayers than staying in and that we will no longer have a voice at the table in Europe. Will the Prime Minister start leading the country, or will she continue to be led by the hard Brexiteers in her own party?
The Prime Minister
The hon. Lady seems to have forgotten one thing: this Parliament voted overwhelmingly for a vote to take place in a referendum on our membership of the European Union. That vote took place, and it was a close vote, but the majority voted to leave the European Union. I think—and I have always felt this—that in other circumstances when other countries in the EU held a referendum on new treaties and came out against them but the EU basically told them to go back and think again is not the right way. If the British people have voted to leave, we should leave.
Nigel Huddleston (Mid Worcestershire) (Con)
I congratulate the Prime Minister on the practical and sensible approach she has adopted towards the Brexit negotiations, as opposed to the flip-flopping, contradictions and wholly unrealistic expectations we have heard from the Opposition parties. Does she agree that if a party wishes to position itself as the party of remain, it ought just to be honest and come out and say so?
The Prime Minister
I absolutely agree with my hon. Friend. The flip-flopping just this weekend from the Labour party shows that it cannot make up its mind what its view is on Brexit. That is all the more reason why it is a good job we are in government and not Labour.
Mr Speaker
Ingenuity and good order are not incompatible, as the hon. Member for Mid Worcestershire (Nigel Huddleston), at least, has just demonstrated.
Wera Hobhouse (Bath) (LD)
Can the Prime Minister give an example of an EU border with a country outside the customs union where there is no hard border and there are no border checks?
The Prime Minister
I think what the hon. Lady is trying to get at is whether it will be possible to do what we have said we will deliver for Northern Ireland and Ireland. The answer is yes, and we have already set out some ways in which it could be done.
Albert Owen (Ynys Môn) (Lab)
I welcome the progress that has been made on the Irish question, but I am disappointed by the response the Prime Minister gave to my right hon. Friend the Member for East Ham (Stephen Timms). Will she state categorically that Welsh sea ports, including the port of Holyhead in my constituency, which is the busiest on the western seaboard, will have equal status with ports in Scotland, England and, indeed, Northern Ireland when it comes to trade and the movement of people?
The Prime Minister
The progress report that was agreed between the United Kingdom and the EU was clear about the significance not just of north-south trade but of maintaining east-west trade. I and the Government are very clear about the need to maintain not just the constitutional integrity of the United Kingdom, but the economic integrity of the United Kingdom.
Jack Dromey (Birmingham, Erdington) (Lab)
The mask slipped at the weekend, when the Foreign Secretary let slip that changes might be made for the worse to British workers’ rights on working time, even though they are already working the longest hours in Europe. The Prime Minister has today refused to give a cast-iron guarantee that there will be no changes for the worse. Does that not demonstrate that we can never, ever trust the Tories with workers’ rights?
The Prime Minister
I will tell the hon. Gentleman who cannot be trusted with workers’ rights—a Labour party that voted against bringing workers’ rights into UK law.
Paul Flynn (Newport West) (Lab)
How and when will Wales enjoy the alleged benefits of the regulatory alignment that will be enjoyed by Northern Ireland? How can it possibly work?
The Prime Minister
As I indicated in response to an earlier question, the reference to full alignment in the progress report is not the first option in ensuring that there is no hard border between Northern Ireland and Ireland. We believe that we can achieve that through the overall relationship between the United Kingdom and the European Union. That is what we will be working for.
Alan Brown (Kilmarnock and Loudoun) (SNP)
In her statement, the Prime Minister said that our “universities remain a highly attractive destination for students from across the EU”. The blunt reality is that the number of applications from EU students has gone down. On EU citizens’ rights, she said she was “providing vital reassurance to all those citizens and their families in the run-up to Christmas.” Just last week, the Select Committee on Environment, Food and Rural Affairs heard confirmation from a seafood supplier that at this moment in time, his employees do not feel any reassurance. To allow Scotland to take control of this situation, does she agree with the Secretary of State for Environment, Food and Rural Affairs that post-Brexit, Scotland should have control of its own immigration policy?
The Prime Minister
If I heard the hon. Gentleman correctly, he was not correct at the beginning of his question. In 2009-10, the number of non-UK EU higher education students in the UK was 100,275. In the 2015-16 academic year, the figure had gone up to 112,410.
Clive Efford (Eltham) (Lab)
The £39 billion is to pay for commitments that we entered into freely when we were a full, operating member of the European Union. If we fell out of the European Union and failed to pay that bill, what freedom would the European Union and independent European Union countries have under WTO rules to interfere with the trade agreements we would be negotiating with other countries?
The Prime Minister
As the hon. Gentleman says, we have negotiated in phase 1 a financial settlement that is representative of the commitments I said we would honour over this period. It is there in the context of the future deal being agreed, but I am optimistic we will agree that future deal.
Neil Gray (Airdrie and Shotts) (SNP)
If there are to be opportunities from Brexit and if we are to avoid the large potential pitfalls, it is crucial that all the nations of these isles have their priorities heard, listened to and acted on. How does the Prime Minister plan to expand consultation with the Governments of all the nations of these isles in the next phase, to avoid the very clear issues from the first phase of the negotiations?
The Prime Minister
Discussions and engagement with the devolved Administrations have already been enhanced over recent weeks and months. The First Secretary of State has regular meetings with the Scottish and Welsh Governments. That engagement will continue.
Karin Smyth (Bristol South) (Lab)
The phase 1 agreement rightly confirms the Government’s commitment to the Good Friday-Belfast agreement. Further to her answer to my right hon. Friend the Member for East Ham (Stephen Timms), will the Prime Minister assure my constituents that their rights to travel, work and study across the EU will be aligned across the United Kingdom?
The Prime Minister
When we leave the European Union, the position of UK citizens will change in relation to the European Union. In relation to Ireland, we will maintain the common travel area so that the rights of movement, which existed long before either Ireland or the UK were a part of the European Union, will continue.
Sammy Wilson (East Antrim) (DUP)
Michel Barnier’s comments this weekend indicate that he may wish to make the UK a vassal state of the EU after we leave. Is the Prime Minister encouraged, however, by the reaction of Italy and Belgium? They recognise the strength and significance of the UK, and believe a special relationship is desirable. What plans does she have to go to member states to sell the UK’s case for a good relationship after Brexit?
The Prime Minister
I was interested to note the comments, made by a number of other countries, that the future relationship we will negotiate with the European Union would, as the hon. Gentleman says, be a tailor-made or bespoke arrangement for the United Kingdom. I assure him that not only will I be having interaction with the other EU27 leaders, but that Government Ministers will be meeting their opposite numbers and talking to them about the significance of the continued relationship with the UK and the EU.
David Linden (Glasgow East) (SNP)
We know that Brexit will be an unmitigated disaster for young people across these islands. With regards to the specific reference to the Erasmus project in the statement, by the time first-year students at Lochend High School in Easterhouse get to university will they still be able to enjoy Erasmus?
The Prime Minister
I said in my statement that for the remaining three years of this budget plan, we will be maintaining access to the Erasmus programme. For the future, it is one of the programmes that will be a part of the negotiations on our future relationship.
Alex Cunningham (Stockton North) (Lab)
My constituency is home to world class chemical companies that are anxious that the European REACH––registration, evaluation and authorisation of chemicals—standards, which regulate their products and guarantee their markets, will still apply after they leave the EU and beyond the implementation period. As trade talks start, will the Prime Minister do something to assure them that that will be the case?
The Prime Minister
We recognise the importance of this particular industry. Part of the trade talks and negotiations will be looking at the basis on which trade will carry on between the remaining European Union member states and the United Kingdom. That is the same in any trade agreement that a country enters into.
Mr Speaker
It is no bad thing, either for the hon. Gentleman or for the House, if the Scottish National party Chief Whip is in the guard’s van.
Patrick Grady (Glasgow North) (SNP)
I had the underwhelming experience this morning of visiting the Brexit Reading Room. For each of the 39 documents, I was left with the very clear impression that they do not contain any commercially sensitive or negotiation-sensitive information, so why not share that experience with the country and put them in the public domain?
The Prime Minister
The papers have been provided for the Select Committee. The formal position is that once the papers are in the hands of a Select Committee, it is up to them whether or not they are published.
Mr Speaker
Order. I thank all colleagues, in particular the 77 Back-Bench Members who questioned the Prime Minister and the Prime Minister for her extremely succinct replies.
Grenfell Tower and Building Safety
The Secretary of State for Communities and Local Government (Sajid Javid)
With permission, Mr Speaker, I would like to update the House on the ongoing response to June’s tragic fire at Grenfell Tower and our wider review of building safety.
It is now six months since the disaster. Last week a number of events were held to mark this sad milestone, including the national memorial service at St Paul’s. I had the privilege of attending the extremely moving service alongside the Prime Minister, the Minister for Grenfell victims, my hon. Friend the Member for Reading West (Alok Sharma), and, of course, the right hon. Member for Wentworth and Dearne (John Healey), among others. The scale and impact of the disaster are unprecedented in recent times, and I could not hope to cover all aspects of the response in one statement, so today I will concentrate on areas where I have new information to share. However, I am very happy to take questions on any aspect of the tragedy and the response to it.
I will start with an issue that is particularly important to hon. Members and to me, and that is finding new places to live for those who lost their homes. Responsibility for rehousing lies with the local authority, the Royal Borough of Kensington and Chelsea. However, I have been closely involved with the process to ensure that everyone is rehoused as quickly as possible, and my Department has been providing the council with support to help to bring that about. The council has been tasked with finding places to live for 207 households from Grenfell Tower and Grenfell Walk. To date, 144 households —almost 70%—have accepted an offer of temporary or permanent accommodation. According to the latest figures from the council, 102 of these households have now moved in.
For those who remain in other accommodation, the council has offered the opportunity to move into private rented accommodation while a permanent home is found. Some have taken up this offer, and others have made it clear that they do not want to have to move twice—something I completely understand. The council was undoubtedly slow off the mark in starting the rehousing process, but, with its own change of leadership, the help of the independent Recovery Taskforce, and pressure and support from the Department for Communities and Local Government, consistent progress is now being made, but I am far from complacent.
I have always been very clear that we should move at the pace of the families involved and that nobody should be rushed or pushed into making a decision about where to live. But to have so many families, including some children, still living in hotels and other emergency accommodation six months after the tragedy is simply not good enough. The situation is undoubtedly complicated, but I have been very clear with the council that I expect it to do whatever is necessary to help people into suitable homes as swiftly as possible. I am confident that the council is capable of that, but, along with the taskforce, I will continue to monitor the situation and to work with the council to ensure that it happens.
The issue of rehousing has an added poignancy with Christmas just around the corner. Whatever one’s faith, this a time for family and friends and that makes it a difficult time for anyone who has suffered a loss or trauma. Nothing anyone can do will make this a normal Christmas for the bereaved and the survivors, but we are doing all we can to offer extra support over the coming weeks. A range of activities and events are being staged for local children, particularly those still living in hotels. Social spaces have been booked in four of the hotels where families are staying, so there is room for people to spend time together. NHS outreach workers are visiting residents in the local area to offer specialist mental health support, building on the excellent work the NHS has already done on mental wellbeing. Specialists have screened almost 1,000 adults for signs of post-traumatic stress disorder: 426 are currently in treatment for PTSD, while a further 62 have completed their treatment, and 110 children have also received or are receiving specialist help. The dedicated NHS Grenfell helpline remains available 24 hours a day, seven days a week.
Local organisations are also providing health and wellbeing support on the ground, including culturally sensitive support that reflects the diverse make-up of the borough, and last month’s Budget made available a further £28 million to pay for mental health and emotional support, a community space for those affected and investment in the Lancaster West estate over the next three years. Of course, it is not only the Government providing funds: in the aftermath of the tragedy the British people responded with incredible generosity, donating more than £26 million to various charities.
The majority of that money—more than three quarters of it—has already been paid to survivors and to the next of kin of those who died. Of the remaining £6 million, about £2 million is being held back for people who are entitled to payments but have not yet claimed them, and for some whose applications are still being processed. Payments for those who have not claimed will be looked after by the charities until the individuals are ready to engage. The remaining £4 million will go towards providing long-term support and community projects. As people are rehoused and take the time to grieve, the distributing charities will work with them, identifying their changing needs and ensuring that money goes where it can best meet the needs of the community. The House can rest assured that every penny that was donated will be spent on the people for whom it was intended; the generosity of the British public demands no less.
Another issue in respect of which the views and wishes of the local community must be paramount is the future of Grenfell Tower itself. The tower is currently being wrapped in white sheeting, a process that will be completed early next year. That is not being done, as some have claimed, to make people forget about what happened. It is being done because many members of the community—people who have been directly affected by the fire—have said that covering the tower will help them to begin the healing process.
I acknowledge the current anxieties about the long-term future of the site among those who have been most affected. I can categorically state that no decisions have been made about the long-term future of the site on which the tower sits. Those decisions will not be led by me, by the Government, by the House, or by the Royal Borough of Kensington and Chelsea; it is the bereaved, the survivors and the wider community who will lead, and be at the heart of, the decision-making process. My hon. Friend the Minister for Grenfell victims is working directly with them to agree on a set of written principles that will guide the way forward for the future of the site. When decisions are made, we want them to have the broadest possible support from those who have been affected, particularly those who lost loved ones, rather than just following the views of those with the loudest voices. The principles that we are drawing up will help us to ensure that that happens, and they will include a firm commitment from the council that if the bereaved, the survivors and the wider community do not want the site to be redeveloped for housing, the site will not be redeveloped for housing.
As well as dealing with the aftermath of the tragedy, we are determined to do everything possible to prevent such a disaster from happening again. A crucial element of that is the public inquiry, which recently held its first procedural hearings under the chairmanship of Sir Martin Moore-Bick. I know that some members of the community are concerned about the inquiry’s remit, structure and personnel. Some have called for Sir Martin to be supported by an extended panel that reflects the diverse population of the tower. The decision on that rests with the Prime Minister. She has given a commitment to consider the composition of the panel once Sir Martin has determined what further expertise is needed, and she is now giving active consideration to the issue.
Meanwhile, Sir Martin has said that he is actively considering plans for a consultative panel of local people who could talk to and receive information from the inquiry. Such a panel has been established successfully by the inquiry into child sexual abuse as a way of closely involving victims and survivors in the work of that inquiry. Sir Martin has said that any decision on the establishment of such a panel for the Grenfell Tower inquiry will be taken in consultation with tower residents and bereaved families. I can assure the House that, whatever happens next, legal representatives of core participants will have access to all relevant documents. They will be able to offer opening and closing statements at certain hearings, and they will be able to suggest lines of questioning for witnesses. The needs of the community have been at the heart of the inquiry since it was first announced, and that will not change.
Learning lessons for the future will be a crucial part of Sir Martin Moore-Bick’s inquiry, but it is not the only piece of work on how building safety can be improved. Earlier this year, the Home Secretary and I asked Dame Judith Hackitt to carry out an independent review of building regulations and fire safety. The current system is complex and confusing, a situation that has developed over many years and under successive Governments. Today Dame Judith has published her interim findings, which show that there is a need for significant reform. I can confirm that the Government have accepted all her recommendations. We agree with her call for a change in culture and a more effective system that will encourage people to do the right thing and hold to account those who try to cut corners. Everyone who is part of the system, including Government, has an important role to play in delivering this change in culture and mind set. We fully support this direction of travel signalled in Dame Judith’s report. Achieving culture change will, inevitably, take time, but while Dame Judith explores these issues further, she has also has identified a number of areas where we can make a start today. These include work on restructuring guidance and tightening restrictions on the use of desktop studies.
On desktop studies, we will revise the approved documents on fire safety and commission work to produce a new British standard on when and how such assessments can be used. On guidance, we will work quickly with industry experts to complete work on clarifying the approved documents on fire safety. More widely, we will consider how the entire suite of guidance on compliance with building regulations can be restructured and reordered to make it more user-friendly; we will work with experts across the sector to explore how this can be done.
Dame Judith recommends that consultation with fire and rescue services be carried out early in the design process and then acted on, and that fire safety information on a building should be handed over at the right moment. We will write to building control bodies to highlight these recommendations. The Government will play our part in making the system work better and fixing the problems, and I urge the construction industry, building control bodies, fire and rescue services, landlords and others to play their part too.
In January, Dame Judith will host a summit on building regulation and fire safety. It will form the springboard for the next phase of her review, and I encourage leaders from across the sector to take part and help design a better system. While Dame Judith continues her vital work, we are continuing to support wider work to make existing buildings safer. In the past six months, we have overseen a comprehensive set of fire safety tests on cladding components and systems. Fire and rescue services have visited and checked fire safety in every residential tower that has been identified as having cladding likely to constitute a fire hazard or which they consider a priority for other reasons.
Across the country, swift action has been taken to improve fire safety systems, and to put in place interim measures where risks have been identified. We have provided detailed advice to local authorities, housing associations and private landlords on how to ensure their buildings are safe. DCLG’s expert panel has issued advice to building owners about carrying out the necessary work to address the fire risks of certain cladding systems.
There is undoubtedly room for improvement in the way the building regulations system works and is managed in the future. However, Dame Judith makes it clear that her report should not be interpreted as meaning that buildings constructed under the existing system are unsafe. The system needs to be made stronger for the future, but the action taken since June is helping building owners make homes safer today.
Six months ago 71 people lost their lives and hundreds more lost friends, loved ones, homes and possessions. Six months on, progress is being made; the situation is moving in the right direction, but there is still a long, long way to go. And as long as that is the case, I will not stop working with, and fighting for, people who have suffered more than any of us could bear. They must not be forgotten; they will not be forgotten.
John Healey (Wentworth and Dearne) (Lab)
I thank the Secretary of State for early sight of his extensive statement.
Last Tuesday, Mr Speaker, you welcomed Grenfell survivors and bereaved families to this House for a memorial meeting. Many of us in the Chamber today were at that event, and, six months on from the terrible fire at Grenfell, they told us, “It should not need us, as survivors, to bear our wounds to get the action needed, but you’re the only people we can turn to.”
As the Secretary of State said, both he and I were also at the national memorial service in St Paul’s cathedral last week, and perhaps the most moving part of the service was a sound montage of voices from Grenfell. The final voice was a woman’s: “I want to start afresh,” she said,
“I just want a home again.”
Yet more than six months after the fire, more than 150 of the 210 families from Grenfell Tower are still in emergency or temporary accommodation. That is no place for a family at Christmas, and no place for people to start to rebuild shattered lives.
It really is not good enough for the Secretary of State to say that responsibility for rehousing lies with the local authority. This is the same council that failed Grenfell residents before the fire, and it is failing them again now. The buck must stop with Ministers. Will the Secretary of State confirm the figures released on Thursday, which showed that only 45 of the Grenfell Tower families are in permanent homes again, and that more than half are still in emergency accommodation? How many of the 50-plus households in temporary accommodation have children, and how many of those have been there longer than the six-week legal limit? Above all, what will he and the Government now do to get the Grenfell Tower survivors and families back in permanent homes again?
In truth, Ministers have been off the pace at every stage since the fire. They have been too slow to act and too reluctant to take responsibility for the response required for this national disaster. The Secretary of State now needs to bring real urgency to this task. Dame Judith Hackitt’s interim report today is welcome, but this review was promised in the autumn. It has arrived just before Christmas, and there is still no date for the final report. Many of its findings are not new, but it is still damning to hear the chair say in the report that
“the whole system of regulation…is not fit for purpose, leaving room for those who want to take shortcuts to do so.”
Developers are still building new homes to meet these regulations, and people still do not know whether the materials and systems used on their homes are safe.
The Secretary of State says that he will work quickly with industry experts on clarifying the approved documents on fire safety. This was promised by his predecessor, Eric Pickles, in 2013 after two previous coroners reports on fatal fires, and was due to be published in 2016-17. That never happened. Will the Secretary of State tell us when this work will be completed and published? Will he also act on other recommendations, rather than waiting for the final Hackitt report next year? Will he start immediate work to make sanctions much tougher for those who do not follow the regulations? Will he make meeting a national standard mandatory for those doing fire inspections? Will he make all fire testing public? And will he ensure that residents are informed of all safety assessments and surveys done on their homes?
On the public inquiry, I am delighted that the Secretary of State has today finally recognised the concern about extending the advisory panel to help to build trust. We welcome this, as we have been making this case for some time on behalf of the Grenfell residents, but the right hon. Gentleman speaks on behalf of the Government, and it is simply not good enough to say that this decision rests with the Prime Minister. She commissioned the inquiry and confirmed its terms of reference four months ago. When is she going to make this decision?
On the safety of tower blocks around the rest of the country, six months after the Grenfell Tower fire, the Secretary of State still cannot give a commitment that all the other tower blocks are now fire safe. Indeed, he cannot even confirm today that all tower blocks have had a fresh fire safety assessment. Is it the case, as some reports state, that fewer than half the council tower blocks in England have had a fresh fire risk assessment since the Grenfell Tower fire? What is the figure for privately owned blocks, which is likely to be much lower? By what date will all tower blocks, public and private, have had a proper fire risk assessment? How much have the Government so far spent on funding to help social landlords to do immediate essential fire safety remedial work? Why will the Secretary of State not back our calls, alongside those of fire service chiefs, for the Government to help to fund retrofitting sprinkler systems in social housing, so that residents can be as safe in those blocks as they are in newly built tower blocks?
This is not about party politics, but it is about challenging the decisions and policies of those in power. This is exactly what the Grenfell families want, and exactly what our job in this House is. All of us share a responsibility to ensure that the Grenfell survivors who need help and a new home get them, that anyone culpable is held fully to account, and that every measure is in place to ensure that this can never happen again, but I say to the Secretary of State that this demands a much greater sense of urgency than we have had from him and the Government to date.
Sajid Javid
I thank the right hon. Gentleman for his response. He raises a number of issues, which I will go through in turn. He asked about the progress of rehousing the victims of the tragedy. I remind the House that 151 homes were lost to the fire, but there are now 207 households to rehouse as several families took the opportunity to create some small family units, each one of which has been accepted. Of the 207, 144 have accepted offers of temporary or permanent accommodation. He asked me about how many of those households had actually moved in, and 61 have accepted temporary accommodation and 83 have accepted permanent accommodation, with 56 of those receiving temporary offers and 46 of those receiving permanent offers having moved in.
I have recognised on several occasions, and I recognise again today, that progress has been painfully slow, but I have been absolutely clear that no family should be forced or pushed to accept an offer of housing. In addition to offers of permanent and temporary housing, all families have been offered private rented sector accommodation. They can either find it themselves, or they can show examples of what is available out there and work can be done for them. However, the clear instruction to the council has been not to force anyone to do anything that is against their wishes and to treat them like people, not statistics. I know that the right hon. Gentleman will agree with that approach.
The right hon. Gentleman asked about the building safety work, and I thank him for welcoming the independent work that has been done by Dame Judith Hackitt. He talked as though that is the only work that has been done since the terrible tragedy but, as he will know, the expert panel was set up within days of the tragedy. The panel is still in place today, and its remit has been strengthened to look at structural safety, for example. The panel has also issued guidance to local authorities, housing associations and private residential providers on several occasions, and that guidance is being continually updated. Alongside that, we have had the building safety programme, which began its work on the different types of cladding immediately. During the summer, as the right hon. Gentleman will remember, a number of independent building systems tests were carried out, and comprehensive results have been published and advice has been given accordingly. Lastly, a tremendous amount of work has been done by fire and rescue services across the country, and today offers me the opportunity to commend them on their work to test and independently inspect over 1,000 towers. That work continues.
The right hon. Gentleman also asked me whether any residential towers still require testing and inspection. We believe that all residential tower blocks that have any type of aluminium composite material cladding have been properly inspected, as have several other towers about which there are concerns for other reasons.
As for the timing of the report, given the amount of work required and given that the independent review has been looking at a system that has been developed over many years under successive Governments, it is welcome to have the interim report at this stage. We expect the final report in the spring.
Mr Mark Prisk (Hertford and Stortford) (Con)
I welcome the Secretary of State’s remarks. Indeed, he has been assiduous in reporting back to Parliament. Dame Judith Hackitt, who has just spoken to the Communities and Local Government Committee, says in her report that there is a culture, to which the Secretary of State referred, of businesses
“waiting to be told what to do by regulators rather than taking responsibility for building to correct standards.”
That has to change. Will the Secretary of State ensure that any future regulations change that culture and ensure that those who design, build and subsequently manage buildings are firmly held to account?
Sajid Javid
My hon. Friend speaks from great experience. Dame Judith recommends a culture change, which will of course take time, but there are some immediate measures we can take. It is certainly our intention to work with Dame Judith and to implement her final recommendations.
Martyn Day (Linlithgow and East Falkirk) (SNP)
I start by thanking the Secretary of State for his statement and Dame Judith for her work. We must not forget that this interim report comes only six months after one of the most devastating high-rise fires the world has seen, and our thoughts at this time of year are with those who lost everything in the catastrophe.
I wish to repeat the call that my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East (Stuart C. McDonald) made last month for the Government to allow indefinite leave to remain to those to whom they offered an immigration amnesty. That is needed for undocumented survivors to feel able and safe to take up the support they so desperately need. Surely that is simply the right thing to do in these tragic circumstances.
This report makes recommendations to ensure that we have regulatory systems that are robust enough for now and for the future. We must be able to assure residents that the buildings they live in are, and will remain, safe. We in the Scottish National party welcome the report’s conclusion that safety must come ahead of cost cutting. Will the Secretary of State ensure that the findings of this report are heard and that safety is made paramount?
Sajid Javid
I thank the hon. Gentleman for his comments, particularly on the immigration rule changes that the Government have announced to help families. We continue to monitor that to see what more we can do, if required. I also assure him that building safety is absolutely paramount, which is why we commissioned all the work that has taken place since the terrible date of this tragedy and accepted the recommendations of the interim report today.
Mr Philip Hollobone (Kettering) (Con)
What is the present fire advice to residents in similar blocks? If a fire breaks out, should they stay in their accommodation or should they leave the building?
Sajid Javid
The fire advice situation can be different in every block. What we have asked is for the owners of such blocks, often the local authority or a housing association, to work with fire safety experts, including the fire and rescue service, and to make sure that, whatever the fire advice is, it is made very clear to every single resident. We believe that advice has been universally followed.
Emma Dent Coad (Kensington) (Lab)
Will the Secretary of State confirm that, despite the Prime Minister’s promise after the Grenfell Tower fire that,
“I have fixed a deadline of three weeks for everybody affected to be found a home nearby”,
there are, according to our calculations—including from the tower, Grenfell Walk, other walkways and nearby buildings—more than 200 children still in bed-and-breakfast accommodation after up to six months? I believe that is illegal.
Sajid Javid
The commitment we gave that all families would be offered temporary accommodation within three weeks of the date of the tragedy was absolutely met. They were all offered such accommodation. I have continually updated the House over the last six months, and no doubt the hon. Lady has had updates from her constituents. We have tried at every stage to offer both permanent accommodation and different types of temporary accommodation. As I have acknowledged today, there are still too many families in emergency accommodation, and we continue to work with the local authority to do whatever we can to reduce that number.
Will Quince (Colchester) (Con)
Will the Secretary of State confirm that he still regularly meets the victim groups and is really listening to what they have to say? To pick up on a point he made, is he ensuring that, despite the understandable questioning from the Opposition, people will not be pressed in any way to take unsuitable accommodation for political expediency?
Sajid Javid
I can absolutely confirm that to my hon. Friend. I have regularly met victim groups and members of the community, and so has my hon. Friend the Member for Reading West (Alok Sharma), the Minister with responsibility for Grenfell victims. He meets members of the community on an almost weekly basis. I can also confirm that we will not press anyone to take any type of accommodation with which they are not comfortable.
Mr Clive Betts (Sheffield South East) (Lab)
The Select Committee found it very helpful to hear from Dame Judith at first hand this afternoon. One of her clear recommendations was that instead of fire and rescue services giving advice and that then being ignored by those in authority, such advice ought to put on a basis where it has to be taken account of and implemented. Does the Secretary of State agree with that proposal? If he does, will he rethink his decision not to provide any extra funding to local authorities to carry out important fire safety work that fire and rescue services say is essential?
Sajid Javid
First, let me thank the hon. Gentleman for the work his Committee is doing to help the overall review of building regulations. I welcome the fact that Dame Judith Hackitt gave evidence to the Committee today and its members could question her.
The hon. Gentleman asks me specifically whether we agree with the recommendation that advice from fire and rescue services should not be ignored—we do agree with that. We have accepted Dame Judith’s interim recommendations. He also asks about funding for fire safety measures, and I can say that our commitment stands that if local authorities cannot afford essential fire safety measures, they should come to talk to us and we will work with them to give them the flexibility they need.
Wendy Morton (Aldridge-Brownhills) (Con)
I thank the Secretary of State for his statement. We all agree that it is crucial that the Government listen to the victims of this tragedy. Will he confirm that he and other Ministers will remain in regular contact with victims’ groups throughout the process and for as long as is necessary?
Sajid Javid
I can confirm that to my hon. Friend. It is essential that in dealing with this tragedy, be it on issues relating to fire safety, rehousing, mental health support or the future of the site, which I mentioned earlier, all decisions must be made in consultation with the local community—not just those with the loudest voices, as I said, but actual members of the community who have been the most affected.
Ms Karen Buck (Westminster North) (Lab)
Further to the question asked by my hon. Friend the Member for Sheffield South East (Mr Betts), the Chair of the Select Committee, it is estimated that cash-strapped local councils have already committed £500 million to essential fire safety works in the aftermath of Grenfell. Will the Secretary of State tell us how much of that has been reimbursed by central Government?
Sajid Javid
As I have said a number of times at the Dispatch Box, we have asked local authorities to contact us, and more than 30 have done so. Ten have given us detailed information and three have given us the actual information we require. We are in active discussions.
Robert Courts (Witney) (Con)
I am glad to hear that progress is being made on rehousing victims, but will the Secretary of State update the House on what steps are being taken—by the Government or by the council—to ensure that sufficient decent homes are available for people to be rehoused in?
Sajid Javid
The council has been leading the work to acquire new homes. About two months ago, it set a plan to acquire about 300 homes by Christmas, and it has exceeded its plans—the number is closer to 400 homes.
Andy Slaughter (Hammersmith) (Lab)
We cannot wait for the final Hackitt report before resolving the issue of the combustibility of cladding and insulation. Some blocks are passing the current test with limited combustibility materials. Some are failing, but the landlords are using other types of limited combustibility materials as a replacement. Will the Government just say that only non-combustible materials should be used for external cladding on high and medium blocks?
Sajid Javid
The hon. Gentleman raises a good point, because clearly a number of building owners have, when they are taking down cladding, sensibly asked what they are going to replace it with. That is why we asked the expert panel to look at that, in the light of the building safety programme, and it has issued detailed guidance on it.
Tom Pursglove (Corby) (Con)
The Secretary of State has previously said that the local authority had accepted the recommendations of the independent taskforce. Will he update the House about progress on implementing those recommendations?
Sajid Javid
I meet the local council regularly and I also have discussions with the taskforce. A number of points were set out in the taskforce report, and the local authority has set up a group to go through each in detail. As we get further details, I will bring them to the House.
Wera Hobhouse (Bath) (LD)
Right across the country, people now live in tower blocks from which cladding has been removed. They will not only worry about their safety, but face much higher heating costs, because the cladding also served as insulation. The Secretary of State has already partly answered my question, but nevertheless when will he tell landlords what cladding is safe for use so that safe reinstallation can take place as soon as possible? He will appreciate that there is some urgency to the matter.
Sajid Javid
First, it is not for me, as a Minister, to recommend what type of cladding should or should not be used. That work should be done by experts, which is why the expert panel that we established, which is still in place, has issued guidance ever since the date of the tragedy. It continues to update guidance on what cladding should be used at all times.
Bill Wiggin (North Herefordshire) (Con)
Everybody is united in never wanting to see something like this happen again. An insulation manufacturer in my constituency, Kingspan, which was not involved in this tragedy, is keen to work to ensure that building regulations deliver the fire-proofing that we all hope for and expect. Will the Secretary of State agree to meet Kingspan?
Sajid Javid
I hope that my hon. Friend will understand that I should not comment on which companies were or were not involved in the tragedy; that will be a decision for the public inquiry and the criminal inquiry. Although in principle I am happy, at the right time, to meet any company that is involved in building services, it is appropriate that I do so only once I am comfortable that any inquiries and reviews are over.
Clive Efford (Eltham) (Lab)
Dame Judith Hackitt draws attention to how the privatisation of things such as fire inspections has denuded local authorities of essential expertise, and that is also true of building control. Can we bring such deregulation to an end, urgently, because people continue to be put at risk? Can we bring such matters back under the responsibility of local authorities, where they belong?
Sajid Javid
Perhaps the hon. Gentleman has in mind the 2002 deregulation of building regulations self-certification schemes, or perhaps the 2005 regulatory order on fire safety that the then Government claimed was cutting red tape. As I have said, successive Governments have been involved in building regulation, and I am glad that Dame Judith Hackitt is looking at all of that.
Kevin Hollinrake (Thirsk and Malton) (Con)
Some things are best left open to interpretation and some things are simply best proscribed. Does my right hon. Friend consider a simple prohibition of combustible materials on the outside of all high-rise buildings to be the right way forward?
Sajid Javid
As a member of the Select Committee, my hon. Friend is rightly taking a close look at these issues—I welcome that. In the interim report, Dame Judith talked about a risk-based approach. The appropriate response for the Government is to wait for the final report, look at all these issues in the round, and then make a final decision.
Dr David Drew (Stroud) (Lab/Co-op)
Will the Secretary of State look again at the role of local authorities in building control? In particular, will he get Dame Judith to examine the idea of primary agency, which has effectively removed the “local” from local authority?
Mr Jim Cunningham (Coventry South) (Lab)
The Secretary of State can in fact direct local authorities to take the advice of the fire services until such time as the committee of inquiry reports. There is nothing stopping him from doing that. In the past, I have dealt with the Government from a local authority angle. How much money is the Secretary of State actually making available, bearing in mind that it was said today the cost will be billions?
Sajid Javid
The hon. Gentleman will know that local authorities have rightly been taking account of the advice that has been issued by the expert panel, which is constantly updated as the panel gets new information. On the availability of money or financial flexibility, we are, as I said earlier, working with a number of local authorities.
Jim Fitzpatrick (Poplar and Limehouse) (Lab)
I welcome the interim review. Dame Judith’s explanation to the media and the Select Committee today was very impressive. Will the Secretary of State tell us how many applications for the costs of cladding replacement and fire precautions, including fire marshals, have been registered with the first-tier tribunal by landlords and freeholders?
Sajid Javid
First, may I take the opportunity to thank the hon. Gentleman for the work that he does on the all-party group on fire safety and rescue? I also thank him for welcoming the report. He raises the issues of tribunals and leaseholders in relation to meeting the costs of building safety. I have made it clear that I expect private sector landlords to take the lead that has been shown by housing associations and local authorities. I have also increased the funding that is available from the Leasehold Advisory Service so that people can get proper advice.
Kate Green (Stretford and Urmston) (Lab)
Local housing providers in my area tell me that there are now bottlenecks and delays both in accessing new cladding material and finding contractors to carry out the work. Can the Secretary of State say how quickly he thinks all properties can have new cladding if they need it, given that there are concerns about extra costs in relation to heating bills due to a lack of insulation if cladding has been removed, or for additional fire safety measures in the interim if it has not?
Sajid Javid
I reassure the hon. Lady that, right from the start of this terrible tragedy, when it was clear that a lot of cladding would have to be replaced, we worked very closely with the industry and the supply chain. That work has been led by the Department for Business, Energy and Industrial Strategy. I would be happy to write to her to provide further information.
Grahame Morris (Easington) (Lab)
Since 2013 and the coroners’ reports into the Lakanhal House and Shirley Towers’ fires, it has been well established that our building regulations need to be overhauled. May I push the Secretary of State to elaborate on the details on page 13 of his statement and give a date by which the necessary changes to the building regulations will be made?
Sajid Javid
Part of me would love to give a specific date today, but the hon. Gentleman will understand that it would not be practical or sensible to do so. We must wait for the final report. In the meantime, there are interim measures that can be taken, including simplifying the guidance in Approved Document B, which we can start working on immediately. We will be able to give a date on the final overall changes to building regulations and building guidance only once we have the final report.
Mike Kane (Wythenshawe and Sale East) (Lab)
This morning I met representatives of the Wythenshawe Community Housing Group, who estimate the cost of modifications to their blocks in my constituency at £6 million. If the Treasury allowed the works under the VAT shelter incentive, there would be a saving of £1.2 million. Are the Government considering that?
Sajid Javid
If I have heard the hon. Gentleman correctly, I believe that he is referring to a housing association. As I understand it, no housing association has approached the housing association regulator. If the housing association to which he refers wishes to do so, I am sure that it will be taken seriously.
Peter Kyle (Hove) (Lab)
It was very good to hear the Secretary of State say in his statement that he was encouraging people to do the right thing and to hold to account those who try to cut corners. In order to do that, people need information. Does he agree with the call of my right hon. Friend the Member for Wentworth and Dearne (John Healey) that all fire test information needs to be made public from now on?
Jack Dromey
Six months on, despite the West Midlands Fire Service recommending the fitting of sprinklers, 10,000 households in 213 tower blocks in Birmingham are awaiting such action. The council has said that it will play its part, but as it is suffering the biggest cuts in local government history, it has looked to the Government to play their part. Nothing has been forthcoming. This cannot go on, so will the Secretary of State agree to meet Birmingham’s MPs and the tenants of tower blocks in Birmingham?
Sajid Javid
It is worth noting what Dame Judith said about sprinklers in her report. In summary, she recognises that a number of measures can be taken to improve the fire safety of buildings, but there is not any single one that is absolutely essential—advice must be taken about each particular building. With regard to Birmingham, as I have said about other councils, if it wishes to approach us about financial flexibilities, we will be happy to consider that.
Chris Elmore
I have raised the issue of combustible insulation with the Secretary of State before. I understand his Department’s focus on cladding, but may I plead with him again? When these buildings are de-cladded, their insulation is exposed and this can cause problems with flammability. What is he doing to investigate this?
Sajid Javid
The hon. Gentleman is right to raise that point. The expert panel has looked at the issue and covered it in its guidance. It continues to monitor the situation and, if necessary, it will update that guidance.
Paul Flynn (Newport West) (Lab)
Was Dame Judith right this morning to say that the Government were told in 2010 that the regulations were “not fit for purpose”? If so, this is a catastrophic failure of not only regulations but politics. If we are to lift the anxiety of the tens of thousands of people living in the 165 blocks of flats that are still at risk, should not the Government’s action be not just inspection, but remedial action on a generous and swift basis?
Sajid Javid
I agree with the last bit of the hon. Gentleman’s remarks—any action we take should be as swift as possible.
Harassment in Public Life
(7 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for the Home Department (Amber Rudd)
With permission, Mr Speaker, I would like to make a statement on the Government’s plan to tackle threats against MPs and harassment in public life.
I echo the Prime Minister’s view that threats of violence and intimidation are completely unacceptable and have no place in our politics. Everybody should be treated with tolerance, decency and respect. Which party an MP stands for, and how they choose to vote, campaign or present themselves, should not be met with vitriolic and disgusting messages suggesting they should be “hung in public”, “get what’s coming” to them or, perhaps most unacceptably of all, that their unborn child should “die”. Across this Chamber, we have much to disagree on, but I know we are agreed on this matter. Everyone in this House condemns particularly the abuse and harassment received by the right hon. Member for Hackney North and Stoke Newington (Ms Abbott); she has our entire support as we do so.
We cannot reach a situation in which people are put off from expressing their views, and engaging in debate or politics in the first place, because of fears of being targeted. Indeed, people being able to freely express their views is essential for our democracy. And it is not just those in politics who are being abused and threatened. Celebrities and other public figures often find themselves at the receiving end of the most horrific abuse. Even those who end up inadvertently in the public eye are being targeted. For instance, online trolls aimed vile and upsetting abuse at the victims of the London and Manchester terror attacks.
Although intimidation, abuse and harassment are nothing new, social media has provided those who wish to abuse others with greater opportunities to do so. The internet is more often than not a force for good, but it can also be a frightening and toxic place, and we know that abuse, misogyny and racism are found on social media platforms. Online abuse can cause stress, anxiety and even panic attacks.
I welcome the report of the Committee on Standards in Public Life on intimidation in public life, and I thank the committee for its thorough consideration. It was asked to undertake the review in the light of abuse experienced by parliamentary candidates—including those who stood in the 2017 general election campaign—that was highlighted by those across the political spectrum. The report provides a body of evidence showing the extent and nature of the problem, as well as the risks to freedom of speech and to diversity in public life if action is not taken. The report demonstrates that a significant proportion of candidates in the 2017 general election experienced harassment, abuse and intimidation, and that the widespread use of social media platforms is the most significant factor driving the behaviour that we are seeing. Worryingly, this is already affecting the ways in which MPs are relating to their constituents, and has put off candidates who would otherwise want to stand for public office.
The report makes recommendations for Government, political parties, social media companies, the media, law enforcement and everyone in public life. This reflects the fact that tackling abuse is a joint responsibility. We will consider the recommendations in detail, and we will respond to them in due course, but I would like to take the opportunity today to set out what the Government are already doing to address harassment in public life.
Online abusers, or trolls as they are sometimes known, believe that they can act with impunity and that there are no consequences for their actions. I am clear that that is not the case. The law does not differentiate between criminal offences committed on social media or committed anywhere else.
We already have robust legislation in place to deal with internet trolls, cyber-stalking, harassment and perpetrators of grossly offensive, obscene or menacing behaviour. Effective laws need effective enforcement, and that is why we are also working to strengthen the criminal justice response to these issues to ensure that those who break the law online are brought to justice. The Crown Prosecution Service recently revised its guidelines on social media to incorporate new and emerging crimes that are being committed online. It also reiterates and clarifies that offences committed online invite the same consequences as those committed offline.
We are working to improve the response from law enforcement agencies. We know that local forces need to get better at investigating digital crimes, and we are investing nearly £17 million through the police transformation fund to meet the challenges we face in the digital era. That includes providing the police with better capabilities to investigate online crimes.
We have provided funding for a new national hub to tackle the emerging threat of online hate crime. The hub, run by police officers, will work to ensure that online cases are managed more effectively and efficiently, providing better support for victims and streamlining the process for frontline police officers.
The Committee on Standards in Public Life particularly highlighted the role that social media has had in the proliferation of abuse and harassment in public life, and we are taking clear action to make the UK the safest place to go online. In October, we published the internet safety strategy Green Paper, which sets out a high level of ambition for how everyone must play a role in tackling online harms.
One of the things we have consulted on is the introduction of transparency reporting for social media companies. This means that social media companies will be expected to publish information about what reports they are receiving on harmful content and to set out how they have responded. This will provide us with the information we need to better understand who is being targeted and what the nature of the behaviour is so that we might better respond to this growing problem. We have also committed to establishing a code of practice for social media companies, which will set out what they should do about harmful or inappropriate conduct taking place on their platforms.
I know that it can be a frightening thing to be on the receiving end of a threat, but I want to reassure Members of the House that arrangements are in place to ensure their safety. MPs’ security is the responsibility of the Parliamentary Security Department, which works closely with the police to ensure that appropriate security measures are in place. They provide personal security advice and guidance, and there is a package of security measures available for homes and constituency offices.
It is completely unacceptable that torrents of abuse and threats are directed at public figures. People being abused for their views, their work or simply who they are will never be allowed to become the new normal. Each gruesome threat is a reminder that there is a dark, unpleasant underbelly of our society—that there is a small minority who bully and demean for entertainment and out of malice. We must make it clear at every opportunity that this sort of behaviour is not acceptable and that it is the responsibility of everyone to call it out and to work together to protect our democracy and to ensure that we retain healthy public debate on the issues that matter to us.
Harassment and abuse are problems that reach beyond political divides, beyond organisational boundaries and beyond the public sector, and the recommendations by the Committee on Standards in Public Life reflect that. One of the key recommendations is for public leaders to call out and condemn this behaviour where it occurs, and my statement here today demonstrates this Government’s commitment to do just that. I commend the statement to the House.
Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)
Does the Home Secretary agree that vigorous debate and insults have been a feature of political life in this country for centuries? It was the distinguished Conservative politician Benjamin Disraeli who described the smile of his opponent Robert Peel as resembling
“the silver fittings on a coffin.”
But does she also agree that the abuse and harassment of recent years is qualitatively different? It is partly the sheer volume, which is facilitated by social media. Nobody who has sat at home and seen literally hundreds of abusive tweets flood their timeline can underestimate the psychological pressure these things put on us all. But it is also the brutal sexism and racism, together with threats of rape and violence, which are a world away from the studied insults of the Victorian House of Commons. And, of course, there was the murder of our colleague Jo Cox.
The Home Secretary will be aware that I have some knowledge of these matters, as fully 45% of this abuse on Twitter in the run-up to the last general election was directed at me. Does she agree, however, that it is unhelpful to suggest that abuse and harassment are the sole preserve of any particular political party or any faction of a political party?
Social media companies have a role to play. They are quick to take down material that is in breach of copyright; they need to be made to react as quickly to offensive material and material that incites hatred or even violence. If necessary, a system of punitive fines should be put in place.
But mainstream media also have a role to play. When politicians get death threats as a result of how they vote in this House, that is not the primary responsibility of social media companies; if anyone is responsible, it is the headline writers who accuse judges of being enemies of the people, and elected Members of Parliament of being mutineers and saboteurs, when all they are doing is exercising their civil right to cast their vote in the House of Commons.
Political parties also have a role to play. All parties should be wary of attack ads, posters, Facebook advertising and political narratives that implicitly target particular politicians on the basis of race, colour and creed. That would be the lowest form of dog-whistle politics.
When people online use the N word, and when they use racist, homophobic, misogynistic, anti-Semitic or anti-Muslim language, that is not acceptable. Threats, and the use of memes of people being hanged or targeted in crosshairs, against any party or public official, from whatever quarter, are equally unacceptable. However, Opposition Members believe that the knee-jerk reaction to every problem cannot be yet more legislation. There are laws against abuse, threats and violence, and before we consider fresh legislation, these existing laws need to be properly enforced against every perpetrator and to defend every victim. In particular, Opposition Members query whether there needs to be special legislation for people in public life. Abuse and harassment are not acceptable for anyone.
Finally, does the Home Secretary agree that we need to deal with this acknowledged crisis of abuse for the sake not just of those of us who are currently Members of this House but of young people who might be considering a career in public life but are rightly horrified by current levels of abuse?
Amber Rudd
I find much to agree with in the right hon. Lady’s comments. To start with her final one, that is such an important point. This is not just about the Members of Parliament who are sitting here. We are none of us wallflowers or made of glass. We expect scrutiny, but we do not expect, and nor should we receive, the sorts of threats that some of my colleagues and some of hers have received—it is completely unacceptable. However, it goes wider than that. Other people considering a life in the public arena will look at us and hear about some of the abuse that we have received, and it will put them off. That is unacceptable as well. This has a much further, wider reach than just the MPs who are here. That is why it is so important that her party and mine are so clear that it is unacceptable and that we will call it out.
As the right hon. Lady rightly says, there is a tradition of debate in this place. Some of it can verge on the rude, but there is no need for it to verge towards and over the threshold of actually being threatening. I agree that there is no need to single out an individual source. She particularly names a political party. Other colleagues may have a view on that. We must be clear that the real attackers here—the villains in this particular area—are the people who write and deliver these attacks. Some of my colleagues, like, I am sure, some of hers, have received those attacks not online but through the post or through telephone communication. This is all unacceptable, and we will always call it out.
Several hon. Members rose—
Mr Speaker
Order. In a bid to accommodate colleagues on this very important matter, may I appeal to Members for brevity, and to those who arrived late not to expect to be called?
Anna Soubry (Broxtowe) (Con)
Thank you, Mr Speaker, for the support that you have given to some of us who in recent days have had particular death threats and abuse because of—as has been identified by both the shadow Home Secretary and the Home Secretary—newspaper comments. I am not going to go into them at length; others can talk about that. My question to the Home Secretary is quite specific.
You, Mr Speaker, have seen quite clearly, in the two dossiers that I have presented to you, a link between a front page of The Daily Telegraph using the word “mutineers” and threats, including death threats, made to me and to other right hon. and hon. Members. Then last week, with the Daily Mail, again, specifically, you can see the link between words that are used and being called traitors, with comments like “Traitors get hanged” —or “hung”. There is lots of bad grammar. But this is serious stuff.
I commend the Home Secretary for her statement. She says that we have to call this out, and she is right. I am an old journalist as well as an old barrister. I believe in freedom of the press, but everybody has a responsibility not to incite abuse and death threats. Will the Home Secretary help us with any thoughts and plans that she might have as to how we get a more responsible press that understands its role and its public duty in doing the right thing by everybody?
Amber Rudd
My right hon. Friend speaks with such clarity from her personal experience. She has shared with me copies of some of the threats that she received, and they are truly appalling. I modestly pay tribute to her strength of character and ability to stand up and to continue to fight her case, for which I have enormous respect. Given that everybody knows the level of abuse that is taking place towards MPs and more widely in public life, everybody should consider very carefully the language that they use so that it does not incite the sort of activity of which we have seen too much, and to which there is such a high cost, not only to the individuals involved but, as has been stated, to the enthusiasm of other people to join us in public life. We need to think very carefully about the type of language that is used in order not to give succour to the type of violence that can follow.
Joanna Cherry (Edinburgh South West) (SNP)
On behalf of the Scottish National party, I welcome this timely report on intimidation in public life. The report highlights how minority religious groups and ethnic groups, women and LBT women experience the highest levels of abuse. Research published recently by Amnesty International found that in the period 1 January to 8 June, female Members of Parliament from all parties were sent more than 25,000 abusive messages on Twitter. As has been said, the right hon. Member for Hackney North and Stoke Newington (Ms Abbott) received by far the greatest share of that abuse. I pay tribute to her for the courage that she displays in continuing in the face of it.
Researchers had to set the right hon. Lady’s results to one side in order to provide analysis of the abuse that the rest of us were receiving. The research revealed that I was the second most abused female MP in this House during that period. I can tell the House that the daily diet of sexist, homophobic and anti-Catholic abuse that I receive on Twitter not only wears me down but has a serious effect on my family and my loved ones. I have no doubt that the abuse that we all receive is designed to intimidate us and prevent us from speaking out. We saw that at its zenith last week when people who had dared to vote in line with their conscience were attacked. I pay tribute to the right hon. Member for Broxtowe (Anna Soubry) for calling out some newspapers in this respect. It is an attack on democracy.
Will the Home Secretary confirm that she will not only consider the terms of this report carefully but take action? Deadlines for action on some of the recommendations are set out in the report. Will she set up some sort of monitoring process to tell us whether the Government are acting and on which recommendations, and to track their actions?
There is a real issue about discrimination against women discouraging young women, women of colour, women of religious or ethnic minorities, LBTI women, and women with disabilities from entering politics. Will the Home Secretary reassure me that action will be taken to make sure that these young women are not put off from entering this House or, indeed, any of the other Parliaments in these islands?
Amber Rudd
I thank the hon. and learned Lady for her constructive comments. By being here to make those points and to stand up against the harassment, she is herself a great example that I hope other women will be inspired to follow. It is so important for other women to have these sorts of role models who have the courage of their convictions to stand up and oppose the abuse, and to say how they will attack it.
The Government have just received the publication. We will look carefully at its recommendations, which are varied. I share some of the concerns raised by the right hon. Member for Hackney North and Stoke Newington (Ms Abbott) about whether additional legislation is required for people in public life. I share her view that people in public life should not necessarily have additional coverage, because all abuse is unwelcome, but we do not yet rule out legislation. I would welcome an early conversation with her, and with the hon. and learned Member for Edinburgh South West (Joanna Cherry), to discuss that. The hon. and learned Lady made the very important point that, in a bid to increase diversity in this House, we have an extra duty to combat this abuse.
Mr Dominic Grieve (Beaconsfield) (Con)
We are not exactly shrinking violets in this House, and I think that most of us are perfectly capable of engaging in robust debate. I have to say, however, that I have been shocked by the level of vitriolic abuse that I have received in the past week, and shocked also to realise that actually this is the new normal for large numbers of Members of this House—a sort of hidden unpleasantness that dominates our lives. I am concerned that, while undoubtedly some of it comes from people who may be a little unhinged, the stimulus for it undoubtedly, as has been suggested, comes from some sections of the national media choosing to report the politics of this country in a way that is designed to entertain but also to intimidate. This is all the more remarkable because when, about a year ago, I criticised one national newspaper, the Daily Mail, for its attack on the judiciary over article 50, its response was to threaten to sue me for libel.
One really has to wonder how this extraordinary unpleasantness has crept in. I think that the Home Secretary may agree that we are going to have to stand up for decency in public discourse and face this down. If we do it collectively, then we do not need to change the law—we can prosecute those who cross the boundary. Then we may be able to face down what seems to me to be a deeply unpleasant phenomenon in our society at present.
Amber Rudd
I share the view of my right hon. and learned Friend that this must not be allowed to become the new normal. That is why I am here to make this statement. It is also why so many colleagues across the House—and you, Mr Speaker—feel so strongly about this issue. Let us make this a tipping point where we call it out and say “No more”. We in the Government will take action. We have set out elements of the action that is already being taken. We have the Committee’s recommendations, and we will look carefully at them. I will certainly join my right hon. and learned Friend in making sure that we call this out and ask for a new type of behaviour, so that colleagues do not receive the sort of intimidation that they have experienced.
Ms Harriet Harman (Camberwell and Peckham) (Lab)
I fully endorse the words of my right hon. Friend the shadow Home Secretary. I thank the Home Secretary for her statement, but I want to press her on the question of death threats to MPs because of how they voted in last week’s debate. Does she agree that we have here a toxic triangle, which is made up of the divisiveness of the Brexit issue, The Daily Telegraph and the Daily Mail identifying certain Members as targets and framing the attack on them and—facilitated by social media—the mob following? When MPs in other countries are threatened with violence because of how they vote, we call that tyranny, and we call that fascism, but that is what is happening here.
As well as rightly commending the bravery of her Conservative colleagues, will the Home Secretary be brave herself and call in the editors of the Daily Mail and The Daily Telegraph? We have more contentious votes ahead of us, and there are people out there who are vulnerable to being incited to violence. Barely 18 months ago, our colleague Jo Cox was killed. The safety of MPs is at stake here, and so, too, is our democracy.
Amber Rudd
The right hon. and learned Lady makes a passionate case about the difficulties, challenges and very real threats that all MPs find themselves facing. Let us be clear that the real criminals are the instigators of these threats and attacks. Everybody should be clear that anything that is illegal offline is illegal online, so anybody who is in receipt of such a threat should go to the police, so that action can be taken.
From the Government’s point of view, we have made sure that the police have the resources to address the problem. We have invested, through the police transformation fund, in new digital advice to ensure that the police know how to record for evidence the types of accusation and attack that Members may receive online, so that there is a proper trail of evidence for prosecution. I believe that the attackers are the clear enemy, and we should focus our policy on them.
Nicky Morgan (Loughborough) (Con)
Let us be very clear about what is happening here. Wherever the abuse comes from, it is a deliberate action to remove from the public space certain voices that these people do not agree with. I applaud all the comments that have been made so far, particularly those made by my right hon. and learned Friend the Member for Beaconsfield (Mr Grieve), who called on us all to act collectively.
Does the Home Secretary agree that it is not enough simply to say that such abuse is appalling? We have all got to think about every word that we use. We are all used to robust political debate, but the way in which we manage ourselves and our teams, the way in which Departments are managed, the way in which the Front Bench teams are managed and the way in which party leaders allow their campaigners to operate, conduct campaigns and put material on social media all contribute to how people see our politics and our democracy. It will put people off going into public life if the Members in this House today do not call out such unacceptable abuse every time they see it unfolding online or in the press.
Amber Rudd
My right hon. Friend’s question follows on from that asked by my right hon. and learned Friend the Member for Beaconsfield (Mr Grieve). I agree that we must call out such abuse and not allow it to become the new normal.
My right hon. Friend makes a particular point about the past 10 days or so, during which I know several colleagues have received a particularly large number of nasty threats and attacks. I point out to her that a number of colleagues have experienced such levels of intimidation and threat for a much longer period. I know that because those colleagues have approached me, or because I have heard about them approaching their own chief of police to report threats and request additional security, not only for themselves but sometimes for their staff. This has not just happened in the past few weeks; it happened more than a year ago, and in some cases two years ago. We must not simply accept that such abuse is part of the life of an MP. It is not acceptable, and now is the time for us to call it out and make the necessary changes together.
Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)
We all believe in passion in politics, as well as in disagreement and argument, but when that passion turns to poison, it can undermine democracy itself. I welcome the Home Secretary’s statement and strongly support the strength and the words of the shadow Home Secretary. We will be hearing in the Home Affairs Committee tomorrow from Google, Facebook and Twitter about the further action we want them to take to tackle online abuse; they have all been urged to do more.
I must press the Home Secretary again on an issue that has been raised by Members from all parts of the House—namely, the need to challenge national newspapers if they do things that incite death threats or have an impact on the quality of our debate. In its report, the Committee on Standards in Public Life called on us all to show leadership and condemn individual cases. I asked the Prime Minister earlier to take the opportunity to say that the Daily Mail was wrong to call people treacherous. May I ask the Home Secretary to show some leadership and do so, even though the Prime Minister did not?
Amber Rudd
I welcome the right hon. Lady’s inquiry into online abuse, which she is taking forward tomorrow. I also welcome Twitter’s statement today about taking down a number of particularly hateful accounts; it shows that action is being taken. Google has announced that it will be publishing transparency reports. At least action is being taken in an area that has, I know, caused a great deal of harm and concern to very many of us.
I repeat that I believe that the real issue is the attackers, who are potentially launching their hate and abuse. As far as the media are concerned, it covers not just national newspapers but internet companies, commentators and television. I hope and expect that the level of discourse here today, and further in response to the Committee’s investigations, will start to engage them; and that they will notice that their language must reflect the fact that MPs are beginning to talk about hate threats and threats of violence as the new normal. We need their assistance to step down from that.
Antoinette Sandbach (Eddisbury) (Con)
Like many of my colleagues, last week I was subjected to hundreds and hundreds of emails, many of which were abusive. The situation was not helped by Members calling for deselections. There is a clear link between abuse and certain parts of particular political parties calling for deselection. Will the Home Secretary condemn that linkage and work across this House to ensure that Members, who are democratically elected by their constituents, can stand here, speak for their constituents and vote in accordance with their conscience without such threats hanging over them?
Amber Rudd
My hon. Friend is an exceptional Member of Parliament. She is always speaking out on behalf of not just our constituents, but what she believes in. I absolutely believe, as I think most colleagues in this House do, that she is exactly the sort of Member of Parliament that we should have here. Members such as my hon. Friend enhance our democracy, so she has my entire support.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
I am sorry to say that I, too, have received threats. A fake bomb was sent to my office. I have experienced homophobia. I have had threats of hanging, and I received a threat this week from someone who said that all traitors should be shot.
We have to accept that there is a plague on all our houses when it comes to the operation of some parts of the fringes of our political parties. I am sick and tired of the abuse that individuals receive in my own party. A party member told me that hanging was too good for me. I am sick and tired of abuse such as I received during the Scottish referendum, when I was told that I was a dirty traitor to the Celts. When we see the sort of abuse that Conservative Members have received from certain newspapers and elements in their own party, we simply have to stand up and say, “This is not acceptable.”
Social media has a massive part in this. The Home Secretary has referred to the action that Twitter has taken today—I welcome that action—by banning Britain First and the two individuals who created the tweets that the President of the United States retweeted. Will she speak to social media organisations and tell them that they need to get their house in order? They have had three weeks to take action, and they did not do so until today. They need to sort themselves out.
Amber Rudd
The hon. Gentleman raises such an important point. It is tragic to hear about the attacks on him, so I am pleased that he has had the opportunity to put them on the record. I hope that we will start to turn this around, and I wholly agree with him that we need to see more action from communications service providers. As I have said, I am delighted that the Home Affairs Committee is playing its part, and we in the Government will certainly play our part in making sure that they do more, act faster and go further to protect everybody.
Sir Hugo Swire (East Devon) (Con)
May I add my congratulations to Lord Bew on presiding over a typically balanced and well researched piece of work? When some time ago I asked my right hon. Friend’s then ministerial colleague, my hon. Friend the Member for Truro and Falmouth (Sarah Newton), what the figures for successful hate crime prosecutions were, she said that she did not have the figures to hand at the time. Although I very much welcome the tone of my right hon. Friend’s statement about looking again at the Crown Prosecution Service’s guidance and about more funding for local police forces to investigate digital crimes in particular, will she reassure me that both the CPS and police forces nationally and locally will take this more seriously and that we will see some successful prosecutions to warn off others who would follow in their wake?
Amber Rudd
My right hon. Friend raises such an important point. Part of addressing hate on social media is about preventing it, but we also need to make sure that we pursue people and get convictions. I am pleased to say that CPS prosecutions for online hate crime are up 68% in the past three years, and we are ensuring we have a programme of work in place to improve police forces’ digital capability. I hope that he will feel that we are addressing this, but there is obviously more to do.
Chuka Umunna (Streatham) (Lab)
I believe something very dangerous is going on in our country. As the hon. Member for Eddisbury (Antoinette Sandbach) said, it is being perpetrated, unfortunately, by some Members, certainly by members of other bodies and definitely by elements of our media. What they do is to imply to varying degrees that if Brexit—there is undoubtedly a link to that issue—is not delivered in certain terms, there will be violence. For example, the leading UKIP MEP Nigel Farage said at a dinner earlier this year that if Brexit was not delivered to his satisfaction he would be “forced to don khaki” and to “pick up a rifle”. Does the Home Secretary agree that this type of talk, whether said in jest or otherwise, is totally and utterly unacceptable because the effect is to justify violence when under no circumstances would it ever be acceptable?
May I just press the Home Secretary again about the fact that there is no doubt that The Daily Telegraph and the Daily Mail have a particular role to play, given their disgusting equivalents of wanted lists on their front pages? What is she doing to engage with those publications in particular?
Amber Rudd
The most important point that the hon. Gentleman makes is about language. I completely agree with him that the language that was used by Nigel Farage, as he described, is the sort of inciting language that is completely unwelcome in an environment where we are trying to protect not just MPs, but anybody in public office and the people who will come after them. I urge media companies—online and offline—to consider that very carefully, because of the atmosphere in which some of these debates are taking place.
Dr Sarah Wollaston (Totnes) (Con)
Sadly, abuse and intimidation are directed not just against those in public life, but against their families and those who work alongside them. I am sure the whole House will want to join me in paying tribute to our amazing teams in our constituency and parliamentary offices—in my case, Nina Smith, Lucy Mannion and Daragh Quinn—who deal with people with unfailing courtesy and respect. It is a great shame that, after I am targeted as a traitor by organisations such as the Daily Mail, the extent of the abusive calls is unfortunately so great that I have to ask them to work from home, and that when Members listen to this stuff—when we go in and work alongside them the next day—we find that it is truly shocking and unacceptable.
Amber Rudd
I thank my hon. Friend for making such an important point. It is for us all to remember that our staff—they are the frontline—so often have to deal with these abusive phone calls, and they do such a fantastic job in usually protecting us from them, but they often have to deal with a torrent of abuse. Yes, I completely share her view, and I wholeheartedly endorse what she says about the people who work for her, as I do about everybody whose staff working for them put up with a level of abuse that we all have to endure.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
On behalf of my party, I warmly—I repeat, warmly—welcome what the Home Secretary has said to us today. May I suggest that one way to help to tackle this problem would be to redouble our efforts in teaching about democracy, and teaching about debate and the courtesy of debate, in our schools the length and breadth of the United Kingdom?
Amber Rudd
That is a very interesting point. I believe that the coarsening of debate in the political environment has led to the acceleration of this, and I will certainly pass on that point to the Department for Education.
Mr Philip Hollobone (Kettering) (Con)
I am beginning to think that it is almost impossible to mix politics with Facebook and Twitter. These platforms are just made for anonymous abuse, and they do not contribute to modern civilisation. They encourage people to instant outrage, because they have to react immediately, without any pause for reflective thought. There is just an automatic direction towards abusing somebody, rather than towards debating, discussing and, importantly, listening because these platforms are for the transmission not the receipt of ideas. To my mind, they do not enhance our democracy in any way at national level, but also, importantly, they do not do so in relation to local councillors at local level.
Amber Rudd
My hon. Friend makes such an important point. That is largely, but not exclusively, where a lot of the hate comes from. For my own part, I no longer look at my Twitter timeline, but I know that plenty of people, particularly younger people, live online and they should not be put off coming into public life because they would then be expected not to engage on Facebook or Twitter. We must have an environment in which such people can continue to engage in their normal communications and go into public life if they choose to do so.
Catherine West (Hornsey and Wood Green) (Lab)
Will the Home Secretary join me in condemning the behaviour in my constituency this weekend of an individual attending the William Hill darts championship who got dressed up as the shadow Home Secretary, put that on Twitter, and began making insults and using racist and demeaning language? Is the Home Secretary pleased, as I am, that the venue in my constituency was able to eject the individual and that we have robust approaches to dealing with this? Will she condemn it, and will she perhaps look again at whether we can do anything more in relation to licensing to ensure that, at sporting events and in entertainment venues, we are doing all we can to clamp down on racism or disgusting and demeaning behaviour to those in public life?
Amber Rudd
I wholeheartedly condemn that. It sounds as though it was dealt with appropriately, so I commend the officers engaged with and delivering on that. If the hon. Lady felt that we should be doing anything in addition, I would welcome an early appointment with her, so that she can tell me what that is. I urge her to have a look at the recent report from Lord Bew to see whether anything should be added.
Alec Shelbrooke (Elmet and Rothwell) (Con)
The difference between social media and the printed media is the anonymity factor. Will my right hon. Friend listen very carefully to the investigation about what can be done that is being undertaken by the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper)? At the end of the day, social media is becoming a cancer in our society, but the people who own and run it can actually be the surgeons who remove that cancer. They need to be encouraged to do so, because we will otherwise disengage from social media and have a lack of democratic accountability, which would be a pity.
Amber Rudd
Yes, I agree with my hon. Friend. We cannot have a situation in which people are expected to disengage from social media to avoid the abuse. As I have said, I am delighted that the Home Affairs Committee is taking this forward as well.
Angela Smith (Penistone and Stocksbridge) (Lab)
It appeared during those terrible days following the murder of Jo Cox—16 June 2016—that the politics of hope and unity would triumph over the politics of division and hatred, but, sadly, we were wrong and we are now in a much worse place than we were at that moment. The intimidation is not just from anonymous people on Twitter, but even between colleagues attacking each other in this place—my heart goes out to those who were attacked last week—and division between those on Government and Opposition Benches, although I consider friendship to be above politics, as well as from our councillors and some of our party members. Will the Home Secretary ensure that any action taken includes consideration of the need for our political parties to understand that intimidation and abuse from Members is as bad as intimidation and abuse from anywhere else?
Amber Rudd
The hon. Lady raises a very important point in an appropriate and delicate way, but I think everybody knows exactly what she is highlighting. I share her views. We need to clean up our own houses as well as working across houses. I hope that her party, as well as mine, will listen carefully to the points she raises.
Simon Hart (Carmarthen West and South Pembrokeshire) (Con)
On that point, the Committee on Standards in Public Life, of which I am a member, reported in some detail on party leadership. It strikes me that simply calling out bad behaviour may be going nothing like far enough, so will the Home Secretary, at least on behalf of our party, assure us that not only will offending activists and third parties be brought to book, but it will be done in a public and robust manner?
Amber Rudd
My hon. Friend is quite right. May I take this opportunity to thank him for his work on the Committee on Standards in Public Life and to thank Lord Bew for his leadership in delivering the report, which makes a number of recommendations? I may talk delicately across the Floor of the House with the hon. Member for Penistone and Stocksbridge (Angela Smith), but there are some very clear recommendations in the report and some very hard-hitting points. I urge everybody to ensure that their party leaders are held to account and deliver on those.
Jim Shannon (Strangford) (DUP)
I thank the Home Secretary for her statement and the firmness of her response. Will she outline what protection and support there is for staff in constituency offices, bearing in mind that they can be accosted by constituents regarding casework in their personal time, and can be subject to verbal and sometimes physical abuse?
Amber Rudd
The hon. Gentleman is absolutely right. As my hon. Friend the Member for Totnes (Dr Wollaston) commented, the staff in our offices are often on the frontline of this abuse. We have to make sure that they are protected. This is not just about us; it is about a wider group of public servants, such as our staff. I agree with him that it is equally important to protect them. I hope that if he looks at the report, he will see that that point is addressed, but if he has further concerns he should come and talk to me about them.
Rebecca Pow (Taunton Deane) (Con)
I will pick up on a point that was made from the Opposition Benches. Where do our children learn to trust? Where do they learn what is right, what is wrong and what is acceptable behaviour? I honestly think that we have to deal in our education system and in our schools with the issue of social media and how we conduct ourselves as citizens, because what is happening now is truly unacceptable in so many cases.
Amber Rudd
My hon. Friend is right. In citizenship classes, there is an online element that I would expect to be covered. That point has been made by other Members, and I will ensure that the Department for Education hears it. I think that our children hear about what is acceptable when they hear people like us calling things out, saying, “No more,” insisting that this is the end of such abuse, and saying that we will take action. It is by example that they learn.
Chris Bryant (Rhondda) (Lab)
Mr Speaker, the first thing you did as Speaker, as is required, was to go to the House of Lords and demand the traditional privileges of this House. At the top of that list is freedom of speech. We should be able to speak our mind without fear or favour and, for that matter, to vote without fear or favour. What we have seen over the past week is a deliberate attempt to humiliate, to bully, to intimidate and to prevent people from doing what is their democratic right. We will not be a Parliament—we will not be a free Parliament—if we continue to allow that to go on.
The worst of it is that there is a concatenation here. Yes, the newspapers, with the authority they have, are putting horrible stories on their front pages and effectively lining people up as if they should be politically shot. An amplification then goes on through social media. But there are also international actors involved in this. There are Russian bots deliberately seeking to intimidate Members of this Parliament.
I do not believe for a single instant that the Government are taking this seriously enough. At the beginning of my time in Parliament, I might have got one death threat a year; it is now one death threat a week and several a month. Until we see real action—until I know that a police officer will one day ring me back and say, “We have done something about it. That person is going to prison,”—I honestly will not believe that the Government really know what is going on out there.
Amber Rudd
Let us make that change ourselves. Let us make sure that our voice is heard clearly, loudly and effectively. Let us say that this is the point at which we will make those changes. We have made it clear that the sorts of activities the hon. Gentleman describes are illegal online, as they are offline, and I would expect them to be reported. We are seeing prosecutions by the CPS, and the police are taking it seriously and are much better trained on digital evidence. I would expect that to start to make a difference.
Mark Menzies (Fylde) (Con)
I welcome the sentiments of the Home Secretary and what she has said today, but when it comes to social media, the time for pussyfooting is over. These are multibillion-pound companies that have the resource to tackle this issue if they want to. What is the Home Secretary doing to tackle those who hide behind anonymous accounts, making it very hard to close them down and to pursue them through the courts? That is something that she should be tackling with the social media companies.
Amber Rudd
I say to my hon. Friend that there is no pussyfooting on this side of the House. We are determined to ensure that the social media companies are held to account. As I said earlier, we are pleased that Google has announced that it will publish transparency reports. Twitter has taken action. It is not enough, but it is an important step in an area that we care about so much. We need to make sure that the people who do these sorts of things and make these sorts of posts are held accountable. We will achieve that by leaning into the social media companies.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
The Government regularly state that what is illegal in the real world is also illegal in the virtual world. Effective laws need effective enforcement, yet the Home Office has allocated only £200,000 to the online hate crime hub. Now that exercising the sovereignty of this House is resulting in death threats, will the Government make sufficient financial resources available to protect all victims?
Amber Rudd
The hon. Lady has drawn attention to one element of our strategy—the online hate hub, which is staffed by police officers who centralise and act on reports of hate—but that is by no means the only activity. The CPS has increased the number of prosecutions by 68% over the past three years and we have put £17 million from the police transformation fund into proper engagement with different police forces to ensure that they have the right skills for the digital recording of the evidence. I reassure the hon. Lady that the online hate hub is only one part of a strategy and we will take action.
Tom Pursglove (Corby) (Con)
There is a fine line, is there not, between disagreeing with someone and being deliberately disingenuous with a view to inciting hatred and harassment, often repeatedly and often for political advantage? Does my right hon. Friend agree that that is corrosive for our political discourse and that it has to stop, but that in order for it to stop we need leadership from across the political spectrum?
Amber Rudd
I agree that there is nothing wrong with argument and a little bit of rudeness, but that the sorts of examples that we have been quoting are absolutely unacceptable. We need to work across the House to ensure that we have a proper answer and strategy to combat them.
Liz McInnes (Heywood and Middleton) (Lab)
Does the Home Secretary agree that it is high time we brought back respect in public life? This is not just about MPs, but about the people who provide our public services. When I was told by a constituent during the last election that it was part of my job to take abuse, I spoke to a local police officer about it and he said, “Welcome to my world.” Does she agree that we must lead by example on these Benches?
Amber Rudd
I agree completely with the hon. Lady. I had a similar experience when I was a Back-Bench MP, when somebody said, “Well you’re an MP—you can take it.” MPs are not blushing wallflowers, but nor should we have to take that sort of abuse. I would welcome the sort of approach she sets out.
Nigel Huddleston (Mid Worcestershire) (Con)
Does the Home Secretary agree that we must all take personal responsibility on this issue and that any Member of this place whose name or hashtag is persistently associated with hate-filled comments on social media must do everything to distance themselves from such campaigns? Otherwise, they deserve the disdain of the entire House.
Amber Rudd
That is a very good point about something constructive that each of us can do. When we see one of our colleagues in the House receiving this sort of hate crime, we can go out of our way to call it out or, at the very least, not participate in any sort of endorsement, which sometimes does take place.
Susan Elan Jones (Clwyd South) (Lab)
There has been some talk here today about certain front page newspaper articles in the Daily Mail. Would the Home Secretary like to clarify whether she considers them to be totally unacceptable?
Amber Rudd
What I would like to say is that the people to blame are the people making the threats and the attacks. It is not just about one media channel, but the whole arena. It is about making sure that we all call out the language. The hon. Lady may have one particular target and other MPs may have different particular candidates they want to call out, but I am very clear that any use of that sort of language to denigrate MPs can lead to the sorts of attacks that should not take place.
Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)
I thank Lord Bew for a very robust report. Having experienced death threats and a campaign of sustained harassment towards me, my family and my excellent staff, I note that the report indicates that political parties must show leadership and do something that perhaps does not come naturally: work together and enforce a code of conduct for Members. How does the Home Secretary see that going forward, and does she have a timeframe for taking that very important step?
Amber Rudd
I thank the hon. Lady for her comments. I know she, like us, feels very strongly about this. It is a very good report and there is a lot for us to do. It calls for party leaders to call this out and to take action. I am standing here making sure that I reassure Members that we will be taking action. There are a number of different particular items. One we have not discussed today is additional legislation for people in public life. We have agreed to look at that, but we are not yet convinced that it needs to be done. I will certainly come back to her before deciding whether to go forward with it.
Sarah Champion (Rotherham) (Lab)
I am sure that everybody in this House recognises that the abuse and intimidation, mainly online, faced by people in public office is replicated and symptomatic of what is happening across the country, including to children. I welcome the Department for Education bringing in relationship education to teach children to respect themselves and others, but will the Home Secretary commit to extra resources for police, not just for training but so they can protect and prosecute?
Amber Rudd
We have put £17 million of resources from the police transformation fund to support the police, so they can have the tools they need to collect evidence when there are online threats. We will always make sure that the police have sufficient resources to do their jobs.
Christian Matheson (City of Chester) (Lab)
In welcoming the Home Secretary’s statement, may I press her on this idea of focusing on the attackers? Just as a clockwork mouse will only scamper across the floor if it is wound up, so some of these keyboard warriors will only take to their computers if they are incited by billionaire tax-dodging newspaper owners—or their editors. Does the Home Secretary accept that there is an element of incitement in some of the shocking newspaper headlines and that that incitement corrodes the quality of our democracy?
Amber Rudd
The hon. Gentleman refers to the language used. The point I have made in my statement and in answer to questions is that we should all—media companies, too—consider very carefully the sort of language used in our debates. I would also ask him to consider very carefully some of the language used by those on the shadow Front Bench about some of my fellow MPs on the Government Benches. We have to be very careful about the type of language used, not just by media companies but by individuals in this House.
Ian Paisley (North Antrim) (DUP)
I welcome the Home Secretary’s comments about language. It was not social media that made, carried or celebrated a massive banner at the Gay Pride celebrations in Trafalgar Square this summer proclaiming—I spell out the word—“F-u-c-k the DUP”, but an identifiable individual, reported to the CPS and the Metropolitan police, whom I could name but will not. The report referred to by the Home Secretary claims:
“We are persuaded that the CPS guidelines are reasonable and proportionate.”
The fact of the matter is that if such a banner was carried in any other jurisdiction of the United Kingdom that person would have met the test and would have been prosecuted and probably fined. I hope the Home Secretary will consider legislative change to lower the threshold, so such crimes can be dealt with properly by the police and the CPS. I hope she will also consider an additional tariff on a person’s sentence if a public representative is attacked verbally or abused physically.
Amber Rudd
I am not familiar with the individual case the hon. Gentleman raises, but if he would like to write to me about it I will certainly take a look at his recommendation. It is interesting to hear his view about the requirement for additional legislation. No doubt we will be looking at that when we consider the Committee’s responses.
Chris Elmore (Ogmore) (Lab)
Mr Speaker, you will be aware that I joined this House in May 2016 after a by-election. Before that election, newspaper articles claimed that I did not live at the address I did live at. Despite the Labour party offering proof, without doubt, that I lived at my home address, articles were run saying I did not live there. After my election, I received countless numbers of tweets from people saying they were looking through my lounge windows to see how my furniture was laid out. I lied to my partner—she now knows this—when I referred that to the police, because I was terrified she would want to move out of our home.
I was a councillor for 10 years and I had to move because my address was public when I sought election. I have asked the Home Secretary whether she could change it so that councillors receive the same protection as MPs. I had to move because constituents put dog excrement through my door. This behaviour is not just linked to MPs, but to councillors too. May I also ask that by-election candidates, with all the scrutiny they receive from the written and social media, are given support, particularly if they are then elected to this House and have never experienced that type of abuse before?
Amber Rudd
I am very sorry to hear that horrific and hateful personal example from the hon. Gentleman. It must have been very distressing for him and his family. We have changed the rules so that candidates no longer have to put out their home address when they stand for election, but I will certainly look at that. I would be grateful if he sent me a note about it.
Peter Kyle (Hove) (Lab)
The most common question I get asked by young people these days is, “How do you put up with all the abuse?” I know the Home Secretary will find that as heartbreaking as I do. Young people know that a corruption has entered our politics, whereby people now believe that if somebody honestly disagrees with them they are unprincipled. As soon as we accept the principle that somebody is unprincipled simply for disagreeing, that opens the door to all sorts of really bad behaviour. This cannot be tackled purely with legislation. What can we do to drive this notion out of our body politic?
Amber Rudd
I wholeheartedly agree with the hon. Gentleman. When I visit schools or universities, I too get exactly the same question: “How can you put up with this abuse?” That is why it is so important for us to call it out. He asks what we can do and I urge him to look at the report. But it is not enough to just act on the report, which we will, or to consider additional legislation, which we may. We all have to make sure that we call it out often and firmly. Sometimes it is difficult when people come after us and we think that this is the role of a Member of Parliament. But no, it is not just about that. [Interruption.] I am getting a certain amount of heckling, Mr Speaker. I referred earlier to somebody from the Labour party. I just remind hon. Members that another person who needs calling out is the right hon. Member for Hayes and Harlington (John McDonnell).
Martin Whitfield (East Lothian) (Lab)
The Government have rightly said that offences online are the same as offences offline, and that the punishment should be the same. Is the media vehicle carrying such offences not as responsible as the driver of a bank robber?
Amber Rudd
That is exactly an area we are continuing to look at, and which the Home Affairs Committee is looking at, and where we are starting to see some real action. It is not enough. We want to go further and faster, but it is a start.
Gavin Robinson (Belfast East) (DUP)
As the DUP’s home affairs spokesman, I say gently that this evening’s statement would have been stronger if Members had been less selective in their condemnation of political commentary and abuse. Just today, I received notification from a local PSNI inspector in east Belfast that abuse reported to him could not be progressed because Twitter does not comply or engage unless there is an imminent threat to life. In reflecting on legislative provisions, will the Home Secretary ensure that this frustration and the failure to engage with authorities in Northern Ireland and throughout the United Kingdom is dealt with appropriately?
Amber Rudd
I thank the hon. Gentleman for his contribution. It is distressing to hear that example, because we are beginning to see some progress from Twitter. If he would like to write to me about that particular example, I will certainly take a look at it. Abuse online is not only just as unwelcome but just as illegal as abuse offline.
Mr Speaker
Order. I thank the Home Secretary for her statement, the shadow Home Secretary for her response and all hon. and right hon. Members for their remarks this afternoon.
Let us be absolutely clear: making death threats or other threats of violence will always, everywhere, without exception, be wrong. In a political context, making death threats or other threats of violence against people on grounds of their views is, whether the authors know it or not, a kind of fascism that must be explicitly and unequivocally denounced. Today, thankfully—and I am extremely grateful to colleagues across the party divide from the highest level—it has been.
You will hear me, as your Speaker, call Divisions. The hon. Member for Rhondda (Chris Bryant) referred to the freedoms of this place, and when the Chair calls Divisions the Chair is calling on hon. and right hon. Members to vote as they think fit, and I would go so far as to say that they not only have a right to vote as they think fit but have an absolute bounden duty to vote as they think fit, and I am confident that that is what all of you—if I may speak to you very personally—do. How you vote is always a matter for you and not for me, but you must be conscious, as I am sure you are, of your duty in this matter. I want, in the light of what has been said and of the experiences of some of my colleagues in recent days, simply to conclude by saying that in voting as you think fit on any political issue, you as Members of Parliament are never mutineers. You are never traitors. You are never malcontents. You are never enemies of the people. You are dedicated, hard-working, committed public servants doing what you believe to be right for this country. If there are people who cannot understand that basic concept of principled conduct, perhaps they need help to ensure that in future they do.
Finance (No. 2) Bill
Monday 18th December 2017
(7 years ago)
Commons ChamberRead Full debate Finance Act 2018 View all Finance Act 2018 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Committee of the whole House Amendments as at 18 December 2017 - (18 Dec 2017)
21:10 - divided: - Ayes: 313 / Noes: 258 - Question accordingly agreed to.
21:28 - The Committee divided: - Ayes: 260 / Noes: 313 - Question accordingly negatived.
23:04 - The Committee divided: - Ayes: 226 / Noes: 313 - Question accordingly negatived.
The First Deputy Chairman of Ways and Means (Mrs Eleanor Laing)
With this it will be convenient to discuss the following:
Amendment 1, in schedule 9, page 132, line 32, leave out from “in” to end of line 33 and insert
“accordance with the provisions of section (bank levy: Part 1 of Schedule 9: pre-commencement requirements)”.
This amendment paves the way for NC3.
New clause 1—Review of operation and effectiveness of bank levy—
“(1) Schedule 19 to FA 2011 (bank levy) is amended as follows.
(2) After paragraph 81, insert—
Part 10
Review
82 (1) Within six months of the passing of the Finance Act 2018, the Chancellor of the Exchequer shall undertake a review of the operation and effectiveness of the bank levy.
(2) The review shall consider in particular—
(a) the effectiveness of the levy in reflecting risks to the financial system and the wider UK economy arising from the banking sector,
(b) the effectiveness of the levy in encouraging banks to move away from riskier funding models,
(c) the revenue effects of the changes to the levy made in Schedule 2 to the Finance (No. 2) Act 2015,
(d) the effectiveness of the anti-avoidance provisions in paragraphs 47 and 48 of this Schedule.
(3) A review shall also compare the effects of the bank levy with those of the bank payroll tax (within the meaning given by Schedule 2 to the Finance Act 2010) in relation to—
(a) revenue, and
(b) the matters specified in sub-paragraph (2)(a) and (b).
(4) A report of the review under this paragraph shall be laid before the House of Commons within one calendar month of its completion.””
This new clause requires the Government to carry out a review of the bank levy, including its effectiveness in relation to its stated aims, the revenue effects of the changes made in 2015 and the comparable effectiveness of the bank payroll tax.
New clause 2—Public register of entities paying the bank levy and payments made—
“(1) Schedule 19 to FA 2011 (bank levy) is amended as follows.
(2) After paragraph 81, insert—
Part 11
Public register of payments
83 (1) It shall be the duty of the Commissioners for Her Majesty’s Revenue and Customs to maintain a public register of groups paying the bank levy and the amounts paid.
(2) In relation to each group, the register shall state whether it is—
(a) a UK banking group,
(b) a building society group,
(c) a foreign banking group, or
(d) a relevant non-banking group.
(3) In relation to each group, the register shall state the amount paid in respect of each chargeable period.
(4) In relation to chargeable periods ending between 28 February 2011 and 31 December 2017, the Commissioners must public the register no later than 31 October 2018.
(5) In respect of subsequent chargeable periods, the Commissioners must public the updated register no later than ten months after the end of the chargeable period.””
This new clause requires HMRC to prepare a public register of banks paying the bank levy and the amount they have paid.
New clause 3—Bank levy: Part 1 of Schedule 9: pre-commencement requirements—
“(1) Part 1 of Schedule 9 shall come into force in accordance with the provisions of this section.
(2) No later than 31 October 2020, the Chancellor of the Exchequer shall lay before the House of Commons an account of the effects of the proposed changes in Part 1 of Schedule 9—
(a) on the public revenue,
(b) in reflecting risks to the financial system and the wider UK economy arising from the banking sector, and
(c) in encouraging banks to move away from riskier funding models.
(3) Part 1 of Schedule 9 shall have effect in relation to chargeable periods ending on or after 1 January 2021 if, no earlier than 30 November 2020, the House of Commons comes to a resolution to that effect.”
This new clause requires the Government to provide a separate analysis of the impact of Part 1 of Schedule 9 nearer to the time of proposed implementation in 2021 and to seek the separate agreement of the House of Commons to commencement in the light of that review.
New clause 11—Review of effects of bank levy on inclusive growth and equality—
“(1) Schedule 19 to FA 2011 (bank levy) is amended as follows.
(2) After paragraph 81, insert—
Part 10
Review on inclusive growth and equality
82 (1) Within six months of the passing of the Finance Act 2018, the Chancellor of the Exchequer shall undertake a review of the bank levy.
(2) The review shall consider in particular—
(a) the effects of the levy on inclusive growth,
(b) the impact of the levy on equality.
(3) A report of the review under this paragraph shall be laid before the House of Commons within one calendar month of its completion.””
This new clause requires the Government to carry out a review of the bank levy, including its effects on inclusive growth and inequality.
The Financial Secretary to the Treasury (Mel Stride)
The Finance Bill makes changes to the bank levy, in particular restricting its scope to UK activities. These changes support our vision to help keep UK banks globally competitive. They reflect improvements in international banking regulation that reduce the risk of overseas operations to the UK, and they complete a set of changes announced in 2015 and 2016 that significantly increase the tax we raise from our banks.
Let me be clear from the outset that this Government believe that banks should make a significant contribution to the public finances, beyond general business taxation, that reflects the risk they pose to the UK economy. That has been the record of Chancellors since 2010. As part of that, in 2011 the Government introduced the bank levy on the balance sheet equity and liabilities of banks and building societies, but this additional tax contribution made by banks has to support our broader objectives for the sector. It therefore needs to be responsive to international commercial and regulatory changes in banking. Any tax changes should ensure that we can continue to secure the additional contribution from the banks from a sustainable tax base, and they also need to ensure we retain a strong, stable and competitive banking sector that supports the wider economy by lending capital to both businesses and individuals.
Alberto Costa (South Leicestershire) (Con)
Does the Minister agree that in pursuing the policies he has just outlined in a strong and stable way we can have sustainable banking that gives the significant contributions to the Treasury that are much needed, and that the policies espoused by the parties opposite would do great damage to our economy and our public services?
Mel Stride
I thank my hon. Friend for that perceptive and helpful intervention. There is no question but that a healthy banking system is absolutely central to a healthy economy, which is why we have invested so much time and energy since 2010 in making sure that the regulation of the banks is tightened up, which was, of course, part of the original rationale for the bank levy. The fact that we are reducing the bank levy over time from 2015 and moving towards taxing profits is in itself an indication of the health of our banking system.
Mr Jim Cunningham (Coventry South) (Lab)
Is the Minister satisfied that the banks have enough in reserve to cope with any emergency should there be a downturn in the world economy?
Mel Stride
As the hon. Gentleman will know, the Bank of England carries out stress tests on our banking system. In the latest round, the banks came through very strongly—not a single one failed. The tests stress the system to a greater extent than the effect of the last financial crash in 2008, so we can be certain that the measures the Government have put in place, the operation of the independence of the Bank of England and carrying those things through are having the desired effect that he rightly seeks.
Alex Burghart (Brentwood and Ongar) (Con)
After 2008, a bank levy was needed because there was not much profitability in the banks to enable their assets to be taxed, but as we have improved regulation it is now worth moving to tax their profitability. Does the Minister agree that this is the right time to make this shift in raising revenue?
Mel Stride
My hon. Friend is entirely right. The Government since 2015, and the coalition Government, oversaw the restoration of the banking sector to a healthy central part of our economy. He is absolutely right. The shift from the bank levy to the taxation of profits which was introduced on 1 January 2016 indicated that the risks themselves were diminishing under our stewardship, and that our banking sector was profitable enough to bring in considerably more tax revenue. Since 2010, under Conservative Chancellors, we have secured more than £44 billion in additional tax—I stress the word “additional”—from the banks, over and above the tax that we would be applying to them were they non-financial businesses.
Robert Jenrick (Newark) (Con)
In 2010, tax receipts from the financial services sector amounted to about £53 billion; today they amount to £71 billion. We are making the banks and the wider financial services sector pay their fair share, but we do not want a race to the bottom. We want the sector to be competitive, because tens of thousands of well-paid, highly skilled jobs throughout the country—not just in London but in cities like Nottingham, near my constituency—depend on it.
Mel Stride
My hon. Friend is entirely right. The additional tax raised from the banks amounts to £9 billion between 2010 and the present time, and a further £25 billion is projected over the current forecast period. Far from taxing the banks less over time—as, no doubt, the Opposition will shortly have us believe we have done—we are securing more tax revenues than we did in the past.
Alex Chalk (Cheltenham) (Con)
As circumstances change, it is right for us to move from a bank levy to taxing bank profits. I am sure that, in due course, we shall hear a great hue and cry about how appalling it is to lose the bank levy. Is that not a little perplexing, given that Labour voted against its imposition in 2011?
Mel Stride
That is a valid point. I am waiting with some interest to hear what Opposition Front Benchers have to say about that point in particular. Even my shadow, the hon. Member for Bootle (Peter Dowd), is waiting expectantly to hear what he himself has to say, which is intriguing.
Dan Carden (Liverpool, Walton) (Lab)
Did the big banks not lobby for this change, and are they not likely to benefit from the surcharge that has replaced the levy? Did not bigger, riskier banks pay more than other banks in the system?
Mel Stride
When we consider who benefits and who does not, we must assume that overall, given that more tax is being raised than hitherto, the banks are probably paying more tax on average as a consequence of these measures. However, the measures will obviously have different impacts on different banks, depending on their profitability and on whether they are at or above the capital threshold of £20 billion at which the levy itself begins to kick in.
In 2015 and 2016, the Government announced a set of changes in the way in which banks were taxed. We set out a phased reduction in the rate of the bank levy to 0.1% by 2021. We announced the changes that the Bill makes in the levy, reducing its scope so that it applies to banks’ UK rather than global balance-sheet liabilities. However, we also introduced an extra 8% tax on banks’ profits over £25 million, on top of general corporation tax. I hope that when the Opposition spokesmen respond to my comments and to the amendments and new clauses, they will at least recognise the important increase in taxation that has been applied to the banks since 2016.
Rachel Maclean (Redditch) (Con)
I, too, look forward with great interest to hearing from Opposition Front Benchers. Has not part of the Government’s overall approach been to back the independence of the Bank of England? Has that not also helped the overall regulation of banks, and ended the situation which, under Labour, led to some of the problems in the banking sector?
Mel Stride
My hon. Friend is absolutely right. I think it would pay all Members dividends to consider the comments made by Mervyn King at the time of the last crisis, when he said that the Bank of England had very limited scope to deal with the issues that were faced at the time. Since then, of course, we have fundamentally changed the structure of the oversight of banks. We have ensured that the Bank of England is at the heart of it, and that the independence of the Bank and the other institutions that we have set up is paramount. That is partly why the position of the banks is so much stronger than it has been hitherto.
We prevented the banks from reducing their corporation tax liabilities when they were required to pay compensation for misconduct, effectively applying additional taxes. The shift towards taxing profits means that the recovery in banks’ profitability will translate into higher tax receipts for the Exchequer, while also ensuring a sustainable long-term basis for the taxation of banks.
Mark Menzies (Fylde) (Con)
It is important that we raise record sums from the banks to pay for vital public services, but is there not a balance to be struck? We need healthy banks, not only to support small businesses and provide mortgages for first-time buyers, but to ensure that there are banks in our high streets.
Mel Stride
My hon. Friend is right, and this is all about striking the right balance. We recognise that banks need to pay their fair share because of the systemic risk that they can feed into the economy, and because, some years ago, the British taxpayer stood behind the banking system. The other part of the balance is to ensure that our banking system remains competitive in comparison with others in the world, and can, in turn, leverage the competitiveness of our own industries through its lending.
Nigel Huddleston (Mid Worcestershire) (Con)
My hon. Friend is making an important point. Rather than setting a tax rate for party political purposes, we should aim to maximise tax revenue while also securing economic growth.
Mel Stride
My hon. Friend is absolutely right, as we know from recent experience. For example, although corporation tax has been reduced from 28% in 2010 to 19% and then to 17% under this Government, the corporation tax take has increased by 50%. Labour’s policy is the reverse. It foresees raising taxation not just from banks but from all the businesses in the country, large and small, including high street businesses, which, as we know, often struggle.
Dan Carden
A branch of Barclays bank in County Road in my constituency has closed, and I know that many other Members will have fought to keep local bank branches open. Are the Government willing to take any action—at least in the case of RBS, which we partly own—to ensure that high-street banking is still available to the most vulnerable and elderly constituents whom we all represent?
Mel Stride
Conservative Members believe that it is better for commercial organisations to be left to run their own businesses. They tend to do it rather better than Ministers, dare I say—although I think I could be quite handy at running a bank or two; who knows?
The issue of bank closures is very important. We are working hard to reinvigorate our post offices and to ensure that the banking facilities that they provide—which are available, typically, to more than 90% of personal and business customers—are promoted in all the 11,500 branches in the United Kingdom.
Stephen Lloyd (Eastbourne) (LD)
A constituent who came to my community surgery on Saturday made a simple suggestion that I thought might well work. Banks face structural challenges, and many are closing, especially in rural areas. Why do the Government not encourage three or four banks to work together to establish a single branch in an area where there are currently no branches? Such a collegiate approach would solve the banking problems of rural areas in particular.
Mel Stride
The hon. Gentleman raises an interesting idea, but I would argue that that is already effectively in practice in the form of the post office: post offices are able to deal with the customers of the major banks, to take cash, and to offer banking services—albeit not the full range, but certainly the most basic and most important to local communities—and, as I said earlier, there are more than 11,500 of them across the UK.
James Cartlidge (South Suffolk) (Con)
All of us who represent rural constituencies are concerned about the issue of access to bank branches and closures, but does that not mean that there is an extra onus on providing access to fast broadband in rural areas so that people can access online banking? To that end, should we not welcome the announcement in The Sunday Times that there will be further help this week for speeding up broadband in the most hard-to-reach rural areas?
Mel Stride
My hon. Friend raises an important point about connectivity, particularly in rural areas, including in constituencies such as mine where making sure there is good broadband is often one way of reducing sparsity and people being cut off from each other, and that is why we have invested so heavily in that area.
These changes are expected to increase the additional tax contribution from banks by more than £4.6 billion over the current forecast period to 2022-23.
Mr Jim Cunningham
Will the Minister look into a situation that a number of us have had letters about? In the case of certain banks, including HSBC, where a person who is on a bank’s pension retires, that retirement pension is deducted because of their old-age pension. I do not expect an answer right away, but will the Minister look into that?
Mel Stride
I congratulate the hon. Gentleman on the ingenuity with which he has shoehorned in that question, which is possibly a Department for Work and Pensions matter, although I am not sure. But I will certainly come back to him on that point, and if it is not for me to respond, I will make sure the appropriate Minister in the appropriate Department does so.
We expect to raise over £25 billion from the additional taxes that banks pay over this period, on top of the £19 billion that we have raised to date since 2011. By 2023 we will have raised more than £44 billion in additional bank taxes introduced since the 2010 election.
I will now turn to the changes made by the current Finance Bill, and set out the reasons for changing the scope of the bank levy. Hon. Members will be aware that the bank levy aims to reduce the risk banks pose to the wider UK economy. It is currently chargeable on the global balance-sheet equity and liabilities of UK-headquartered banks, but overseas banking groups only pay bank levy on UK activities. However, regulatory developments currently being implemented across the G20 as a result of the standards set by the Financial Stability Board and the Basel Committee on Banking Supervision will reduce the risk that overseas operations of UK banks pose to the UK economy, for example with stricter international standards on the need for subsidiaries to be independently capitalised.
We have also made it mandatory for the largest UK banks to separate core banking services from their investment banking activities by 2019. This ring-fencing will help to insulate UK borrowers and depositors from failures arising in banks’ overseas branches, before the changes to the scope of the levy take effect. As such, there will now be less need for the bank levy to address the risks posed by overseas operations of UK banks, and as the bank levy is less necessary to cover these risks, we have an opportunity to boost the competitiveness of UK banks by reducing its scope.
At present, UK-headquartered banks pay the levy on their worldwide operations, while foreign-headquartered banks only pay on their UK operations. We want the UK to stay at the forefront of global banking; we want banks based in the UK to compete and win business overseas, bringing jobs, prosperity and tax receipts with them. So we have decided that from 2021 the bank levy will apply only to UK balance-sheets for UK-based and foreign banks alike. This will allow UK banks to compete and win business on a more level playing field in these overseas marketplaces, and it is a change we are making as part of a package of reforms that secures revenue while boosting competitiveness.
The corporation tax surcharge, the reduction in bank levy rates, and changes to compensation relief restriction were legislated in 2015. Following detailed consultation, this clause and schedule implement the final element of our plan: changes to the scope of the bank levy. The clause and schedule narrow the scope of the bank levy so that from 2021 it will be chargeable only on the UK balance-sheet equity and liabilities of banks and building societies. Broadly, this means that overseas activities of UK-headquartered banking groups will no longer be subject to the bank levy. However, the levy will continue to apply to the UK operations of UK and foreign banks.
Robert Jenrick
Will the Minister re-emphasise the point he has just made: that the practical effect for our constituents of the move he is making today will make it much more attractive for important British international banks such as HSBC and Standard Chartered, who have a choice of locations in which to be registered—HSBC recently considered whether to move to Hong Kong or even mainland China—to remain in the City of London?
Mel Stride
As is so often the case, my hon. Friend has hit an important nail on the head: in terms of improving our competitiveness, it is clearly deeply unattractive to have a situation where UK-domiciled banks are being taxed on their foreign operations whereas foreign banks are not being taxed by us on their foreign operations, but are only being taxed on their operations in the UK. He is right that the future of HSBC, Standard Chartered, Barclays and other banks, who make a huge contribution to our tax-take and our economy, are much more secure if they are not being disadvantaged by being taxed on overseas operations unlike their foreign counterparts. As part of these changes, the schedule also provides for a reduction in the amount on which the levy is chargeable for certain investments a UK bank makes in an overseas subsidiary.
I shall now briefly turn to the amendments tabled by Opposition Members. For the reasons I have described, we believe that a combination of taxing profits and balance-sheets is the most effective and stable basis for raising revenue from the banking sector. The bank payroll tax was intended as a one-off tax; even the last Labour Chancellor pointed out that it could not be repeated without significant tax avoidance. I can assure the House that information about the bank levy will continue to be published as part of the normal Budget cycle. Official statistics are published on the pay-as-you-earn income tax and national insurance contributions, bank levy, bank surcharge, and corporation tax receipts from the banking sector as a whole. The Government have published a detailed tax information and impact note on the proposed changes introduced by part 1 of the schedule. We have also published information about the overall Exchequer impact of the 2015 package of measures for banks, and these figures have been certified by the Office for Budget Responsibility.
Finally, new clause 2 proposes that HM Revenue and Customs should publish a register of tax paid by individual banks under the levy. Taxpayer confidentiality is an essential principle for trust in the tax system, and HMRC does not publish details of the amount of tax paid by any individual business. While this Government continue to consider measures to support transparency over businesses’ tax affairs, we must balance that with maintaining taxpayer confidentiality in order to sustain public confidence in our tax system.
Dan Carden
Is it not right that these banks, some of which were bailed out by, and may well look in the future for bail-outs from, the public, are treated slightly differently from other companies across the UK economy, and that we should have a public register for that reason?
Mel Stride
I would maintain that the banks are indeed being treated rather differently from other sectors of the economy, not least—as I have been at great pains to point out this evening—because they are being taxed far more heavily than other types of business. On a fundamental issue of principle relating to tax confidentiality, it would not be right to single out any particular bank, whatever its history, to make an example of it and treat it differently from other financial institutions.
The changes in this schedule are part of a package of measures that provide a sustainable basis for raising revenue from the banking sector in the long term. These measures continue to apply additional taxes to banks, to reflect the special risk that they pose to the UK economy. They put the taxation of banks on a more certain and sustainable footing to ensure that the banks will continue to pay additional tax, and they reduce the impact of the bank levy on UK banks’ international operations. In doing this, we will ensure their continued health and competitiveness, which are essential for us if we are to go on raising yet more tax from our banking sector. I commend the clause to the Committee.
Peter Dowd (Bootle) (Lab)
I rise to speak to the amendment and new clauses in the name of my right hon. Friend the Leader of the Opposition and others. Banks have a crucial role to play in the proper and smooth functioning of our nation’s economic wellbeing. In addition, it is important to ensure that the banks are not all lumped together with a one-size-fits-all approach for the purpose of a bank-bashing session, as was suggested by Conservative Members. Further, it is neither reasonable, fair nor sensible to homogenise the people who work in the banking sector as either saints or demons. Neither beatification nor demonisation of the banks is appropriate; it does no credit to the complexity of the landscape facing us. It is important when dealing with fiscal issues relating to banks that we keep a sense of proportion during the process. That is why it is important to ensure that, in an objective sense, we examine the context in which the Government have decided to cut the take from the bank levy. So, what is that context?
Alberto Costa
Will the hon. Gentleman be fair enough to confirm at the Dispatch Box that since the Conservative party came into government in 2010, the tax take from the banking sector has increased, especially since 2015?
Peter Dowd
I will come to that in the course of my speech.
I was asking about the context for these measures. First, there is the political context; then there is the ideological context. Politically, we saw a new low for the Government last week. We witnessed an increasingly weak and ineffectual Prime Minister being pulled between the troika of the Democratic Unionist party, her hard-line Front-Bench Brexiteers and, latterly, rebels on her own Back Benches.
Leo Docherty (Aldershot) (Con)
The hon. Gentleman mentioned ideology. The shadow Chancellor is on record from 2013 as being a self-declared Marxist. Does the hon. Gentleman share that ideology? Is he a Marxist, too?
Peter Dowd
The hon. Gentleman is nothing if not persistent in asking that question. We are dealing with the bank levy, not the political opinions of the shadow Chancellor. I will be happy in due course to pitch our policies against those of the Conservatives.
Alex Burghart
Does the hon. Gentleman regret the fact that his party opposed the bank levy when this Government introduced it in 2011?
Peter Dowd
I will come to that in due course as well, if I may. I am beginning to think that my staff have been leaking my notes. I shall have to have words with them.
Last week, in true one nation mode, the right hon. and learned Member for Beaconsfield (Mr Grieve), among others, gave the Brexit Front Benchers every opportunity to acquiesce to his reasonable requests. In effect, he tried to give them a “get out of jail” card, but they could not take yes for an answer, and the remnants of the Government’s credibility went down the pan. There is a civil war going on within the Government, and this goes to the heart of the matter. The Government are throwing everything into the mix to try to distract us from the civil war that is going on in the Tory party.
Alex Chalk
I am grateful to the hon. Gentleman for talking about civil war. By contrast, in the interest of showing the solidarity among Labour Members, does he agree with the shadow Chancellor’s listing of his hobby in “Who’s Who?” as
“generally fermenting the overthrow of capitalism”?
Peter Dowd
I know that the hon. Gentleman was disappointed when he was unable to ask that question last week because the Whips wound up his ability to do so. The reality is that that is of absolutely no relevance to the matter in hand. It does not matter; it is a complete irrelevance. We are in danger of getting swamped by red herrings.
Dan Carden
On the topic of the shadow Chancellor, it was he who called for an independent assessment of the bank levy, the balance between fairness and competitiveness, and how the Government’s calculation was arrived at. Does my hon. Friend support the shadow Chancellor in that call?
Peter Dowd
Of course I am more than happy to support the shadow Chancellor, because that is the very point that we are trying to make—[Interruption.] I referred to red herrings a moment ago, and I hear Conservative Members mentioning Marxist herrings. That is very witty; it is nice to hear a witty comment from the Conservative side on occasions.
Rachel Maclean
The hon. Gentleman refers to red herrings, but surely the views and political ideology of his shadow Chancellor are relevant. I will therefore give him another opportunity to answer the question: is he a Marxist, like his fellow shadow Treasury spokesman? Does he agree with that ideology, or is there civil war in the Labour party as well?
Peter Dowd
I think that the shadow Chancellor is more interested in Groucho Marx than Karl Marx, quite frankly.
James Cartlidge
It is very kind of the hon. Gentleman to take so many interventions on the trot. [Laughter.] This is not a minor issue. Let us not forget that Marxism destroyed the economy of half our continent. I very much admire the hon. Gentleman, but he did mention ideology in the first place. It is therefore not only in order for me to raise the question in his terms, but pertinent. Is he a Marxist—or is he perhaps a Leninist, a Bolshevist, or an adherent of one of the various other isms?
The Temporary Chair (Sir Roger Gale)
Order. It may be in order in the hon. Gentleman’s terms, but it is not in order in my terms. I should like to return to the bank levy.
Peter Dowd
Thank you for bringing us back to the land of reality, Sir Roger. I very much appreciate it.
Mr Jim Cunningham
Let us get real and say to the Government that at the end of the day, when we are in government, our Chancellor will carry out the policies of that Labour Government, whatever his personal views are. More importantly, many comments have been made about the previous Labour Government tonight, but the previous Chancellor said that it was not the Labour Government who created the financial crisis. If we had not capitalised the banks, many of those on the Conservative Benches would be in the poorhouse today.
Peter Dowd
As ever, my hon. Friend makes a reasonable point. The Government are so lacking in confidence that they are gerrymandering Public Bill Committees to reflect their control-freakery. We have to ask ourselves how long the Government can treat the House with such disdain. It is the kind of disdain that saw the Government ensure that there was no amendment of the law resolution, which has deliberately restricted the scope of the Bill and effectively limited parliamentary scrutiny and debate. [Interruption.] A Whip says from a sedentary position that that has happened before, but the procedure is used rarely and not in these circumstances. It is the Government’s control-freakery and fear of scrutiny that makes them do such outrageous and virtually unprecedented things.
Perhaps if the Bill set out a bold plan—let us call it a long-term economic plan—to get the economy back on track, we could all put up with the Government’s guileful procedural gymnastics. However, as I said on Second Reading, there is little in the Bill to solve the growing problems facing our economy—from sluggish growth and slow productivity to a lack of investment in our infrastructure and our people. The Government have instead decided to dedicate their efforts to offering the banks another tax break by further limiting the scope of the bank levy, ensuring that from 2020 UK banks will pay the levy only on their UK balance sheets, not their overseas activities. It is the same old Tories looking after the same old interests.
Alex Burghart
I am very grateful. I want to give the shadow Minister another opportunity to answer the question. Does he regret his party’s decision to vote against the bank levy in 2011?
Peter Dowd
I will come to that in a moment. In future, if two hon. Members want to make an intervention at the same time, they should perhaps have a ballot.
Leo Docherty
The hon. Gentleman mentioned tax. If we had a Labour Government, by how much would corporation tax rise?
Peter Dowd
We discussed this issue last week, but the bottom line is that we are here to talk about the tax policies of the Government, not the Labour party. I suggest that the hon. Gentleman reads “Funding Britain’s Future”, which we call the grey book. As I said to one of his colleagues last week, I am not his research assistant. The Independent Parliamentary Standards Authority provides the hon. Gentleman with enough money to employ his own research assistant, so he should not need a shadow Minister to do his research for him.
Labour’s position on the bank levy has been clear. We have consistently argued for a higher bank levy and pointed out that the levy, introduced in 2011, would raise substantially less then Labour’s bankers’ bonus tax. In short, we have always stood against the Government’s divisive austerity agenda. That was why we voted against the 2011 Finance Bill, which introduced the bank levy along with cuts to corporation tax and tax giveaways for the most well-off. That was also why we voiced our concern in 2015 over the Government’s cuts to the bank levy and the introduction of a corporation tax surcharge. It is why we will vote against the measures in the Bill.
Alex Burghart
Given the hon. Gentleman’s love of punishingly high corporation tax, does he not regret supporting the corporation tax surcharge on banks in 2015, when he was in the House?
Peter Dowd
No matter how many times Government Members ask rather tangential questions, I will not be drawn down that particular avenue, much as I would love to have that debate with the hon. Gentleman. The bottom line is that we have always stood against this Government introducing austerity measures at the same time as giving banks a tax cut. That is what it comes down to.
Peter Dowd
No, I will push on for a moment.
It is worth pointing out that the bank levy was not the brainchild of a Conservative Government. It was not introduced by the previous Chancellor after he had listened to the clear public outrage aimed at the reckless decisions made by some in the banking sector, who plunged the world into one of the greatest economic crises in modern times. As much as Government Members would like to blame the Labour Government for a world financial crisis, that is stretching credibility a little too far. [Interruption.] It is nice to see that the Chief Secretary to the Treasury is shouting across the Chamber, but I cannot quite hear her, so if she wants to intervene—or shout a little louder—so that I can actually hear her question, I will be more than happy to answer. It is nice to see her in the Chamber.
Mr Jim Cunningham
It is probably right to look at the history, rather than listening to the made-up stuff coming from Conservative Members. Let us be clear that the financial crisis started with Lehman Brothers in America. We recapitalised the banks, and we kept our triple A rating so that we could borrow to bail out the banks in the first place. The Government are trying to take the credit for something that they did not do.
Peter Dowd
My hon. Friend is right. Conservatives always try to take the credit. They take responsibility for the good things and no responsibility for the bad things—it is the way they are made.
The banking levy was not designed to ensure that the banks received enormous and unprecedented bail-outs from the taxpayer, such as the £76 billion of shares the Government purchased in RBS and Lloyds. It was designed to make them pay their fair share. In fact, the very concept of a levy was developed at the G20 summit in Pittsburgh in 2009. It was championed by the previous Labour Government, who subsequently introduced the bankers’ bonus tax. In the coalition’s 2011 austerity Budget, the Government decided to dump the bankers’ bonus tax and adopted the bank levy. At the time, Labour made it clear that the levy threshold was far too low in comparison with the money that would be raised if the Government stuck with Labour’s bonus tax. Instead, Ministers wilted under pressure from the banks and set the levy at a puny £2.6 billion.
James Cartlidge
The hon. Gentleman is talking about where the bank levy came from. I remind the Committee that it was actually Geoffrey Howe who introduced a deposit levy in a Budget in the early ’80s as part of his stabilisation of the financial system inherited from a previous Labour Government.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
If we are talking about the 1980s, let us remember that corporation tax spiked to over 50% in 1983 under a Conservative Government. Government Members are giving us lectures, but they should perhaps look at their own history rather than judging ours.
Peter Dowd
That is a fair comment.
The threshold was established despite Treasury officials considering it to be far too low. Under the original plans, the levy would have raised £3.9 billion a year—nearly £1.5 billion more than £2.6 billion—but the Government of the few ensured that the threshold remains low.
At 0.078% for short-term liabilities and 0.039% for long-term liabilities, the level set was—not to put too fine a point on it—an embarrassment when compared with that in other countries that introduced a similar levy. It was less than a third of France’s level, substantially smaller than Hungary’s, which was set at 0.53%, and even lower than that of the USA. They are all well-known Marxist countries.
In 2015, under pressure from the Minister’s and the Government’s chums, once more the then Chancellor cut the bank levy rate, and the current occupant of No. 11 has continued on that sojourn. In so doing, he has ensured that, by 2020, the UK’s biggest banks will have received a tax giveaway worth a whopping £4.7 billion. That is £4.7 billion that could have been spent on our public services—notably on children’s services, for example.
Stephen Kerr
It is all well and good for the hon. Gentleman to say what he is saying, but he is neglecting a simple fact. The financial sector is paying 35% more in tax today than it did in 2010 under a Labour Government.
Peter Dowd
Yes, because the sector returned to profitability after a Labour Government supported it throughout. That is why the sector has returned to profitability. Ultimately, if a Labour Government had not gone in and supported the sector, there would have been no banks, no profits and no tax whatsoever. I remind the hon. Gentleman of that one.
Alex Burghart
I am enjoying the hon. Gentleman’s potted Marxist history of the past 10 years. There seems to be a little bit of history that he has forgotten, which is of course the lax and inappropriate regulatory regime that the Labour party introduced under Ed Balls. That regime contributed to the terrible state in which our banking sector was left after 2008. Perhaps the hon. Gentleman would like to remind the Committee and his party of that.
Peter Dowd
First, we did not regulate the banks in the United States, where it all started. I ask the hon. Gentleman—I have said this a number of times—to go and look at “Freeing Britain to Compete,” the document produced by the right hon. Member for Wokingham (John Redwood) for the shadow Cabinet in, surprisingly, August 2007.
The Chief Secretary to the Treasury (Elizabeth Truss)
They were not the Government.
Peter Dowd
“They were not the Government” is shouted across the Dispatch Box, but that brings me to the point I am making. The bottom line is that chapter 6 of “Freeing Britain to Compete” called for significantly less regulation of the banks. As I have said before, the right hon. Member for Wokingham effectively said in that document that the Labour Government at the time believed that, if we did not regulate the banks, they would steal all our money. Many people out there believe that that is, in effect, what happened. The taxpayer had to bail out the banks. Why did the taxpayer have to bail them out? Because of the lack of regulation. The shadow Cabinet at the time ratified a policy of less regulation. If we had followed the right hon. Gentleman’s exhortations, as ratified by the shadow Cabinet, we would be in an even worse state. I ask the hon. Member for Brentwood and Ongar (Alex Burghart) to go and have a look at that one.
Rachel Maclean
The hon. Gentleman is discussing the strictures and exhortations of my right hon. Friend the Member for Wokingham (John Redwood), who was then an Opposition Back Bencher. Surely the hon. Gentleman must recognise that it was the Labour party, in government, that deregulated the banks and took power away from the Bank of England. Whatever my right hon. Friend may or may not have said—he is an incredibly intelligent and learned person—he was not in government and was not making policy. It was the Labour Government who made the policy to deregulate and allow the financial crisis by taking away strength from the Bank of England at a time when it should have been strengthened.
Peter Dowd
If the hon. Lady wants to take back to the Conservative party the independence of the Bank of England, she should feel free. We will not support it— [Interruption.] That is what I heard her say. She was complaining about the independence of the Bank of England. So a new policy has been introduced by the Conservatives to take away the independence of the Bank of England.
To offset the cuts to the bank levy, the Government introduced the 8% corporation tax surcharge, which they falsely claimed would offset the reduction. If we look at their Red Book and the forecasts from the Office for Budget Responsibility, however, we can clearly see that the surcharge will not make up the fall in the bank levy. Under the forecasts, the surcharge is set to increase by £0.3 billion a year, while the receipts the Exchequer receives from the levy will fall by £1.7 billion a year, which is a £1.4 billion gap. That is a fact. That is in the Government’s own Red Book.
Dan Carden
I am grateful to my hon. Friend and constituency neighbour for giving way. There is a lot of displacement activity coming from Conservative Members in the form of interventions. This is the second debate I have attended on the Finance Bill in which not one Conservative Member has mentioned living standards, wages, public sector pay or any real life conditions.
I encourage my hon. Friend to carry on with his speech and to talk about the review that should take place into the bank levy and the real life consequences of this Tory Government’s policies.
Peter Dowd
I thank my hon. Friend for his advice, which I will take.
In 2017, we are still feeling the effects and economic consequences of the actions of the banks. Every day we are told by the Government that there is no money to invest and that austerity must continue, yet the Government have gone out of their way to undermine any remuneration from the banks that caused this sorry state of affairs in the first place.
Once again, the Opposition’s ability to amend this Bill is hamstrung and limited by the Government’s continued use of arcane and outdated parliamentary procedure. In football parlance, not only have they moved the goalposts but they have put boards across the goalmouths so that the Opposition cannot score any goals—a recreant act, if ever there was one, from a pusillanimous Government frightened of their own shadow.
By tabling new clause 1, we seek, first, to require the Government to carry out a review of the bank levy, including its effectiveness in relation to its stated aims—Sir Roger, you will be glad that we are back on the bank levy. Secondly, we seek to establish the extent of the revenue effects of the cuts made in 2015. Thirdly, we seek to calculate how much would have been raised if the Government had stuck with Labour’s bankers bonus tax. Let us have the comparisons.
Such a report would shine a light on the Government’s malpractice in cutting frontline services while offering tax giveaways to the banks. It would require the Minister to reassure the House directly that certain banking practices are not simply in hibernation. “Once bitten, twice shy” is a fair assessment of most people’s views, including many in the sector itself. A by-product of the process would be to show that far more would have been raised under Labour’s bankroll tax.
We are also calling for a separate review of the changes introduced by clause 33 and schedule 9 and their overall impact on revenue and risky behaviour. That review would make the Treasury explain the rationale for further limiting the scope of the bank levy and forgoing billions of pounds while, at the same time, pushing for more cuts to departmental budgets and frontline services.
It is, of course, unsurprising and indicative of the Government that they have failed to keep track of the banks that regularly pay the levy and a full list of what they have paid. That is why, in the name of transparency—a very novel concept for the Government—we would ensure fiscal accountability. The Opposition have tabled an amendment that seeks to create a public register for the bank levy.
The Minister talks about commercial sensitivity. Well, that old chestnut is brought out time after time. When we supported the banks with billions upon billions of pounds, nobody talked about commercial sensitivity then. In this particular case, I am sure many in the banking sector would be happy to have such transparency. It is shocking that the Government consider this tax cut for the wealthy few to be a good use of nearly £5 billion.
Alongside demanding that the Government change course, we must also understand the impact of the lower levy rate introduced in 2011, as well as the revenue effects of lowering the levy in 2015. That, among other things, is what our amendment seeks to tease out.
Robert Jenrick
I am confused by the hon. Gentleman’s position on the bank levy. He says that he voted against it in 2011 because it was set at too low a threshold, but between 2011 and 2015 the then Chancellor raised the bank levy seven times and, on each occasion, the Labour party voted against it. Why did it do that?
Peter Dowd
I suggest that the hon. Gentleman goes back and reads Hansard when it is printed to see exactly what I said.
Once we can see the true costs of the Government’s policies, we can grasp the extent of the choices they have been making and how they have favoured a small, wealthy group over the many citizens of this country time and again. Let us look at the example of children’s services. Only a week before the Budget, the chief executive of Action for Children, Sir Tony Hawkhead, described the “devastating cost” of cuts to children’s services, which he said have been left on a “dangerous and unstable” footing. These prevention and protection services are vital to provide proper care for our nation’s children, and the banking levy could help with that, yet we have seen deep cuts of 55% of funding for local government and a gap of £2 billion in funding by 2020.
There is widespread talk and reports of local councils having to seek permission from the Government to raise council tax to cover the costs, in effect, of cuts to the bank levy—this money may have been available for children. So cuts to bankers and council tax up seems to be what we are being told today. As these services have been decimated over the past seven years, we have seen a doubling of serious child protection cases and twice the number of children put into care protection plans. Last year, 70,000 children were placed into care. The support for foster care, adoption and Sure Start children’s centres has all been reduced. Youth centres are closing and parenting classes are being axed. Short breaks for disabled children, provided by local councils to give their parents a little respite from full-time care, are being taken away and are under strain.
Taken together, those cuts mean that some of the most vulnerable children in our country are paying the price for seven years of failing economic strategy. When are the Government going to change their strategy? It is still shocking to see the Government put the needs of others ahead of those of our youngest citizens, who are picking up the bill for austerity
Alex Burghart
Will the hon. Gentleman not acknowledge that, as we have reduced the rate of corporation tax, so revenues have increased and there is now more money to spend on public services than there would otherwise have been? Does he not acknowledge that there is a real risk that, if his party were to increase corporation tax rates, there would be less money coming in, and cuts to public services and so on would be on his party’s head?
Peter Dowd
In short, no. The Institute for Fiscal Studies has made no link whatsoever between the rate of corporation tax and tax take. This is one of these myths that have been presented to the House time after time, which in the main we have tried to ignore, but at some point we have say that it is complete and utter claptrap, not to put too fine a point on it.
The banking surcharge, supposedly introduced to compensate the taxpayer for this levy loss, will not come close to making good the difference. The Chancellor still has a choice though: he could reverse the cut to the bank levy and end the crisis in our children’s services instead.
It is increasingly clear that the oldest political party has run out of steam.
Lucy Frazer (South East Cambridgeshire) (Con)
Does the hon. Gentleman therefore think that France’s recent proposal to cut taxes for higher earners in order to woo bankers over to France is an incorrect policy, and that France has got it wrong because low taxes do not encourage investment and growth in a country?
Peter Dowd
The only thing that is going to attract people over to France is the shambles that the Government have made of their Brexit negotiations. That is a significantly bigger factor than, for example, the banking levy.
Gareth Snell
France has a corporation tax rate of 33%, so I am not entirely sure the point the hon. and learned Lady was making is valid. Would my hon. Friend care to comment on that?
Peter Dowd
My hon. Friend is right on that. Other countries, including the United States, have a corporation tax of 36% and the German rate is higher than ours, so even if we went back to the 2010 level of 26% that we had under a Labour Government, we would still have the lowest rate of all our competitors. That is the reality. Interestingly, they are doing much better than we are, notwithstanding that higher level of corporation tax.
Stephen Lloyd
Does the hon. Gentleman agree that the Conservative party continues to cut corporation tax aggressively, but that perhaps next year rather than cutting it still further it might take that money to ensure that the WASPI women—the Women Against State Pension Inequality Campaign—get a fair transition payment?
Peter Dowd
There are many, many calls on the taxpayer, and that is one of them. The Government would do well to pay attention to the exhortations of the hon. Gentleman.
Peter Dowd
I am more than happy to give way in relation to corporation tax, but it is important that I maintain the theme of the austerity project. It has not led us to prosperity. It has delivered misery for this country, yet the Government stick to the same old rules: tax breaks for wealthy bankers and cuts for the rest of us. It is like a stuck record.
James Cartlidge
I am sure that, coming from where he does, the hon. Gentleman takes a close interest in the Republic of Ireland, a country he has not mentioned. Is he aware that, by keeping its corporation tax rate low, it has revolutionised its economy and become an export tiger, and that that has been a key factor in helping it to recover from the crash?
Peter Dowd
Huge amounts of support from the European Union have revolutionised the Irish economy. My forebears came from Ireland, but I do not think even the Irish would compare themselves as a small country of 3.5 million people or thereabouts with the United Kingdom with its 60 million—this is chalk and cheese. The hon. Gentleman will appreciate that that is a ridiculous comparison to make in the debate.
Our amendment will finally help to demonstrate the true cost to the public purse of the Government’s favourable approach to some. In that way, we can understand exactly what the cost in revenue is. This should be all the evidence the Government need to change course—things simply are not working. Productivity is low, inflation is up, wages are stagnating, public services are in absolute decline and the NHS is under strain, as is social care, yet the Government just do not get it. They seem to think that we live in Shangri-la, but, unfortunately, we do not. We know that the Conservative party relies on support from vested interests for its own survival, but the question we must ask ourselves is: should the survival of a clapped out, atrophying, self-centred, out-of-touch, diminished Tory party take precedence over the needs of children? I know the answer, so I will simply leave Conservative Members to answer it in the silence and solitude of their own consciences.
Stephen Kerr
It is my great privilege to follow the hon. Member for Bootle (Peter Dowd), whose speech was greatly entertaining, if a little devoid of something approaching accurate history. We were treated to a festival of revisionism on this country’s economic history over the past 10 years. I did agree with one thing he said—it was almost the first thing he said—which was that it is wrong to create a single category to describe bankers. He alluded to the fact that some may be called saints and others may be called sinners—he may have said that, but I cannot recall exactly the term he used—and that is undoubtedly the case, so to generalise about banking and bankers, as we often hear Opposition Members do, is extremely rash.
As for culpability for the events from the end of 2007 to 2009, the hon. Gentleman may wriggle on the issue, but the fact is that the Labour Government were indeed culpable, as were other politicians of that time who were holding senior office in this country, including the then First Minister of Scotland, Alex Salmond, who positively encouraged the Royal Bank of Scotland to engage in some of the more reckless initiatives that the leadership of that bank were engaged in. The result was that not only did they upend a great Scottish institution, but they nearly upended the whole United Kingdom economy.
Ian C. Lucas (Wrexham) (Lab)
Does the hon. Gentleman recall the shadow Chancellor at that time, the then Member for Tatton, calling repeatedly for the relaxation of what he described as the strict regulation that the Labour Government were imposing?
Stephen Kerr
The important thing to remember is who was in government and whose hand was on the tiller at the time, and it was a Labour Government’s.
Stephen McPartland (Stevenage) (Con)
Does my hon. Friend remember the City Minister, Ed Balls, saying in 2006 that nothing could endanger the light-touch regulation of the banking system?
Stephen Kerr
I thank my hon. Friend for that useful intervention because I absolutely do remember that. The reason why those words might linger in mind longer is that they came from someone holding an office of state. Cabinet members at the time were positively encouraging those whom they considered their friends in the City to become increasingly reckless, as was the First Minister of Scotland, as I have mentioned.
Gareth Snell
Now that the hon. Gentleman has demonstrated that his memory is fully functioning, will he answer the question asked by my hon. Friend the Member for Wrexham (Ian C. Lucas)? Does he recall the comments made by the former Chancellor, who was shadow Chancellor at the time? It appears that the views of shadow Chancellors are quite important to Conservative Members.
Stephen Kerr
It might be a function of my age, but I must confess that I have no recollection of anything to which the hon. Member for Wrexham (Ian C. Lucas) referred. I apologise to the House for the lapse in my memory, but I am of an advanced age and it is perhaps a senior moment—I do not know.
I support the Bill and the plan that goes with the banking levy, which is a fair way to ensure that banks make a fair contribution to the tax system and that they make the right contribution to society. The changes proposed in the Bill are fair. They provide for a level playing field for all banks, whether domiciled in the UK or based outside it.
Sandy Martin (Ipswich) (Lab)
Will the hon. Gentleman explain how we can know there is a level playing field and that such levies are fair if there is not complete transparency?
Stephen Kerr
I was about to describe the level playing field as I see it. The Bill will remove any disincentive there might have been for banks to base themselves in the UK, which is important. I remind all Members of the reputation that our country and particularly the City has. I think we would all agree that the City is the financial capital of the world.
With respect to the bank levy, the banks’ contribution must go beyond the paying of taxes, as outlined in the Bill. Given the banking sector’s behaviour—I referred to the comments by the hon. Member for Bootle about saints and sinners earlier, but I am generalising now—the banking industry does have a responsibility to make a fairer contribution to society, which is what the measures taken by the Government since 2010 and 2015 have made happen.
Let me mention in passing the Financial Conduct Authority’s report on the Royal Bank of Scotland and its treatment of small and medium-sized business customers.
James Cartlidge
I do not want to distract my hon. Friend from his excellent speech, but he referred earlier to the former First Minister, Alex Salmond; does he recall the encouragement that Mr Salmond gave to RBS with respect to ABN AMRO and anything related to that purchase, which many people thought at the time was a risky investment?
Stephen Kerr
I have a very bright recollection of that. There is a famous document that shows the First Minister wrote to the chief executive of RBS and added at the end some personal notes that went above and beyond encouragement.
Given recent history, it is right that the banks make a more-than-fair contribution, and that is what they have been doing. I return to the FCA’s report on the RBS and its treatment of small and medium-sized business customers. I refer specifically to the conduct of RBS’s global restructuring group, about which the FCA’s report makes depressing reading. When I looked at the report, I lost count of the number of times the words “inadequate”, “inappropriate”, “systematic” and “failure” were linked repeatedly to a wide range of RBS’s activities, and particularly the global restructuring group’s conduct towards small and medium-sized businesses. The words I highlighted were appended to the description of how the group laid charges and managed loans and communications and to the description of its valuation practices. There is also the fact that the complaint procedures were completely ignored.
Many Members from all parties will know of examples of how the systematic failings in RBS’s global restructuring group affected constituents and their businesses. My constituency is no different. I am mindful of ongoing investigations involving cases in my constituency and have no desire to jeopardise their progress as I address the issue of bank levies. I shall simply say that from the cases I have seen there remain many unanswered questions that RBS needs to address.
Many Members present will be aware of RBS and the Bank of Scotland having closed their bank branches.
James Cartlidge
My hon. Friend reminds us that, what with Royal Bank of Scotland and Bank of Scotland, there is clearly a theme among these great institutions that failed. Has he considered the fact that the bank levy is one function of a system in which ultimately the lender of last resort is the most important function? That system would simply not exist had Scotland gone independent and been left with massive liabilities to pick up. It would not have been able to cope.
Stephen Kerr
My hon. Friend makes a first-class point. He provides me with an opportunity to remind the House that, thankfully, in September 2014, Scotland had the good sense to vote overwhelmingly to remain part of the United Kingdom. Part of the reason for that was, I am sure, the lessons we had learned as a country from our experiences between 2007 and 2009, particularly the recklessness of the Scottish National party Government and the First Minister at the time, Alex Salmond, in the way he conducted himself with respect to RBS.
Just so that the hon. Member for Glasgow North (Patrick Grady) is aware, I am talking about the bank levy in relation to bank closures. It is my firm belief that having bank branches in communities is part of the covenant between the public and their financial institutions, but that covenant that is clearly broken. People should expect the banking sector to keep businesses going with cash flow, loans, financial planning and so forth. People should also expect that bank branches are close by and serve the communities in which they live. Earlier, the hon. Member for Liverpool, Walton (Dan Carden) reminded us that high street banking is particularly important for people in our constituencies who are elderly or whose mobility is challenged in other ways.
In Bannockburn, Dunblane, Bridge of Allan and the Springkerse estate in Stirling, RBS and the Bank of Scotland are leaving communities without adequate access to banking. It is important to state these things in the context of our consideration of the bank levy.
Ian C. Lucas
The hon. Gentleman is making a powerful argument about local banking. Does he therefore support the Labour party proposals for the introduction of regional banks? A nation such as Scotland could have its own banking system to serve local communities, rather than the incredibly centralised system we have now.
Stephen Kerr
I am in favour of some fair competition in retail banking. We need to consider many important issues in the context of the future of retail banking, especially how it appears in the heart of our communities.
RBS is closing its branch in Bridge of Allan, which happens where I live. In the past eight months alone, the Clydesdale bank, the Bank of Scotland and the TSB have all closed their branches, and now RBS is, too. That leaves the post office on Fountain Road as the only place where anyone will be able to do any over-the-counter banking.
Gareth Snell
Given that the Government are the major shareholder in one of the banks to which the hon. Gentleman referred that has closed and left his community devoid of proper facilities, does he not agree that it is time for the Government to step in and use their shareholder clout to ensure that bank branches stay open?
Stephen Kerr
I thank the hon. Gentleman for his comment. In fact, I have made representations to Ministers—as have my colleagues on the Government Benches—because of the impact that the closure of the bank branches, particularly the recent announced closures of the Royal Bank of Scotland branches, will have on communities such as the one from which I come in Bridge of Allan. I do have concerns about the capabilities of the Post Office branches to be able to deal with the kinds of cash amounts that they will now have to handle. It is a different scale of operations that they will have to be prepared to lift themselves to. Yes, I have made representations, and I will continue to do so. In fact, there is an Adjournment debate on the subject following these debates.
Peter Dowd
Does the hon. Gentleman agree that using state money to keep banks open in local communities amounts to Marxism?
Stephen Kerr
Well, I have mentioned what I did in my earlier years. In all those years, I was never accused of being a Marxist. I am concerned when communities become devoid of a basic service, such as a bank branch of any description. Frankly, I consider it to be unacceptable. These banks have had so much money from the British people and have been bailed out by them. I have already mentioned the recklessness of the banks, particularly of the Royal Bank of Scotland, for which I do not apologise.
I should say that I did actually work for the Royal Bank of Scotland when I left school. Perhaps I should have mentioned that earlier. [Hon. Members: “Yes, you should.”] I was 16 at the time. I was a junior bank officer for RBS at the East High Street branch in Forfar. The Royal Bank of Scotland is a great institution. I just pause to pay tribute to its staff because they do a great job, and they have done a great job over these past 10 years in particular in very great difficulties. I pay them my compliments for that. Nevertheless, it does not excuse the Royal Bank of Scotland. In addressing the bank levy, it is important to remember that the greed and the calumny that they were guilty of means that they owe the British people something more. I fully acknowledge that that something more has been extracted and is being extracted, but I also think that there is a case for them having the social responsibility to maintain a presence in the communities of my constituency, such as in Bannockburn, Dunblane, Bridge of Allan and the rural parts of the constituency. I am afraid that a mobile bank does not quite meet the need.
The other consequence is that many more empty units are appearing on our high streets. That is on top of the units that have been left empty by the Scottish Government and their inaction on business rates. I was about to say, Sir Roger, that I wish that I could show you the picture of King Street in Stirling, but, in retrospect, I am glad that I cannot, because there are so many empty units and so many “to let” and “for sale” boards. That is a situation that leaves someone such as me, who loves Stirling and the great history of my constituency and everything that it stands for, more than a little concerned. There is a feeling that we need to see a change in this respect. Certainly, when the banks, which are 72% owned by the taxpayer, decide to vacate these prime sites, it leaves a big hole at the heart of these shopping centres and communities.
Karin Smyth (Bristol South) (Lab)
I just want to be clear: is the hon. Gentleman asking for a further Government subsidy from either the Scottish Government or the UK Government for those institutions?
Stephen Kerr
I do not think that I have mentioned the word “subsidy”. I am talking about corporate social responsibility. [Interruption.] Corporate social responsibility has nothing to do with subsidy.
The Temporary Chair (Sir Roger Gale)
I am listening with interest to the hon. Gentleman. He is talking about social responsibility, but I need to remind him that he should be talking about the bank levy.
Stephen Kerr
I appreciate that reminder, Sir Roger. My comments about social responsibility are in the context of why we have a bank levy at all and why it has been an important part of the Government’s focus in, quite rightly, raising the billions of extra revenue.
I promise that I will take only a few seconds more. There was some comment earlier about the effect of taxation. Someone mentioned the Laffer curve, which is well known to Members. It was certainly well known to the former Member for Gordon and the former First Minister of Scotland, Alex Salmond, who used to regularly quote the Laffer curve in his models. He argued with great eloquence in many places—perhaps he even did so here, I cannot be sure—for lower corporation tax. That was one of the things that Alex Salmond absolutely stood for. The lack of any intervention on me means that I am obviously not going to be corrected on that score.
Rachel Maclean
My hon. Friend is talking about Scotland, but is he aware that, in the whole UK, while we reduced corporation tax from 28% to 19%, the amount collected has increased from £37 billion to £50 billion during the period 2010 to 2017. Will he comment on that as well?
Stephen Kerr
I am delighted to offer a comment on that, because that is exactly in line with the point that I am trying to make, which is that the Laffer curve is exactly that—we increase revenue as we reduce taxation rates. It is very much at the core of what we believe on the Government Benches. At one time, it was what the SNP also stood by, but now the Financial Secretary in the Scottish Government has not even heard of Laffer. He told a Select Committee in Holyrood that he had never heard of the Laffer curve. That is where we are at in Scotland. When it comes to incentive, hard work and industry—I am referring this to the bank levy and the bankers’ bonuses that were mentioned by Opposition Front Benchers—we are now at a point where £33,000 a year is classified in Scotland as “rich”. I think that that is dismal. We are talking not about people with yachts in the marina bays of the west of Scotland, but doctors, teachers and middle managers—the working men and women of Scotland. Therefore, when it comes to the bank levy and to bankers’ bonuses, and we talk about incentives to work hard, to exercise initiative and to take a few risks, it is just not on in Scotland now. The Scottish Government are sending out a clear message, which I find dismal and dismaying, that that is not the kind of Scotland that they want. It is the kind of Scotland that I want. It is the kind of United Kingdom that I want, which is why I unreservedly stand to support the Bill.
Kirsty Blackman (Aberdeen North) (SNP)
You will be delighted to know, Sir Roger, that I will be talking about the bank levy and the new clauses that have been tabled both by the Opposition and by our party. I wish to start by saying that I have rarely been more embarrassed to be part of this House than I am this evening. This debate followed hot on the heels of a statement on bullying and harassment and we ended up in a situation in which there was a ping-pong between Government Back Benchers and the Opposition Front-Bench team. It just was not acceptable. I appreciate the fact, Sir Roger, that you intervened and brought Members back to the matter under discussion.
Kirsty Blackman
No, I will not give way.
The other concern about the tone of this debate thus far is that it has basically been a history lesson. Both sides have been talking about the history and how we have ended up in this situation. Very few people have spoken at any length about the future and about how the bank levy in the future will affect the tax take of the Treasury, as well has how it could be made to be more fair and ensure that we redistribute taxes and wealth in a positive way.
The SNP has a manifesto commitment to support the reversal of the reduction in the bank levy. We stand by that commitment and have been consistent in our views on that. We have also been consistent in supporting the introduction of a tax on bankers’ bonuses.
I am pleased with the way in which Labour’s new clause 1 has been written; there is a lot to commend it to the Committee. The suggestion of looking at the effects on revenue of the bank levy compared to the bank payroll tax is utterly sensible. It strikes me that this information should be in the public domain, so that we can all talk from a position of knowledge about the actual effects that this has had, rather than the projected effect that the Treasury thought it would have when it was first put in place or even thinks it might have now. It is totally reasonable for us to ask for a review of these things.
We would be able to go further and ask for more drastic changes if the Government had proposed an amendment of the law resolution, which would allow us to be more flexible in tabling amendments. As I think I have said before—if not, I am quite happy to say it now—the fact that the Conservative Government are not proposing an amendment of the law resolution means that future Labour Governments will be likely to do the same thing, so this creates a situation whereby the House is less transparent and there is less Opposition scrutiny. It would be much better for all parties if there was an amendment of the law resolution.
New clause 1 states that the proposed review would consider
“the effectiveness of the levy in reflecting risks to the financial system and the wider UK economy arising from the banking sector”.
That is key. Despite all that has happened since the financial crash, there are concerns about ensuring that banks continue to make less risky propositions and continue to be safe places for people to put their money. It is reasonable to look at the bank levy in the context of discouraging risky behaviour by banks, and the reference to the incoming revenue is key.
New clause 11, tabled by the SNP, would deal with two things: inclusive growth and equality. We will hear an awful lot in the debate tomorrow about equality, and this should apply across all measures. The review proposed in our new clause would consider whether reducing the bank levy would disproportionately affect, for example, people of a certain gender or people who are not wealthy. People who work for banks are more likely to be male and wealthy. Therefore, reducing the bank levy is more likely to support them than it is to support groups that are disadvantaged in the first place.
We in the SNP have been absolutely clear and consistent in our support of inclusive growth. We have also been clear that things such as quantitative easing—certainly since the first round of QE—do very little to support those people at the bottom of the pile or to inject money into the real economy, but actually have a disproportionate effect in organisations such as those in the FTSE 100. We will keep being clear that inclusive growth is important, which is why we have proposed progressive options for taxation. Particularly in this place, it is difficult to get any sensible answers from the Government about how their proposals will affect people across the spectrum. That is not necessarily because the Government have not done the work; they may have done the work, but they are unwilling to publish it. They do not produce comprehensive reviews of how the tax takes have changed as a result of the changes they have made to the tax system.
Hon. Members will be unsurprised to hear me calling again for the Government to be more transparent, but that is what I am doing. I will also be very clear that we are keen to support new clause 1 if Labour decides to push it to a vote.
James Cartlidge
It is a pleasure, as always, to follow the hon. Member for Aberdeen North (Kirsty Blackman). Interestingly, she mentioned inclusive growth, to which I will return shortly. It is also a pleasure to follow my hon. Friend the Member for Stirling (Stephen Kerr), whose speech was a real tour de force. The hon. Member for Aberdeen North criticised him for not talking about the future and dwelling on the past. Actually, he was talking about the present—the challenges facing his constituency today, in the here and now. The bank levy is incredibly important because it is all about the future prosperity of those constituents, so I very much welcome my hon. Friend’s comments.
Interestingly, the Opposition’s new clause 3 gives us a good way of looking at the bank levy as it stands. Subsection (2) of new clause 3, which would affect schedule 9—the schedule that contains the details about the bank levy—states:
“No later than 31 October 2020, the Chancellor of the Exchequer shall lay before the House of Commons an account of the effects of the proposed changes in Part 1 of Schedule 9—(a) on the public revenue, (b) in reflecting risks to the financial system and the wider UK economy arising from the banking sector, and (c) in encouraging banks to move away from riskier funding models.”
I accept that those three points are incredibly germane. In fact, let us not wait until 31 October 2020. Let us stand here now and think about how a review would fit under Labour’s very own new clause.
Look at subsection (2)(a) of new clause 3, which is about the impact “on the public revenue”. What do we see? Well, the banking sector paid 58% more tax in 2016-17 than in 2009-10. That is under a Conservative Government. The average amount paid by the banks every year since 2010 has been 13% higher than under Labour. In 2016, the Government introduced an additional tax on banks—the 8% corporation tax surcharge, which we have been discussing—which will raise nearly £9 billion by 2022.
Sandy Martin
In 2009-10, the banks were recovering from the worst position they had been in since the 1930s. In many cases, they went under and needed Government support to get out. Does the hon. Gentleman accept that it would therefore have been extraordinary if the banks were not making more profit in 2016-17 than they were in 2009-10, that that is the reason why there is more take from the bank levy than there was in 2009-10, and that it is not simply because the Conservatives have reduced the amount of it?
James Cartlidge
I consider the hon. Gentleman to be a friend because we work together in Suffolk as MPs; we are always happy to do that. I will be coming to the issue of the crash and the way in which the banks went back to the 1930s, as he puts it, because I experienced that myself.
Stephen McPartland
Is my hon. Friend aware that the total tax take from banks now is 6% higher than it was in the year before the financial crash?
James Cartlidge
My hon. Friend makes an excellent intervention and provides the rebuttal for me. The key point is that more tax is being raised now than before the crash.
My point is that were we to apply now the test of the impact on the public revenue under Labour’s very own review as proposed in new clause 3, we could only come to one conclusion, which is that all the taxes we have put in place on the banking sector—not just the bank levy—have been raising significantly more revenue. The rising revenue has contributed to paying off the deficit and supporting UK public services. [Interruption.] The shadow Minister, the hon. Member for Bootle (Peter Dowd), is shaking his head. I am happy for him to intervene and tell me that we are not raising more tax from the banks. He was very generous in giving way to me, but it appears that he is not going to intervene.
Subsection (2)(b) of new clause 3 states that the review that Labour would introduce of the bank levy would look at
“reflecting risks to the financial system and the wider UK economy arising from the banking sector”.
I always find it amusing to see a Labour amendment—particularly from this Labour party—talking about risks to the financial system; indeed, I think the shadow Chancellor himself has referred to Labour as a risk to the financial system. One wonders whether, in its own review, Labour will be modelling what the impact of a run on the pound—let alone a run on the banks—would be on the banking system. I certainly think it would be most profound.
The hon. Member for Aberdeen North said we are going back in time, but of course we have to go back, because the bank levy was born out of what happened in 2008. The bank levy came from the crash, which has had very many wider impacts, but particularly on this aspect of our tax system.
Let us remember the real bank levy—the real cost to the public. The cost of the bail-out of the banks was £850 billion. That was the figure the National Audit Office published in 2009 while there was still a Labour Government. That consisted of all kinds of costs. There was £107 million for City advisers—that’s right, a Labour Government spent over £100 million on City advisers. There was £76 billion to buy shares in RBS and Lloyds. There was £250 billion to guarantee wholesale borrowing to strengthen liquidity. There were many more hundreds of billions of such costs, including hundreds of billions for the Bank of England to insure itself in providing liquidity. People forget that. When we talk about the cost of the bail-out, we are not talking just about buying shares in the banks; this huge amount of subsequent activity that took place ultimately has to be accounted for, and it is borne by the whole of our economy and all our taxpayers.
Gareth Snell
I am very interested to hear the hon. Gentleman give us his rhetoric about history. What, at the time, were the suggestions from the Conservative party in terms of dealing with the impending crash? Anecdotally, I know that chief execs of banks were talking about money running out at cashpoints. What would the Conservative party have done differently in 2008 from what happened under the Labour Government?
James Cartlidge
I would say three things. First, the hon. Gentleman talked earlier about the shadow Chancellor, but I have to go back and quote the City Minister at the time—Ed Balls—who said in 2006:
“nothing should be done to put at risk a light-touch, risk-based regulatory regime”.
Gareth Snell
If we are going to trade quotes across the Chamber, the then Member for Witney, who was the leader of the Conservative party at the time, said:
“I want to give you…less regulation.”
If we are talking about regulation and the state of the banks at the time, the Conservative party is as culpable as anybody else.
James Cartlidge
I am happy to have that debate. I will tell the hon. Gentleman what I said. I started a mortgage broking company in 2004—we have expanded since then, and I should declare that I still have interests in that business. I wrote an article for The Guardian in 2004 about the next general election. [Interruption.] Just a closet Marxist. At the time, the big issue being talked about was public services, but I said—this was in 2004—that the big risk we were not talking about was consumer debt. I knew that because, having just started a business in that area, I was stunned by what was happening in mortgage finance, which, of course, was the type of borrowing that laid the seeds for our destruction in 2008.
Sandy Martin
May I tell the hon. Gentleman how prescient he was in 2004? He was clearly right. Does he have the same concern about the rising level of private debt now?
James Cartlidge
The hon. Gentleman makes a very good point, and I will come back to that once I have set out the context of my remarks. The key point is this: there are some concerns, but in a growing economy, consumer debt will tend to rise, so we have to separate out that which is perfectly acceptable and that which may give cause for concern. I will come back to that point, but it is very fair.
In respect of proposed subsection (2)(b) of the Labour new clause, which talks about
“reflecting risks to the financial system”,
we conclude by reminding ourselves that it was the very explosion of the financial system that created the need for this bank levy. As I say, we have to debate the past—why we are here in the first place and where this all came from—and the fact that we are on a journey. The reason this tax is being tapered off is that the banking sector is once again becoming profitable, and we are allowing it to flourish again as a free enterprise-based banking system, but, of course, in the context of very strict regulation and a prudential regime.
Let me go back to the point about personal experience. It amazes me when members of the Labour party stand up and, like Pontius Pilate, wash their hands of the huge impact of that crash. At the time, many of us approached the regulator—the Financial Services Authority—which Gordon Brown launched early in the first Parliament after Labour won in 1997. He claimed that that would avoid future financial crises. We must remember that and have accountability.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
Will the hon. Gentleman be reasonable or fair enough to acknowledge that while it is entirely possible to say that the system of regulation on the eve of the financial crisis was not adequate— no one is making the case that it was—surely it is illogical and ridiculous to suggest that the Conservatives would have been doing anything different. After all, the banks themselves were not aware of the level of risk they had undertaken, so it was no surprise that the regulator did not appreciate it. One cannot claim that the Conservatives advocated anything different from the overarching framework of regulation that existed at the time.
James Cartlidge
I entirely disagree. The absolute root cause of it all was not saving enough and having a bad culture of over-reliance on debt. I well remember that back in ’98 and ’99 when Francis Maude was the shadow Chancellor, he kept saying, with regard to the low savings ratio, “We are storing up problems for the future.” At every Budget, no matter how high Labour was in the polls, our shadow Chancellors and shadow spokesmen—people like Howard Flight—would say that the savings ratio was way too low and we were storing up problems for the future. We did warn, we did say it, and we were ignored.
Alison McGovern (Wirral South) (Lab)
The hon. Gentleman is making the case that people borrowed too much because they were somehow feckless or immoral. [Interruption.] He mentioned the poor savings culture in this country and said that people were unable to save. Actually, is it not the case that the picture has worsened since then, because the simple fact is that wages have been held down and people are now unable to save? How has his party in government fared on the issue that he has raised?
James Cartlidge
I never talked about fecklessness or being immoral. I was talking about the economic fact that the savings ratio was dangerously low throughout much of the Labour Government’s time in office, and they were warned about it. Labour Members are saying that we never said anything, and that simply is not true.
The hon. Lady seems to think that Labour had good policies on debt. I remember when someone could get a self-certified mortgage, with no proof of income, on an annual percentage rate relating to bad credit, so they could have a history of failing to pay debt. Not only that, but it was interest-only, so they were not even repaying the capital. There was a whole menu of different types of sub-prime such as light-adverse, medium-adverse or heavy-adverse. As I have said before, basically the question was, “Do you have a pulse?”, and then one got a mortgage.
Peter Dowd
Will the hon. Gentleman simply acknowledge that in August 2007 the Conservatives had a policy of significantly more deregulation, including of the banks, and that was ratified by the Tory shadow Cabinet at the time?
James Cartlidge
I do not accept that. Those mortgages were being advanced. The FSA knew about them and the Government knew about them. The fact is that when you are in charge of the financial system, you have a responsibility to act in a prudent manner. The Governor of the Bank of England always says, “Your duty is to take the punchbowl away when the party gets started.” The problem was that when the party got started under the new Labour Government in terms of debt and borrowing too much, they did not take the punchbowl away—they came out with a new round of tequila slammers, and when that was not enough, they brought out the Jägerbombs, until in 2008 we had the biggest hangover in our history, with the crashing of our economy on the back of the most reckless oversight of financial regulation that this country has ever seen.
Mr Mark Prisk (Hertford and Stortford) (Con)
My hon. Friend is making a very strong case. However, he is relatively new to this place. May I remind him, and the Committee, that when I was on the Opposition Benches for 10 years, the then Labour Chancellor of the Exchequer told us that he had abolished boom and bust? That is the political context in which Labour ruined the economy.
James Cartlidge
My hon. Friend is absolutely right. The types of borrowing that I have talked about were the reality, but what have we done since? It is no longer possible to get self-certified mortgages. It is very difficult—almost impossible—to get interest-only mortgages as a residential purchaser.
James Cartlidge
The hon. Lady did not give way to me, but because I believe in inclusive growth and equality, I will give way to her.
Kirsty Blackman
The hon. Gentleman is making a very sensible case about the issues there were with mortgages before, but there are currently issues with consumer credit. The Bank of England has raised concerns about, for example, the card credit that people are taking out, and the fact that half of households have less than £100 in savings. When is he going to take the punchbowl away?
James Cartlidge
I did say that I would come to the current position on credit. I want to finish on the analysis of the three tenets in new clause 22 under which Labour says that we should consider how the bank levy has worked. According to subsection (2)(c), we should look at it in terms of
“encouraging banks to move away from riskier funding models.”
It is quite amusing to see a Labour new clause that contains the phrase
“encouraging banks to move away”.
My colleagues will appreciate that the whole point of reforming the bank levy is not to encourage banks to move away, but to encourage them to stay here and create wealth and jobs. Let us not forget that in all the figures we have heard about, we have not heard the key one. Banks contribute £116 billion of value added to our economy, not including any of the tax take.
Peter Dowd
We have talked about the rewriting of history. The Shadow Cabinet at the time—we are talking about what happened at the time—said:
“We need to make it more difficult for ministers to regulate, and we need to give the critics of regulation more opportunity to make their case against specific new proposals.”
The Conservatives’ direction of travel at that time was towards not more regulation, but less. Does the hon. Gentleman acknowledge that at all?
James Cartlidge
All the financial plans of that shadow Government would have been about fiscal prudence, and the context would have been completely different. The Labour Government crashed the economy on every single front, which is why we are where we are today.
There is one final point I want to make. We had a wide-ranging discussion earlier about Marxism, which I thought particularly intriguing. We have to decide, as a country, whether we want to be a flourishing free enterprise economy or a centrally commanded one in which everything remains in, or is taken into, the public sector. When the banks were nationalised, they were bailed out on the basis of rescuing the economy from an extreme threat that could have left us resorting to barter. The point is that we have put the banks on a stable footing so that they can flourish again and become competitive businesses. The bank levy, to me, is about striking a balance but having a competitive financial services sector to drive our exports and growth, and that is why I will be voting to support it.
Karin Smyth
We have had an interesting, if not very factually correct, history lesson this evening. I want to bring us back to the question of how we spend £4.7 billion of taxpayers’ money, and the political choices that the Conservative party are making in this Finance Bill. Politics is about priorities, and I would like to talk, as the hon. Member for Aberdeen North (Kirsty Blackman) suggested we should, about the future and how we might spend the money differently. For my constituents in Bristol South, and, I think, for the country, the biggest issue in the Budget is productivity. I would like to think that we could use that money for something better, such as technical qualifications, to help to reduce the skills gap in my constituency.
Of all the constituencies in the country, mine sends the smallest number of young people into higher education, and only 24% have a level 4 qualification. For a city that contains two universities and has two more close by, that is scandalous. Because of that, I have followed the apprenticeship levy very closely and supported the Government in its introduction, but the figures are hugely disappointing. Large employers are using the levy to train current executives, and small employers simply do not know how to navigate the system. That has led to the 62% drop-off in apprenticeship starts since last July. It is outrageous that in the Budget, the Chancellor could only give a nod to the apprenticeship levy by saying that he would keep an eye on it, at the same time as deciding to grant the banks a tax giveaway of £4.7 billion.
T-levels have had very little debate in this House since they were announced in October, and they are mentioned only in passing in the Budget. I welcome the Government’s approach to trying to improve technical education as an alternative to the academic option, because it could really help social mobility in my constituency and those of many other hon. Members. The Government have said that T-levels were
“the most ambitious post-16 education reform since the introduction of A-levels”,
but if they are, the current signs are very worrying. Let us compare that £4.7 billion with the sums of money that the Government have committed to T-levels: £60 million in 2018-19, £445 million in 2021-22 and £500 million every year afterwards to ensure that the supposedly hugely ambitious T-levels are a success. However, while the overall investment is welcome, it pales into a rather small figure compared with the other sums we are talking about.
Robert Courts
It is a great honour to speak in the debate on this very important matter, and particularly to follow the hon. Member for Bristol South (Karin Smyth). She made some very interesting points, and I am glad that she supports many of the technical education measures that the Government are bringing in. I entirely agree with her that this is one of the great challenges the country faces, and I applaud the Government’s work in setting out a framework for technical education in the future.
I want to talk directly about the bank levy. All hon. Members on both sides of the House probably accept that it is very important for the banks to pay a fair contribution towards public services and the tax yield in this country. They are significant employers with significant operations and they are wealthy and profitable enterprises, but it is very important to have a balance. Such a balance throws into relief the fact that banks are responsible not just for being profitable and therefore for paying tax, but for introducing liquidity into the system and enabling us to borrow.
If any hon. Member has ever borrowed to buy a car or a house or to invest in a business—many of their constituents will of course have done so—the money will have come from a bank in most cases. It is very important that banks are enabled to provide precisely that service, so there has to be a balance. Yes, they must pay a fair share towards the economy and society in which we all live, but that share should not be so large that their ability to lend is decreased. I suggest that this Government have got the balance right. In 2010, the Conservative coalition Government increased regulation, and in 2011 they introduced the bank levy, which reflected the risk inherent in the banking sector. It is an inherently risky sector because of the very nature of the way in which it operates, and the bank levy was introduced precisely to recognise that risk. It was introduced to incentivise the banking sector as it then was to invest in a way that was less risky than the ways in which it had operated up until that time.
That spirit of balance, which is the keynote point of my few remarks this evening, is why we need reform now. There is a gradual shift from the levy to taxing profit, recognising that the regulatory regime globally, as well as in this country, has moved on considerably since it was introduced. Since 2016, we have had an 8% tax on bank profits—the corporation tax surcharge—which will raise £9 billion between 2017 and 2022. The bank levy rate will be reduced to 0.1% over the same period. Of course, there is the additional fairness brought by ensuring that the levy affects only UK balance sheets. UK-based banks must never be disincentivised from being based here, rather than being based abroad and operating here. We can make those changes now because of the improvements in global regulation.
Members from all parts of the House should recognise that it is important that we, as politicians, do not become too fixated on the rate of taxation, but rather look at the revenue that is earned. I suggest that this Government have got that balance—that key focus—correct. That is the economic paradox of taxation rates. We heard about the Laffer curve from my hon. Friend the Member for Stirling (Stephen Kerr). If there is 0% tax, 0% taxation is received. If there is 100% tax, 0% taxation is received. The point is where precisely the balance is struck. I suggest that the Government have got it correct.
The measures that we have brought in since 2015 have introduced an additional £7 billion through to 2023, bringing in a total of £30 billion over and above what would have been brought in through corporation tax in any event.
Peter Dowd
I am not quite sure that the hon. Gentleman is correct about that, because the Institute for Fiscal Studies states:
“Cuts to corporation tax rates announced between 2010 and 2016 are estimated to reduce revenues by at least £16.5 billion a year in the short to medium run.”
Even the Treasury’s own figures show that the cost has been significant.
Robert Courts
I simply do not accept that point, with the greatest of respect to the hon. Gentleman. It is quite clear that the reduction in corporation tax, which I am glad he has mentioned, has led to an increase in revenues over that period. It is accepted that GDP is expected to increase by 1.3% in the long run. The receipts have increased by 50% since the Government have been reducing the corporation tax rate, from £36 billion to £55 billion between 2010 and 2016. That is an increase to £55 billion going to the Exchequer over that period.
Ian Paisley (North Antrim) (DUP)
The hon. Gentleman is absolutely right. We have seen the boost in spending generated by the proposed reduction in VAT on the hospitality trade in Northern Ireland before the measure even kicks in. I suggest that if the Government had the bottle to do away with air passenger duty—that would be an exceptionally good move—we would see even more air travel and an increase in tax take overall.
Robert Courts
I thank the hon. Gentleman for those excellent points, which reinforce the point I am making.
Of course there has to be taxation, but we must strike a balance with the level of taxation. I know it is paradoxical, but sometimes when tax is reduced, there is an increase in the amount of tax that is taken because it sponsors the amount of work that business is able to do. When business is able to do more work, it earns more money, it pays more tax, it is able to employ more employees, those employees pay more tax and hopefully their wages increase. I am sure that Opposition Members will be glad to ensure that we have measures that increase wages. That is something we should all aim to do, not least because it increases the tax take and the funding for our public services.
I suggest that the Government’s measures can in no way be described as a bank tax giveaway, because 58% more is being paid in tax than was the case under Labour. An additional £27.3 billion was taken through corporation tax, the bank levy, national insurance, the bank surcharge and income tax in 2016-17 than would otherwise have been the case. A 35% increase in the amount of taxes paid by the financial services sector since 2010 is an extraordinary figure. It has been made possible by this Government’s sensible tax policies.
Nigel Huddleston
My hon. Friend is making a very important point about tax fairness. Whether corporations or individuals, the top 1% of income tax payers pay more than double what the bottom 50% pay. It is a similar principle.
Robert Courts
It is exactly the same principle with personal taxation. My hon. Friend makes an absolutely outstanding point. He is quite right and we must not forget that the principle is the same for personal taxation as it is for corporation taxation. Not only is the tax yield increasing, it is also borne by those who earn the most. It is indeed progressive and, I would hope, something all Members could support.
I know other Members wish to speak, so I will conclude with this point. An Opposition Member suggested that no one on the Government Benches has spoken about wages, public services and so on. I would very much like to concentrate on them in these last few seconds of my speech. It is through our tax regime, the sensible taxation policies that this Government have put in place since 2010, that we are now able to see an increase in—
Peter Dowd
Given those sensible taxation levels and rates, will the hon. Gentleman explain why productivity is the lowest of all our competitors, inflation is higher than our competitors, wage stagnation is almost becoming endemic, investment is slower, and economic growth is on the floor? If having these so-called lower rates of tax is such a fantastic opportunity for businesses, how come we are still in this particular situation?
Robert Courts
I am grateful, as ever, to the hon. Gentleman for making his points. He makes a number of them and it will not surprise him that I do not agree with him. We have record investment, an extraordinary economic miracle and a jobs miracle. We are still having to recover from the economic mess the Labour party left us in. There is absolutely no two ways about it: the Labour party left us with record levels of national debt.
Our economy is seeing an increasingly benign environment. That has been made possible by the sensible taxation measures the Government have allowed to take place and have sponsored. It is through that tax regime that there is more to spend on public services: companies can look to increase wages, hire more staff, pay more tax and thereby fund the public services we all need.
Rosie Duffield (Canterbury) (Lab)
The Chancellor, in his Budget speech, offered nothing at all for our vital children’s services, which are already struggling and stretched. He was, however, able to find £5 billion of tax relief for bankers, so it is certainly a happy Christmas for them this year. The additional new surcharge on banks and the changes announced to the bank levy mean that the amount received will reduce by a third over time.
A less happy Christmas awaits the staff, parents and children who use the Riverside Sure Start children’s centre in my constituency. On Thursday, I was told that Kent County Council is considering plans to close this beloved centre. The council talks about making efficiency savings and bringing services in house, but we all know what that could mean: more victims of Kent County Council’s ruthless cost-cutting drive in line with this Government’s. When it comes to cuts, it seems to me that Kent County Council is doing its very best not just to throw metaphorical babies out with the bathwater, as real children and babies are being betrayed by this heartless agenda to keep the council in the black.
Kent County Council does not know when to stop. Many families in my community and from local schools rely on the services provided by our children’s centre. Those services include stay and play sessions, vital family support and outreach for parents. They also include advice and help with all aspects of childcare, school choices, breastfeeding support, health visitor and midwife clinics, post-natal depression advice, parenting skills, and speech and language services. Furthermore, the centre threatened with closure in Canterbury also offers advice on employment and opportunities to engage in adult education and training. Riverside children’s centre celebrated its 10th birthday last year. Since it opened in 2006, almost 7,000 children have attended the activities provided and nearly 2,000 families have registered with the centre.
Alison McGovern
My hon. Friend is making an excellent speech. Given the comments that we heard earlier about recent history, does she agree that the brutal cuts to important children’s services such as those that she describes go completely against the rhetoric with which David Cameron and George Osborne came to this House when they went into government in 2010, after the events we heard described just a moment ago?
The Temporary Chair (Albert Owen)
Order. As the hon. Lady continues, rather than concentrating on recent history, will she get back to the bank levy, which is what is under debate?
Rosie Duffield
I thank my hon. Friend the Member for Wirral South (Alison McGovern) for her intervention, but in the light of your comments, Mr Owen, I shall continue with my speech.
These parents and children will no longer be able to meet or play together, and the children will be unable to socialise with children their own age in a safe, well-equipped space. Loneliness is a—[Interruption.] This is about real cuts to real people, affecting their lives.
The problem of loneliness has been much talked about lately. New parents often experience feelings of isolation and can lack confidence, and that is especially the case for parents who have recently moved to a new area or do not have English as their first language. It goes without saying that they are helped enormously by being able to meet others in similar circumstances, sharing their common fears and trepidation at a time of huge life change. Taking away a lifeline such as Sure Start cuts them off from friends, health advice, skills sharing and their communities.
Gareth Snell
My hon. Friend is setting out in her excellent speech exactly the same point as that made by my hon. Friend the Member for Bristol South (Karin Smyth): reducing the bank levy will have a direct impact on community services. Could the services she has mentioned be saved if the Government were to drop their plans to cut the bank levy?
Rosie Duffield
Absolutely. We have heard a lot about Marxism and some filibustering speeches, but the real people watching today are interested in cuts to services such as children’s services. That is why I am speaking about them.
We know that two thirds of councillors from 101 local authorities that were surveyed said that not enough money was available to provide universal services such as children’s centres and youth clubs. How does the short-sighted and drastic cutting of the funding that children’s services need help the children and families of tomorrow? This short-term, household budget-style approach will leave a generation of communities bereft, isolated and without the many essential services that are so needed by parents and children.
Emma Hardy (Kingston upon Hull West and Hessle) (Lab)
I wish to support Labour’s new clauses 1 to 3, which call for a review of the change in the scope and rate of the bank levy, the funds from which should be invested in young people’s and children’s services. Given the desperate state of young people’s and children’s services across the country, I am surprised that the Chancellor has chosen to reduce the bank levy, effectively depriving the Government of funds that could be spent on those vital services.
It has now been 26 days since the Chancellor delivered his Budget—his second Budget, and the 10th since the Tories took office in 2010, which is now nearly eight years ago. By coincidence, it is also nearly eight years since my baby was born, who is still my baby despite being eight years old. Every parent wants the best for their child and wants them to have every opportunity to fulfil their potential, but for the almost eight years of her life, we have seen her opportunity rationed and funding for children’s and young people’s services slashed. Sir Roger, I will quickly—[Interruption.] I am so sorry, Mr Owen.
Emma Hardy
You have been promoted, Mr Owen.
I want quickly to draw the House’s attention to the funding cuts to Hull City Council’s children’s services budget since 2010 and to argue that rather than reducing the bank levy the Government should be properly funding children’s services. The headline figures for Hull City Council are as follows. Spending on children’s and young people’s services is down by £19.5 million, with more than a quarter of its spending power cut since 2010. That is just half of the £37 million that the council has to cut before 2020. The time taken to get a diagnosis of autism is up, with the average waiting time now at 14 months. The number of Sure Start centres in the city is down since 2010. Those centres were instrumental in supporting me when I had my two girls.
Karin Smyth
Is that not simply incomprehensible at a time when productivity is such a major issue for our economy? Is not the proven, evidence-based value of Sure Start early intervention with children at the youngest age one of the biggest drivers for improving productivity, and is not cutting that totally detrimental?
Emma Hardy
I completely agree. The Education Committee has been looking into fostering. We know that in some of the most deprived areas of society the number of looked-after children is increasing, and we know that one of the reasons is that there is no money for social services departments to support families and give them the early intervention that they so desperately need. It is a false economy to pull funding away from early intervention, saying that that will save money. It will not; it will cost a lot more in the long run.
Those horrendous headlines do not tell the whole story. They do not tell of the worry experienced recently by breastfeeding mothers in Hull who panicked at the possibility that their peer-to-peer doula support would be cut because the council could not afford to pay for it. The council is having to make impossible choices. If it supports those breastfeeding mothers, it will have to pull funding from somewhere else. That is simply not fair.
Those headlines do not tell the story of the child in need who has fallen behind at school and finds it difficult to catch up again because of Government cuts in Sure Start’s speech, language and communication services. The Minister recently published an article in a newspaper complaining about the fact that children were starting school before they were school-ready. Why do the Government think that that is happening? It is happening because there is no money for the early intervention and Sure Start centres that are so desperately needed. Again, more potential is being missed and more opportunity wasted.
As I said in my maiden speech, I do not want a single child to have their life story written on the day they are born. Can we really say that the Bill will create the conditions in which all children can be given the support that they need and the opportunity to fulfil their potential? Does it, as the Prime Minister said on the steps of Downing Street just after taking office,
“do everything we can to help anybody, whatever your background, to go as far as your talents will take you”?
Until we can answer yes to those questions, a reduction in the bank levy is a luxury that we cannot afford. I urge Members to back Labour’s new clauses 1, 2 and 3, because the future of our economy, and our children, depends on them.
Mel Stride
We have had a very wide-ranging debate. On occasion, we even touched on the matter at hand—the bank levy.
The hon. Member for Bootle (Peter Dowd) was very generous in giving way, but less generous and less forthcoming in his answers. He was asked whether he recognised that we would be raising more tax from the banks. He said he would come back to that, but I do not think he did. He was asked why Labour had voted against the bank levy in the first place. On two or three occasions he said he would come back to that, but I am not sure he did. When he was asked whether he supported the overthrow of capitalism, he declined to answer. When he was asked by how much Labour would increase corporation tax, he told his interlocutor to go away and look it up. He was asked whether he was a Marxist. He was swamped by red herrings at one point, which caused my hon. Friend the Member for South Suffolk (James Cartlidge) to say that he was the victim of too many interventions “on the trot”—boom boom!
My hon. Friend the Member for Stirling (Stephen Kerr) stressed the importance of a fair playing field, which is exactly what the Bill is introducing for the banks. The hon. Member for Aberdeen North (Kirsty Blackman) talked about the importance of less risky behaviour by banks. I certainly subscribe to that, which is why the Bank of England’s Financial Policy Committee has been conducting the stress tests to which I referred earlier. They have all been very successful, including one that is based on a no-deal Brexit scenario.
My hon. Friend the Member for South Suffolk also took us through the amount of tax that has been raised from the banks under the Conservatives. He slightly ruined it all by saying that he had once written an article for The Guardian, and that he was, indeed, a closet Marxist at least.
The hon. Member for Bristol South (Karin Smyth) talked about the importance of productivity while my hon. Friend the Member for Witney (Robert Courts) highlighted the importance of a balanced approach to tax so that the banks could lend and stay healthy. The final two contributions were on childcare support, on which this Government have a proud record: by 2019-20 we will spending a record £6 billion per year supporting childcare. On that note, I commend clause 33 and schedule 9 to the Committee.
Question put and agreed to.
Clause 33 accordingly ordered to stand part of the Bill.
Schedule 9
Bank Levy
Question put, That the schedule be the Ninth schedule to the Bill.
The Temporary Chair (Albert Owen)
With this it will be convenient to discuss the following:
That schedule 11 be the Eleventh schedule to the Bill.
Clause 41 stand part.
Amendment 2, in clause 8, page 4, line 16, at end insert—
“(4A) Regulations under this section may not increase any person’s liability to income tax.”
This amendment provides that the power to make regulations in consequence of the exemption from income tax in respect of payments of accommodation allowances to, or in respect of, a member of the armed forces may not be exercised so as to increase any individual’s liability to income tax.
Amendment 3, in page 4, line 17, leave out from “section” to “may” in line 18.
This amendment is consequential on Amendment 2.
Clause 8 stand part.
New clause 4—Review of Relief for First-Time Buyers—
“(1) The Commissioners of Her Majesty’s Revenue and Customs shall undertake a review of the impact of the relief for first-time buyers introduced in Schedule 6ZA to FA 2003.
(2) The review shall consider, in particular, the effects of the relief on—
(a) the public revenue,
(b) house prices, and
(c) the supply of housing.
(3) The Chancellor of the Exchequer must lay a copy of a report of the review under this section before the House of Commons no later than one calendar week prior to the date which he has set for his Autumn 2018 Budget Statement.”
This new clause requires a review to be published prior to the Autumn 2018 Budget on the impact of the relief for first-time buyers, including its effects on house prices and on the supply of housing.
New clause 10— Annual Report on Relief for First-Time Buyers—
“(1) The Chancellor of the Exchequer must prepare and lay before the House of Commons a report for each relevant period on the operation of the relief for first-time buyers introduced in Schedule 6ZA to FA 2003 not less than three months after the end of the relevant period.
(2) The report shall include, in particular, information in respect of the relevant period on—
(a) the number of first-time buyers benefiting from the relief,
(b) the number of purchases benefiting from the relief,
(c) the average age of first-time buyers benefiting from the relief,
(d) the effects on the operation of the private rented sector,
(e) the effects on council housing and other social housing,
(f) the effects on the supply of affordable housing, and
(g) the effects on the operation of collective investment schemes under Part 17 of the Financial Services and Markets Act 2000 in the provision of cooperative housing.
(3) For the purposes of this section, “relevant period” means—
(a) the period from 22 November 2017 to 5 April 2018,
(b) each period of 12 months beginning on 6 April during which the relief is in effect, and
(c) the period beginning on 6 April and ending with the day on which the relief ceases to have effect.”
This new clause requires an annual report on the operation of the relief for first-time buyers, including information on the beneficiaries and effects on different aspects of housing supply.
New clause 5—Parliamentary Scrutiny of Regulations Relating to Armed Forces’ Accommodation Allowance—
“(1) Section 717 of ITEPA 2003 (regulations made by Treasury or Commissioners) is amended as follows.
(2) In subsection (3), leave out “subsection (4)” and insert “subsections (3A) and (4)”.
(3) After subsection (3), insert—
‘(3A) No regulations may be made under section 297D unless a draft has been laid before and approved by a resolution of the House of Commons.’”
This new clause requires that regulations setting conditions relating to the availability of the income tax exemption in relation to armed forces’ accommodation allowance shall be subject to the affirmative procedure.
Mel Stride
The Budget set out an ambitious plan to tackle the housing challenge—a plan that will raise housing supply by the end of this Parliament to its highest level since the 1970s. However, the Government also recognise that we need to act now to help young people who are trying to get on to the housing ladder. This Bill therefore introduces a permanent relief in stamp duty land tax for first-time buyers, which I will turn to shortly. Alongside that, I will also cover clauses 8 and 40, which respectively introduce an income tax exemption for accommodation payments made to members of the armed forces and make minor changes to the higher rates of stamp duty land tax.
Home ownership among young people has been falling. Today, the average house in London costs almost 12 times average earnings, nearly 10 times average earnings in the south-east and more than eight times average earnings in the east.
Kelvin Hopkins (Luton North) (Ind)
Does the right hon. Gentleman not accept that the only solution to the housing crisis is to build millions more houses, not to pump demand into the demand side, which just pushes up prices in the end?
Mel Stride
The hon. Gentleman makes an important point. We announced plans in the Budget along the exact lines that he has suggested in order to free up the supply side and to increase supply to 300,000 units by the mid-2020s. In the last 12 months, we have achieved 217,000 new builds, so we are on our way, although it will take time. He is quite right that the supply side matters.
Sammy Wilson (East Antrim) (DUP)
Does the Minister accept that, although it is important to increase the supply of houses, this measure has been welcomed by young people who see this as at least an opportunity for them to be able to get a deposit for a house and to have fewer up-front costs?
Mel Stride
My hon. Friend is entirely right. The point about up-front costs—alongside the costs of conveyancing, surveyors and so on—is a critical one, particularly for young people getting on to the housing ladder.
Gareth Snell
Average wages in Stoke-on-Trent are £100 a week lower than the national average, and the average house price is only £123,282, so will the Minister tell me the tangible benefits of lifting the stamp duty threshold to £300,000 for my constituents in Stoke-on-Trent?
Mel Stride
There is not an area or region of the country that will not see benefits for first-time buyers. [Hon. Members: “Yes, there is.”] No, I am afraid that that is simply not the case. This measure will benefit first-time buyers in every single region of the country. It is the case that property is a lot more expensive in some parts of the country than in others. Arguably, that is where the particular need is. As I have said, the average house price in London is 12 times average earnings, and it is 10 times average earnings in the south-east.
John Spellar (Warley) (Lab)
Can the Minister give us any indication of his Department’s estimate of the cost of this measure and of the incidence—how it falls— in different regions of the country? In other words, how much is it going to cost globally and what other housing could the Government have built with that money? Equally importantly, how much of this will be in the south-east and how much in other regions?
Mel Stride
In addition to what I just said about every region seeing benefits, I can tell the right hon. Gentleman that the average benefit for the average first-time buyer will be around £1,700, which is a significant amount. For people purchasing a property at the £300,000 to £500,000 level, the benefit is no less than £5,000, which is a considerable sum.
Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)
Does the Minister disagree then with the Office for Budget Responsibility, which says that the measure will actually increase house prices by 0.3%? Is the OBR wrong?
Mel Stride
As the hon. Gentleman may know, the figure of 0.3% takes a static view of this policy and its effect on house prices. It does not take into account the supply side changes that I have mentioned. As we increase supply, prices will inevitably begin to fall. There is no single solution to this challenge and no magic bullet.
Mel Stride
I will make a little progress, if I may.
The Budget announced an ambitious package of new policies to tackle the housing challenge, including planning reform; spending; and a new agency, Homes England, to intervene more actively in the land market. Together with the reforms in the housing White Paper, the housing package announced in the Budget means that we are on track to raise annual housing supply by the end of this Parliament to its highest level since 1970 and to 300,000 a year on average by the mid-2020s. That means that housing supply is on track to be higher over the 2020s than in any previous decade. However, it will take time to build these new homes, and the Government want to act now to help those young people who are aspiring to take their first step on to the housing ladder. That is why the Bill permanently abolishes stamp duty for first-time buyers purchasing a property for £300,000 or less. First-time buyers purchasing a house that is between £300,000 and £500,000 will save £5,000. To ensure that this relief is targeted at those who need it most, purchases above £500,000 will not benefit from the relief.
Gareth Snell
I thank the Minister for taking a second intervention from me. To my earlier point, though, there are fewer than 15 properties currently on the market in Stoke-on-Trent between the value of £250,000 and £300,000. I say again: the average wage in Stoke-on-Trent is £100 a week less than the national average. How will young people in Stoke-on-Trent benefit, when the housing supply does not exist and the wage level will simply not allow them to purchase a property of that value?
Mel Stride
The figures the hon. Gentleman chose to use were, I think, a range between £250,000 and £300,000, and he says there are 15 properties in that category. Of course, stamp duty kicks in at £125,000, so it is the range from £125,000 to £300,000 that we would actually be considering in that example.
First-time buyers are typically more cash-constrained than other buyers, and stamp duty requires cash up front, on top of a deposit and conveyancing fees, for purchases over £125,000. The Government think it is right to reduce the up-front costs that first-time buyers need to pay, giving them an advantage over the rest of the market.
Alison McGovern
I thank the Minister for giving way, but he simply did not answer the question from my right hon. Friend the Member for Warley (John Spellar), who quite legitimately asked him where the money from this cut is going. The Minister talked about the average gain that will be made. Will he tell us the average benefit to a first-time buyer in the west midlands?
Mel Stride
As I say, the average across the piece will be £1,700 per average first-time buyer. I also stated quite clearly that, in every region of the country, there will be those who benefit from this measure.
John Spellar
I thank the Minister for giving way, but surely his Department must have done an analysis, first, to convince the Treasury of how much this would cost and, secondly, to work out how much this would affect each region—in other words, how much benefit was going to the south-east, how much to London, how much to Yorkshire and how much to the west midlands. Why is he so reluctant to open up about those figures?
Mel Stride
What I am able to tell the right hon. Gentleman is that, as I have said, the average benefit will be £1,700 for the average first-time buyer. Every region in the United Kingdom will see benefit from this measure, and those regions—particularly in the south and south-east—where the ratio of salaries required to mortgage levels is particularly high will especially benefit.
However, the other thing we need to do as a Government, as I have already stated, is to make sure we get the supply of housing right. That is why we will be moving from the current level of 200,000 new builds a year up to 300,000 in the middle of the 2020s.
Ian Paisley
It is important to put on the record that Northern Ireland probably benefits disproportionately as a result of this measure, compared with any other part of the United Kingdom. The average house price in Northern Ireland is £128,650—in some areas west of the Bann, it is about £109,000—so hitting house prices over £300,000 would involve such a limited market. Many, many people in Northern Ireland are going to benefit from this, and I welcome the move the Government have made.
Mel Stride
I thank my hon. Friend for those comments, which illustrate the point that there are benefits accruing across all regions of the United Kingdom.
The changes made by this Bill include the largest ever increase in the point at which first-time buyers become liable for stamp duty. This relief will help over 1 million first-time buyers who are taking their first steps on the housing ladder during the next five years. It provides immediate support while our wider housing market reforms take effect.
The changes made by clause 41 ensure that over 95% of first-time buyers who pay stamp duty will benefit by up to £5,000, including 80% of first-time buyers in London. That means that over 80% of first-time buyers will pay no stamp duty at all, and it saves the buyer of an average first property nearly £1,700, as I have said.
In summary, this change to SDLT will help millions of first-time buyers getting on to the housing ladder. Together with the broader housing package we have announced, we are delivering on our pledge to make the dream of home ownership a reality for as many people as possible.
Mel Stride
I am going to make further progress.
I will now move on to other changes relating to stamp duty. Clause 40 brings forward some minor changes to the higher rates of stamp duty land tax for additional properties, which will improve how the legislation works. The changes help in a number of circumstances, including in relation to those affected by divorce or the dissolution of a civil partnership, where they have had to leave a matrimonial home but are required to retain an interest in it, and in relation to the interests of disabled children, where a court-appointed trustee buys a home for such a child.
We will also close down an avoidance opportunity. The Government have become aware of efforts to avoid the higher rates by disposing of only part of an interest in an old main residence to qualify for relief from the higher rates on the whole of a new main residence. This behaviour is unacceptable, and the Government have acted to stop it with effect from 22 November.
Clause 8 introduces a new income tax exemption for payments made to members of the armed forces to help them to meet accommodation costs in the private market in the UK. The exemption enables them to receive a tax-free allowance for renting accommodation or maintaining their home in the private sector. The allowance will also be free of national insurance contributions. That measure will be introduced through regulations at a later date. By using the private market, the Ministry of Defence will be able to provide access to similar accommodation, but with more flexibility.
Opposition Members have tabled amendments 2 and 3 to the armed forces accommodation clause, and I look forward to hearing about them in the debate. The amendments seek to prevent the Treasury from laying regulations that would increase the liability of a member of the armed forces to income tax. I am happy to reassure the Committee that the Government do not intend to use the power to increase tax liabilities either now or in the future. The regulation-making power is retrospective so that the allowance can be provided tax free before regulations take effect. As a standard safeguard, the Bill expressly provides that the Government would not retrospectively increase tax liabilities. I hope that, in the light of that, hon. Members will not press their amendments.
New clause 5, also tabled by Opposition Members, would require the House to expressly approve any regulations made under the clause. The Bill provides for regulations to be made under the negative procedure. Regulations made under the clause will align the qualifying criteria for the proposed exemption with the Ministry of Defence’s new accommodation model once more details are available. Any future regulations will ensure that the tax exemption reflects changes to the model. It would be a questionable demand on Parliament’s time, particularly over the next two years, for it to be called on to expressly approve regulations in these circumstances. The negative procedure provides an appropriate level of scrutiny. I therefore urge the Committee to reject the new clause.
The stamp duty relief for first-time buyers is a major step to help those getting on to the property ladder, and one that has been widely welcomed. The other changes made by these clauses provide relief from some tax costs associated with housing for several groups that deserve them. The clauses also tackle avoidance. I commend clauses 41, 40 and 8, and schedule 11, to the Committee.
Jonathan Reynolds
This country is in the grip of a severe housing crisis that the Conservatives have allowed to spiral out of control over the past seven years. Making sure that people have a roof over their heads and can raise their families somewhere safe, decent and affordable is more than just a matter of sound public policy—it is surely a yardstick of a decent society. At the moment, we are falling short of this yardstick to a degree that is shameful for one of the world’s most affluent nations.
Now, after seven years of Tory government, the Government say that they have noticed the problem, yet it is on the brink not of being resolved but rather exacerbated. The Chancellor’s autumn Budget, from which the measures in the Bill are drawn, falls woefully short in addressing the scale of what is needed. Since 2010, house building has fallen to its lowest level since the 1920s, rough sleeping has risen year on year, rents have risen faster than incomes and there are almost 200,000 fewer homeowners in the UK.
Lucy Frazer
Can the hon. Gentleman confirm whether Labour built houses when it was in office or house building fell when Labour was in office?
Jonathan Reynolds
Labour’s record in office is 2 million more homes, 1 million more homeowners, and—something that is particularly important to me as a Labour councillor during some of that time—an incredible investment in social housing. In local government, we used to ask whether we could ever fulfil the backlog in repairs that the Thatcher and Major Governments had created, but we did, and it made a tremendous difference to people’s lives.
The one headline-grabbing move that the Chancellor made in the autumn Budget was the abolition of stamp duty land tax for first-time buyers up to the value of £300,000. I acknowledge that this was a Labour policy included in our manifesto for the June 2017 general election, but we were very clear in that manifesto that the measure should be proposed only if there were accompanying measures to increase supply. Without these, stamp duty land tax cuts risk further inflating a housing bubble that is snatching the idea of home ownership out of reach for the younger generation.
Mrs Anne Main (St Albans) (Con)
In St Albans, we are very grateful for the Chancellor’s abolition of stamp duty. Is the hon. Gentleman saying that the Labour party is against it, and that he does not wish it to happen?
Jonathan Reynolds
I have just explained that the policy was our idea to begin with, but it is effective only if it is accompanied by measures to increase supply.
Rachel Maclean
The hon. Gentleman says that he will support the policy if it is accompanied by measures to increase supply. That is exactly what the Chancellor has introduced in the Budget, so will the hon. Gentleman support the measure, or is he against cutting stamp duty for first-time buyers?
Jonathan Reynolds
No, we are not, as I have just explained, but there have to be measures that genuinely increase supply. I will explain to the hon. Lady that the measures in this Budget do not in any way contribute to that, and we will get on to the Office for Budget Responsibility’s definition.
Lucy Frazer
The Budget states that 300,000 houses will be built every year. That is a measure to increase house building, so will the hon. Gentleman commit to supporting the stamp duty measure?
Jonathan Reynolds
Members have become accustomed to the fact that the number of homes that the Government claim to build is not always the actual number that are built. I will get to some of that record of failure later in my speech.
Mr Kevan Jones (North Durham) (Lab)
Does my hon. Friend think it is a bit ironic that when a similar measure was proposed in 2015, it was derided as a gimmick by the then Chancellor?
Jonathan Reynolds
My hon. Friend is entirely correct. As we know, sometimes the situation in the Government means that they tend to look around for ideas, and they often find best practice in the Labour party.
Sammy Wilson
Does the hon. Gentleman accept that the additional capital that is being put into housing, the attack on companies that engage in land banking and the aid to enable small builders to build more houses are all supply side measures?
Jonathan Reynolds
We will get on to whether those measures will be effective, based on the assessments that have been made. I am old enough to remember when a tax on land banking was described as Venezuelan-style socialism, so it is good to see some permutation of that idea among Government Members.
The analysis by the OBR on the likely outcome of the policy shows that it will push up prices by 0.3% in 2018.
John Spellar
My hon. Friend is talking about land banking by the big house builders. Is not the evidence of that the utterly obscene bonus being paid to the chief executive of Persimmon, which is so outrageous that the chairman of the company has seen fit to resign in disgust?
Jonathan Reynolds
My right hon. Friend identifies another feature of a dysfunctional market. That will be corrected only by a change in Government policy, but we have not seen one in the Bill.
Conservative Ministers’ review of a previous stamp duty cut concluded that the tax relief, in itself, had
“not had a significant impact on improving affordability for first time buyers”.
That is why Labour has tabled an amendment calling for the publication of a review prior to the 2018 Budget on the impact of the relief on first-time buyers, including its effect on house prices and the supply of houses.
The Minister, as usual, talked an extremely good game on funding for new housing, which he said would help to ameliorate the supply issue. On further scrutiny, however, we find that no measures in the 2017 Budget will directly increase house building. Only one third of the £44 billion announced in the Budget is genuinely new, and there is no extra Government investment in new affordable homes. That builds on a legacy of failure. Let us remind ourselves that not one of the 200,000 starter homes promised by the Tories three years ago has yet been built. That lack of action is having a serious impact across every part of our society. During the Government’s seven years in power, homelessness has doubled. Shockingly, recent statistics from the Department for Communities and Local Government show that nearly 80,000 households were homeless in September; that includes 120,000 children. The situation is extraordinarily urgent.
Mr Kevan Jones
Does my hon. Friend agree that one of the mistakes that former Chancellor Osborne made was the cap on rents, which threw into complete chaos the planning of social landlords and housing associations in budgeting for building new houses? It had the effect of reducing the supply, rather than increasing it.
Jonathan Reynolds
Absolutely. A combination of policy measures—not just the failure on new housing completions, but a range of other measures—has contributed to this toxic situation. We see it perhaps most visibly in Greater Manchester—I live there and represent part of it—than in any other part of the country, and thank goodness that we in Greater Manchester have a Labour Mayor in Andy Burnham who is so determined to make a difference on this matter. If Labour was in power, we would set up a taskforce, led by the Prime Minister, to end this, and we would start by setting out plans to make available at least 4,000 homes for people with a history of rough sleeping.
The homelessness statistics obviously include the hundreds of families who tragically lost their homes in the Grenfell Tower disaster in June, four-fifths of whom are still living in temporary accommodation. Although Labour welcomes the additional funding for mental health services for those affected by Grenfell, we have profound concerns about the fact that no new money has been allocated for fire safety throughout the country. The Government ignored calls to fit sprinklers to all social housing tower blocks in 2013, after the disastrous and fatal events that happened at Lakanal House and Shirley Towers, so it remains the case that only 2% of tower blocks in the UK have sprinklers installed. That figure should be of serious concern to us all.
We can see that the measures included in the Bill fall far short of what is needed to fix the housing crisis in Britain. We want in particular to discuss one measure that the Opposition are concerned may be being used as a fig leaf for just another cut. This is in regard to clause 8, the income tax exemption for the armed forces accommodation allowance, which the Minister mentioned. The explanatory note to the clause states that this is
“to allow members of the armed forces to give up their entitlement to accommodation in exchange for an allowance to be used to rent or maintain accommodation in the private market.”
Labour is concerned that this manoeuvre is designed to force more servicemen and women into the private rental sector, as part of a Government shift towards selling off the military housing stock in which armed forces personnel would ordinarily be housed.
Lucy Frazer
The hon. Gentleman has mentioned that Andy Burnham is the Mayor of the area he represents. Does he remember that, in 2010, when Andy Burnham was standing for the leadership, he said:
“These issues are important, particularly stamp duty as it stands in the way of young people getting on in life”?
Jonathan Reynolds
I commend the hon. and learned Lady for googling that so fast. I do not think that Andy Burnham’s resolution to tackle homelessness should be laughed at; it is admirable. As someone who has lived in Greater Manchester for nearly 20 years now, I see the scale of the social and urban decay on the streets around us. Anyone who travels to Manchester and moves a short distance in any direction from Manchester Piccadilly station will see what an appalling state of affairs we have reached. It is simply the case that every time the Conservatives are in power, they increase homelessness. For me, that is the most visible sign of a Conservative Government in office, and I commend any politician—Andy Burnham is leading on this for us in Greater Manchester—who makes the difference.
Gareth Snell
The shadow Minister is making an excellent contribution. I want to point out, as he has in relation to Andy Burnham in Greater Manchester, that continual cuts to local government are forcing many local authorities to disinvest in their homelessness prevention services. For example, Stoke-on-Trent—a Conservative-run council—is cutting £1 million out of its homelessness prevention budget in the next five years. What does he say about such a situation, and what does he think could solve it?
Jonathan Reynolds
I agree with the point my hon. Friend has made. The fact is that we know the impact that a series of Government measures have had, and we can reverse or improve on them. Fundamentally, we can change the availability of housing stock, but we can also create a policy framework that prevents people from being made homeless in the first place, and that is what we need to do.
Lloyd Russell-Moyle
Does my hon. Friend agree that some of the wider measures, such as forcing through universal credit and local housing allowance caps, are forcing large numbers of people out on to the streets?
Jonathan Reynolds
Absolutely. There have been 13 consecutive cuts to housing association budgets, the cumulative impact of which is exactly as my hon. Friend describes. As constituency MPs, we are left requesting our local housing association simply to try to absorb the costs of this Government policy failure. In many cases, the housing association does so, but there is ultimately a cost. The cost is taking away available resources to build further houses, thus getting us into a situation in which the problem is never truly resolved.
I will return to the armed forces accommodation allowance. The Ministry of Defence has a target in the 2015 national security strategy and strategic defence and security review to sell off 30% of its estate by 2040, but the Conservatives have a track record of making poor decisions on selling off service family housing in the name of short-term savings. Annington Homes bought most of the service family accommodation from the Ministry of Defence for £1.6 billion in 1996. A 999-year lease was granted back to the Ministry of Defence at a discount, with the stipulations that the MOD would be responsible for maintenance and that Annington Homes could terminate individual leases and had the right to include five-yearly rental reviews and a breakpoint at 25 years. The National Audit Office has said that the MOD has therefore not benefited from the rise in house prices since the agreement and, in fact, has paid higher rental costs to Annington Homes. In 2016, Annington’s annual statement estimated its property portfolio to be worth £6.7 billion.
Mr Kevan Jones
Having tried to get out of the Annington Homes contract when I was responsible for armed forces housing, may I say that the situation is worse than my hon. Friend describes? The MOD is still paying not only for empty houses, but for houses that have been demolished. It was the worst deal possible for the taxpayer.
Jonathan Reynolds
I am grateful to my hon. Friend for sharing his expertise with the Committee. It truly is an appalling record of failure.
As every Member knows, there are enormous problems in the private rented sector in respect of affordability, quality and security of tenure. By forcing service families into the private rented sector, we risk reducing the quality of their accommodation and their quality of life. It might therefore impact on recruitment and retention rates.
The Government have so far offered little detail on which members of the armed forces will be entitled to the new allowance or what the rate will be and have not said whether the Treasury has done an impact assessment on local housing supply. The proposal ignores the fact that there is not a supply of affordable housing to buy or rent near many military bases.
It seems clear that the Government are attempting to rush the proposal through to make short-term savings, without considering the potential repercussions. Labour is demanding more consultation with armed forces personnel and a full and robust impact assessment of any proposed changes. Clear communication with armed forces families must be a top priority throughout this process and their long-term interest must be considered, as well as the long-term value for money for the taxpayer. Committing to sell this Government-owned housing risks shackling the public purse to ever-rising rents, as well as poor outcomes for armed forces personnel.
Given Labour’s concerns over the lack of detail over the armed forces allowance and any potential safeguards for members of the armed services in the private rental sector, Her Majesty’s Opposition have tabled an amendment that calls on the Government to publish a review of the measure to Parliament before it is enacted.
Overall, the measure forms part of a housing package that barely scratches the surface in addressing the country’s housing crisis. All the measures are too minimal to make a serious difference to the housing pressures that people face and too late to make up for the Government’s lack of action over the past seven years.
Robert Courts
It is a great pleasure to speak in this debate. I only wish to make some very brief comments because I have already spoken this evening and I am conscious of the fact that other Members wish to speak.
I will make a few comments about the armed forces exemption that we have just been discussing, because it has particular relevance to my constituency, where a great amount of the Royal Air Force is based at Brize Norton. We are awaiting the redevelopment of the two REEMA sites, which are particularly important. Already, a great number of Royal Air Force and Army personnel live either on the base or outside it, in particular in Bampton, Witney, Carterton and Brize Norton village.
I am glad that the Government have proposed this welcome measure. It falls into a similar bracket as the Armed Forces (Flexible Working) Bill, which we have discussed in the House over the past few weeks and months. It is important that we understand that expectations are changing. The armed forces offer must be able to stand alongside what can be received in the civilian world. This measure has the potential to provide exactly that.
At the moment, there is the anomaly that if personnel live in Ministry of Defence accommodation, it is essentially provided tax free, but if an armed forces allowance is given, there is taxation on it. That is how the rules work at the moment, so clearly personnel would be disadvantaged. We have to accept that in many cases, armed forces personnel wish to live outside a base, perhaps close to where their spouse works or where their children go to school. I welcome the measure because it moves us a step along the road towards realising that.
Sir Mike Penning (Hemel Hempstead) (Con)
The people who serve in our armed forces today—I have some experience of this—are looking for a different model and a different way of life for their families to grow up in. In the old days, they would have been in the garrisons or the ports. My constituency is further from the sea than anywhere else in the country, yet I have Royal Marines bringing their families up in the town. They are penalised for doing that because of the way the scheme works now. The new scheme will help them and they tell me that they are looking forward to it.
Robert Courts
I am very grateful to my right hon. Friend for making that point. His constituency is very similar to mine in that respect. I welcome this measure and I anticipate that my constituents will as well.
Those brief comments are the only ones I wish to make. I very much welcome this measure because it is in the interests of west Oxfordshire, in particular Brize Norton. It helps to bring forward the offer to which my right hon. Friend refers. We have to accept that there is a change in expectation on the part of many members of the armed forces and this is welcome.
Sandy Martin
I am concerned about the lack of impact that financial incentives for first-time buyers appear to be having on encouraging housebuilding. The recent pay-offs for Persimmon Homes executives are surely good evidence that a substantial proportion, if not all, of the Government’s money is going into exceptional profits for private housebuilders, rather than genuinely making homes more affordable. We need to know that any money or tax incentives that the Government put into housing will genuinely help people to achieve the housing they need.
The cost of housing for residents is not just about the building itself, but the costs of running the building. New houses are still being built which make short-term savings for the builders at the cost of a long-term expense for their owners or tenants, and also at a long-term cost to the environment. Ipswich Borough Council had a substantial plan to install solar PV panels on all suitable roofs on its substantial council housing estate. It was all set to go in 2013 when the Government moved the goalposts and blew a hole in the business case. The Government seem to be willing to promise vast sums as guarantees for new nuclear powers stations, but they are not willing to use the extensive potential tax powers at their disposal either to incentivise housebuilders to install photovoltaics in original buildings or to adequately incentivise owners to install them on existing buildings.
Increasing the number of solar panels on the roofs of this country would be one of the most cost-effective ways of generating the electricity we need. It would be more beneficial to the residents of those buildings. It would take effect far sooner than waiting for the construction of nuclear power stations and it would predominantly employ working people and small businesses in this country.
Many of us were hoping that the Government would have found further substantial incentives for solar panels in the Bill. I can only hope that a review of the operation of housing finances and an equality impact assessment of the way the Bill will affect low-paid people might encourage the Government to look again at how they can make housing less expensive for those who live in it.
Alison McGovern
I want to talk about the cut to stamp duty for first-time buyers, but before I do so I would like to take the opportunity to briefly remind Ministers on the Treasury Bench that in March my constituency suffered a terrible disaster: the gas explosion in New Ferry. The Department for Communities and Local Government currently has Wirral Council’s plan for the rebuild. I trust that, in the context of discussing new housing, Treasury Ministers will look kindly on the plan should it come before them.
I want to argue against the cut to stamp duty and for the Opposition amendment, which calls for a review of the policy, and a review of the place of first-time buyers in the housing market and the supply of housing. My argument against this specific policy is, first, that it looks set to fail against the targets the Government have set themselves; and secondly, that in the current economic context it is simply the wrong policy priority. Perhaps we might consider this policy if we were experiencing the same growth as other countries in Europe or we had dealt with our budget deficit, but even if it was not set to work against what the Government have tried to achieve, it would still be the wrong policy because it is not the country’s priority.
I imagine this policy coming before Treasury Ministers during the Budget preparations and their thinking to themselves, “Well, this might be attractive on the face of it, but ought we not to ask our bevvy of economists here in the Treasury what the likely impact might be?” The hon. Member for Spelthorne (Kwasi Kwarteng) just rolled his eyes at me, and he did so because he knows as well as I do—we have debated it often enough—that the advice from the OBR was entirely predictable.
It was entirely predictable that anyone looking at the policy in the current economic climate would say that we have clear, credible evidence from previous changes to stamp duty that the value of this tax change will accrue not to first-time buyers but to those who already own properties. That is what the OBR says, and it is what advice from the specialists in the Treasury would have told Ministers. I do not know—I have no evidence of this—but I have confidence in the Government Economic Service and I think they would have told Ministers that.
Furthermore, it is very unlikely that the Treasury does not have the full analysis requested by my right hon. Friend the Member for Warley (John Spellar). All Members across the House know in their own minds whether their constituencies will benefit from this, and all members of the Cabinet know whether constituents in their constituencies—which are largely in the south-east of England—will benefit. Those of us who have watched house prices in our constituencies barely grow at all in the past 10 years will know that our constituents will benefit very little from this very expensive tax change.
Mrs Main
I am listening carefully to the hon. Lady, because obviously I have a constituency in one of the higher value areas. I am confused. The shadow Minister just said that the stamp duty cut was not appropriate because the right measures were not in place for affordable housing, whereas she seems to be saying that a stamp duty cut is not what she would like to see. Which is it? Does she think that the stamp duty cut should not happen at all? I would like a simple yes or no answer.
Alison McGovern
I thank the hon. Lady for that intervention, but I have already answered her question. I said that in better economic circumstances this might be something that we might want to do, but it is not a priority for now. I answered her question before she even asked it.
Given what the OBR has said, I ask Ministers once again to look at that and at the evidence. The value of this tax cut will not go to first-time buyers. That is absolutely clear. If Ministers think that they can come back to this House after having a review and persuading the OBR that the Treasury is correct and the OBR is wrong, then fine, we can look at it, but I see no reason to think that, and here is why. When we asked the Chancellor about this measure in the Treasury Committee, he gave the same line as the Minister just gave at the Dispatch Box. He said, “Ah, yes, but the OBR assessment —their model—doesn’t take into account our reforms, which will make a huge difference to the supply of housing.”
Anybody can look at page 28 of the Budget—at the Budget scorecard. This year, the stamp duty land tax cut will cost us £125 million. How much extra will we spend on the housing infrastructure fund? A big fat zero. Next year, 2018-19, the stamp duty land tax cut will cost us a whopping £560 million. How much extra will we spend on the housing infrastructure fund? A big fat zero. In fact, according to the Budget we will not spend anything on extending the housing infrastructure fund until 2019-20, when we will spend £215 million. In the same year, we will spend £585 million on the tax cut. And so it goes on, and on. We are frontloading a tax cut and pushing back spending on housing infrastructure. How can the Chancellor come to this House and say, “Oh no, the OBR has got it all wrong, because we are going to build all these houses and that will sort out the housing market”? Honestly, Mr Owen, I do not know what he is talking about.
Sammy Wilson
Does the hon. Lady not accept that, for a variety of reasons—planning permissions, procurement, or whatever—the capital expenditure cannot be turned on immediately? There is always a delay. It is not a question of “pushing it off”; it is simply a fact of life.
Alison McGovern
The hon. Gentleman seems to be arguing that it takes a little bit of time for capital expenditure to get going. That is an argument for us to increase capital expenditure now, and wait until we have increased supply to make the tax cut. It is the front-loading of the tax cut versus pushing off our investment until sometime in the future.
In proposing the stamp duty land tax cut, the Government have admitted that they have no further ambitions to rebalance our economy between the regions, and no further ambitions to tackle the disgraceful inequality between different parts of the country. In the north-west and the north-east, house prices have grown barely at all, whereas in the south-west, for example, they have shot up and wages have been held disgracefully low. This policy gives money to those who already have assets. It is a charter for inequality, and if it is ever to be implemented, it should not be implemented now.
The number of children in poverty is due to increase by nearly half a million: there will be 400,000 more children in poverty over the period of this Budget. The Government may say, “That is unfortunate, but benefits have to be frozen, and we need to focus on investment so that we can build our way out of these difficult economic circumstances.” This tax cut, however, is not investment. It is just a revenue cut—a tax giveaway—at a time when we could be ensuring that child poverty does not increase. The two-child policy that the Government have stuck to is an absolute disgrace. It shames our country that we are saying, “If you are the third child in a family, in poverty, the Government have nothing to say and will do nothing to help you.”
If the Tories who are now in power actually believed their rhetoric of compassionate conservativism, they would agree with me that if there were ever a time for this tax cut, it would not be now. Let me leave them with this comment. They may think that they can get on with this, and that they will have decent headlines on the front pages of the newspapers because newspaper editors might like the idea of first-time buyers being able to buy properties that they, perhaps, own. They may think that they will get a fair wind because tax cuts of this kind are popular.
I will tell you what is really unpopular in our country, Mr Owen. As we heard earlier from my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds), what is really unpopular in our country is having to step over rough sleepers while walking home. What is really unpopular in our country is having to watch other parents taking paper into schools because our schools cannot even afford the basic necessities. And what is deeply unpopular in our country is watching the number of food banks grow because jobs do not pay enough.
People will remember that while all that was going on, the Tories were busy cutting stamp duty for people who could afford to buy houses. I do not think they will ever forget that.
Mr Kevan Jones
I agree with the hon. Member for Witney (Robert Courts) and the right hon. Member for Hemel Hempstead (Sir Mike Penning) about the armed forces allowance. In my experience, as in theirs, the modern member of the armed forces, whether male or female, wants choice. I have nothing against that, but I think that this is the wrong way of providing it. As we heard from my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds), the problem now is that much of our military housing stock was locked into what was a terrible deal for the taxpayer during the last year of the Major Government, who sold most of the housing stock in England.
John Spellar
May I correct my hon. Friend? In the last few months of the Major Government, Michael Portillo, in a hugely criticised deal at the time, basically gave Nomura the deal of the century.
Mr Jones
My right hon. Friend is right: the taxpayer got about £1 billion and it has been a shoddy deal, because not only did it lock us into a long-term contract, but it locked us into a ludicrous situation whereby, once houses became surplus and were given back to Annington Homes, the taxpayer had to refurbish them and also in some cases—when they were having to be knocked down, for example—if they were within the wire of a base, we were still paying the rents on what were basically empty spaces. I had a look at this when I had ministerial responsibility in the Ministry of Defence, and I am sure my friend the right hon. Member for Hemel Hempstead (Sir Mike Penning) did as well. We must not blame Nomura; it made a great deal for itself, but it was a bad deal for the taxpayer.
The right hon. Gentleman and the hon. Member for Witney (Robert Courts) raised an interesting point: the way our armed forces operate these days has changed. Many more people travel long distances at weekends: it is not unusual for servicemen and women who live in the north-east to travel to the south coast at weekends and back again. When Labour was in government, we put a lot more money into single living accommodation; that was the way forward.
We have been promised the new housing model by the MOD, but it has not yet materialised. I was working on that at the time, because I, like the right hon. Gentleman and the hon. Gentleman, recognised that the fit we have at the moment does not work. The Army did not like it, because the Army—or a certain general—held the very traditional view at the time that we needed the regiment around the base.
I cannot understand why this is being done in advance of that new housing model being brought forward. The hon. Member for Witney raised a point in respect of his area that I have also looked at: if we are going to bring in this change, we will have to bring it in over a number of years and provide housing locally, to ensure there is a supply of housing locally for those who want to live locally. We were looking at working with local housing associations and others to provide that.
There is nothing wrong with the model of this housing allowance, therefore, but if it is done in the vacuum in which it is being done, it can lead to situations whereby people take their housing allowance and then find that they are at the mercy of the over-inflated local housing market in and around some of our garrison towns and ports.
Sir Mike Penning
The hon. Gentleman—my friend—and I agree on most things, but no one is going to force people into doing this. We must wait for the model to come forward, and I would not vote for something where we forced people into such a scheme, as the Opposition Front Bench claimed. But my friend is wrong to say we will have to address this just around the localities: we will have to do that, but these people often want to find accommodation in their own home towns, so they can be around their family structure. That is the way the armed forces are now, rather than just having the garrisons, and the super-garrisons, which are coming.
Mr Jones
I do not disagree with the right hon. Gentleman, but unless we do some work on where we are going to house these people and families, we will be throwing them out to the market. That is why the last Labour Government introduced the early support for members of the armed forces who wish to purchase their own property, a move that was cancelled in the first Budget in 2011. There is a mixture here: some members of the armed forces want to buy, while others will want to rent as they move around.
To do this without any thought about how we are going to provide the housing behind it is a little strange, and I cannot understand why this measure is being brought in now. The right hon. Gentleman said people are not going to be forced, and I agree, but if they think it is attractive and then suddenly realise it is not, will they be able to go back?
Instead of having a piecemeal approach like this one, or putting the cart before horse, we should have waited for the new housing model before this proposal was brought forward. As part of this mix, I would also like people to be able in some cases to opt not for rental allowance, but for support for mortgage payments; we introduced that, but it was cancelled in the first Budget in 2011.
Jim Shannon (Strangford) (DUP)
I am doing the armed forces parliamentary scheme, which gives me the opportunity to speak to Army, Royal Navy and Royal Air Force personnel. The issue that comes up all the time is accommodation for families. If we do not get the accommodation right for families, we will not retain the personnel. We need to retain the personnel, so does the hon. Gentleman agree that we need to work on those issues and that the introduction of this policy could provide an opportunity to ensure that Army personnel can be retained and that the accommodation is up to standard?
Mr Jones
I do agree with the hon. Gentleman. Anyone with a close involvement with the armed forces, as he has, will know that we rely on those men and women to go on operations and that a key issue for morale is to ensure that their families are supported during those times.
I am a bit wary about this proposal for another reason. When the Australians introduced this type of rent allowance, they did it gradually, over a 10-year period. There was therefore a transition period with new starts and other people coming in. The proposals in the Bill seem a bit piecemeal, and if they are not done in a thought-out way, we could end up in a situation in which Annington Homes retracts the existing accommodation and people’s options become limited. Again, I think this is the right move forward but it is not being done in the right way. Anything that the Treasury can do to extract the Ministry of Defence from the Annington Homes contract would be universally welcomed—[Interruption.] The right hon. Member for Hemel Hempstead is shaking his head. He has obviously looked the same thing as me. Let us wait and see what the new housing model delivers, but let us hope that it adopts a joined-up approach that will be of benefit to members of our armed forces.
I want to turn now to stamp duty. My right hon. Friend the Member for Warley (John Spellar) asked the Minister which regions would benefit the most from this proposal. The Minister, as usual, sidestepped the answer, but it is in fact quite clear. The average house price in County Durham is £138,000. In London, it is £488,000, so it is quite clear where the money will go. As my hon. Friend the Member for Wirral South (Alison McGovern) said, the Government are completely ignoring the idea of trying to eradicate inequalities throughout the regions. Indeed, they will actually increase them through these moves.
There is a broader point, however. I passionately believe that people who aspire to own their own home should be able to do that, and we should be able to help them to do it. The problem with this Government, however, is that they have one trick in their armoury, which is the idea that the private sector should deliver all this. They believe that the only way to achieve the mythical 300,000 new homes is to allow the private sector to deliver them. Well, I am sorry, but if they are going to rely on the private sector to do that by supplying 300,000 new homes for purchase, that will not deliver the homes that we need in most areas—not just in London but throughout the regions.
John Spellar
Does my hon. Friend agree that the underlying problem is that the private sector supply side is becoming increasingly dysfunctional? Indeed, it is becoming an oligopoly, and many of the companies involved are no longer construction companies but just land banks.
Mr Jones
They are indeed. My hon. Friend the Member for Ipswich (Sandy Martin) mentioned the example of Persimmon earlier. Many of those companies are no longer housebuilders in the traditional sense. They are employment agents who employ contractors to do things. In my constituency, some of the complaints about new builds are pretty horrendous, and I think that that experience is shared across the House.
Gareth Snell
Where private developers are developing houses, they are all too often quick to run to the district valuer to argue that affordable and social housing makes development schemes unaffordable, so fewer affordable social houses are being built through private development.
Mr Jones
My hon. Friend makes a good point. Added to that is the fact that the definition of “affordable” in London is completely out of reach for most people.
The Government have this one idea that we are going to solve our housing problem through the private sector. I accept that it has a part to play, but the social sector, meaning both councils and very good housing associations, could step up to the mark and actually provide houses where we need them. If we look at the amount of money that is going into the subsidy, as mentioned by my hon. Friend the Member for Wirral South, we would not even have to spend money directly on social housing. We could provide new housing by just underwriting the debt of some of the social housing providers. In my area, Derwentside Homes and Cestria have now come together as an organisation called Karbon—I emphasise the k for the Hansard reporters, but I think it is a stupid name—which has been able to do small-scale developments by borrowing against its assets. If it had Government support for that borrowing, it could do a lot more.
Helping local authorities to take a share in things by putting land into deals or by setting up their own corporations of social landlords and councils could lead to the development of the houses that we need. Social housing is not a static model. People think that social houses are just for rent, but Karbon has a good subsidiary called Prince Bishops Homes, which allows people to start by renting and then, as their circumstances change, purchase the house and convert their rental into a mortgage. We need to look at schemes like that. Are they expensive in terms of what my hon. Friend the Member for Wirral South referred to? No, I do not think they are, and they will provide housing where we need it. I accept the particular pressure on housing in London, but there is pressure everywhere, not just from first-time buyers, but people who want to rent for the first time.
If the Government put their ideological baggage away and said, “Are we actually going to do what we say and produce the houses that people need?” they could do things in a different way. The Minister can talk about 300,000, half a million or a million homes—I say the same to my Front-Bench team—and it is fine to pluck figures out of thin air, but delivering them is a different thing altogether. If we look back at the history of housing in this country, we only actually build large numbers of houses when we have direct Government intervention, and we need that direct intervention now. It is easy for the Government to argue that the previous Labour Government failed here, but we did not. We actually transformed a lot of social housing. Two housing associations in my constituency received over £100 million to bring their stock of homes up to a decent standard, which was transformative for residents and tenants. Houses with 40-year-old bathrooms had them changed. There were new rooms, new central heating systems, new kitchens and more energy-efficient measures. I am not going to shy away from talking about what the Labour Government did when we were in power to change the lives of many people in this country.
Turning to land banking, there is evidence that certain companies are using land banks. In some cases, companies submit planning applications and then just sit on the land. I welcome any approach to deal with that, but we need to be a bit more imaginative about allowing local government to be a bit more forceful with their planning powers. When Labour was in government, I was a huge critic of something called the regional spatial strategy, describing it once as Soviet-style five-year planning. It was too blunt an instrument.
We need to allow Country Durham and other areas like mine to expand housing, because we are increasingly becoming commuter belt for Tyneside and Teesside. Somehow restricting the allocation of housing to the urban conurbations fails to understand that, without new houses, a lot of villages and communities in my constituency will struggle to survive. More powers should be given to local authorities not only to form local plans but to implement them, too.
John Spellar
I start by welcoming the service accommodation proposals. I echo the comments of my hon. Friend the Member for North Durham (Mr Jones) on the short-term gain taken by the Ministry of Defence and the Treasury in a bid to shore up the finances of the Major Government, which did them absolutely no good in the 1997 election. Service personnel and their families have been suffering from the impact of that ever since.
On the basic question of the stamp duty measure, I suppose that it could be welcomed, superficially, as a reversal of the intergenerational transfer of wealth, but in fact, as my hon. Friend the Member for Wirral South (Alison McGovern) said, the reverse is the case, as the main beneficiaries will be the existing owners of housing. In a tight housing market with a large amount of stock and limited flow, the net effect of adding extra liquidity into the system is most likely to be an increase in the price of housing.
The other beneficiaries will be not just individual householders who seek to trade down, or even up, but private sector landlords who have been buying up property and forcing up prices. Many youngsters are not able to get together the sort of deposit that is now required unless they can go to the bank of mum and dad. With the average house price in London at nearly £500,000, they are having to find a deposit of some £50,000. We are targeting a considerable public subsidy towards one small group without actually dealing with the problem.
It was very instructive that the Minister was unable—or probably unwilling—to give the figures I asked for about how much the measure will cost in aggregate and how the costs will break down by region. It is inconceivable that such analysis was not carried out as the policy was drawn up and ground through the mills of the Treasury. To save me from tabling a parliamentary question, I urge the Minister to come up with those figures in his winding-up speech. I think that the figures will show a considerable disparity between regions, which is not uncommon under this Government, much as they seek to hide it. Just recently, a letter from the Secretary of State for Transport told us that we had it all wrong and the average spend on transport was roughly equal between the north and the midlands, and London and the south. The only issue was, as my hon. Friend the Member for North Durham found out, that the Government had omitted to include the £32 billion—I believe that is the figure—for Crossrail from the London figures, because that had somehow been designated as a national scheme.
Mr Kevan Jones
I can inform my right hon. Friend that it was actually worse than that, because the Government had also deemed the north as being the north-west, the north-east and Yorkshire.
John Spellar
I do not get involved in those arguments.
In essence, we are seeing major transfers of wealth to areas that the Government see as their political homeland. However, let us also look at the big house builders, as they are euphemistically called—really they are land bankers and, as my hon. Friend said, employment agencies. They also indulge in a number of other unsavoury practices. Several of them have now been exposed for their involvement in the racket of escalating leaseholds, which they have now been forced to back down from. They have had to pay considerable sums to buy back those leases from individuals—speculators—who bought them and were then exploiting residents on that basis. Is that not a symptom and a symbol of the dysfunctional nature of our housing market? The Government are not tackling that in any particular way.
Nor are the Government tackling the increasingly oligopolistic nature of the house building industry. There has been a significant decline in medium and small builders, who used to be the backbone of the building industry and of many towns. Building, by its nature, is subject to cycles, and banks have been incredibly reluctant to lend money to small builders, who have steadily either gone out of business, or been absorbed into the big builders. That has flowed into the lack of training that has taken place, because so many of the big house builders are mainly just the name outside a project and are not particularly interested in the small sites—brownfield sites—around our towns. With the breakdown in training, we then have the cry from those same builders that need to bring in more and more builders from abroad because of insufficient supply in this country. That is because over several years, if not decades, they have not been training people.
Nor do the Government have any programme, as far as I can see, that is equivalent to the better homes programme which, as a number of colleagues have said, contributed enormously, not only to bringing many properties back into effective use, but to improving the lives of many of our constituents. Finally, what we see here is figures being plucked out of the air. This is reminiscent not of an efficient market, but very much of Soviet planning, with declarations of 300,000 houses but no visible means by which that will actually be achieved.
Lloyd Russell-Moyle
I will try to be brief, because we all want to get to the vote and then move on, but I will say that the measures we are considering are far too little and far too late. Homelessness has doubled in Britain, and in Brighton it has tripled, with 10% of adults now on the housing register. How do these proposals help them? The measures will increase house prices for first-time buyers. I know the Minister says that he has better data than the OBR, but I tend to believe the OBR, which was set up by the Conservative Government to provide independent analysis, over the books that are cooked in the Treasury—[Interruption.] Yes, the books that are cooked in the Treasury. What we need are clear supply-side measures—[Interruption.] The evidence for cooked books is that the OBR does not believe the Government’s figures. The evidence comes from the independent regulator. Let me get back to what I want to say, otherwise I will be distracted and we will be here for longer.
We clearly have a problem with young people and first-time buyers getting into the property market. In my constituency today, only five studio flats are on the market for less than £200,000. With average earnings in Brighton lower than the average for the rest of Britain, the introduction of a stamp duty waiver will make not one jot of difference, because people cannot afford to raise money for a deposit and to go to banks to ask them to lend. What we really need is decent social and council housing so that people can move into secure tenancies. I asked the Prime Minister whether she would lift the housing revenue account cap. We see in the Bill that there will be a lift to the value of £1 billion, if councils apply, but of course £22 billion would be made available, at no direct cost to the Government, if they just lifted the cap completely. Why will they not? Because they are scared—they are chicken—to allow working people to have decent homes. Clearly they want to keep people subjugated and in poor-quality rented private property. That is the only conclusion I can draw from their miserable set of proposals.
Another thing we need is planning regulation that is stronger, not weaker. Until very recently, I sat on my local council’s planning committee. Time and again we were toothless in enforcing the social and affordable housing requirements. We do not need to give councils less power to enforce those requirements; we need to give them more powers to enforce them. The measures in the Bill to try to deregulate the planning sector go in completely the opposite direction.
I could make other points, but I am not going to talk anymore—let us go home. It is quite clear that I will be voting against the Government’s measures, because they are absolutely useless for dealing with homelessness and house building. In fact, they will make matters worse.
Ruth George (High Peak) (Lab)
I echo my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) in saying that I am proud of Labour’s record on housing. I am proud of how we invested in 2 million more new homes, increased home ownership by 1 million, and made sure that more than 1 million homes were brought up to a decent standard, fit for human habitation, which is what we need to see now.
Since 2010, we have seen home ownership fall by 200,000 as house prices have risen by an average of 32%. Of those homes that have been built, less than 20% have been affordable, as councils’ rights to impose affordable limits have, as my hon. Friend the Member for Brighton, Kemptown (Lloyd Russell-Moyle) said, been taken away, with the rug pulled out from under their feet. What have we had instead? We have had £10 billion invested in the Help to Buy scheme, which even Morgan Stanley said has almost entirely gone towards raising house prices and increasing the share prices of the biggest house builders.
In my constituency, those house builders are not content with all the assistance from Help to Buy. Almost all their new homes are sold on leasehold—or fleecehold, as it has been called—so people do not feel that they actually own the home in which they live, despite having paid an inflated price for it. They still have to pay ground rent; they are still being fleeced with maintenance charges; and they still have to pay fees to a third party. It does not feel like home ownership any more. This is actually private rental as well as home ownership.
Stephen Pound (Ealing North) (Lab)
I hope my hon. Friend will forgive me for interrupting her flow. She is making a precise and pertinent point. Would she not wish to encourage all people of good heart here present to support the Bill that has been presented by my hon. Friend the Member for Westminster North (Ms Buck) on this very subject?
Ruth George
Absolutely. I hope that Members on both sides of the House will give their encouragement to that Bill so that we can make homes fit for human habitation.
On the subject of universal credit, whether or not homes are fit for human habitation, unfortunately landlords are not prepared to rent. A representative of a lettings agency came to my surgery just last week and showed me the books for its tenants. At the moment, 20 tenants are on universal credit—we still have not seen it rolled out—of whom 18, or 90%, are in huge arrears. Nine of them—45%—have had to be evicted because landlords cannot get any redress for arrears. They cannot afford to see those arrears build up. Now that they no longer claim mortgage interest relief, they know that they will have to pay a big tax bill come the end of January, so they need to ensure that they can make their homes pay.
This Government’s housing policy is simply racking up disaster on disaster. Homelessness is doubling and home ownership is falling, and universal credit is yet to come. We needed big ideas from the Chancellor, as the Secretary of State for Communities and Local Government told him in no uncertain terms. We see nothing in this Bill but tinkering at the edges that will do nothing to help solve the enormous housing crisis in this country.
Mel Stride
We have been debating important measures. Clause 8 introduces an income tax allowance for members of the armed forces to help them to meet the cost of accommodation in the private market in the UK. Clause 40 makes sensible legislative adjustments to the additional rate of stamp duty land tax to ensure that people in some specific—often disadvantaged—circumstances are not unduly penalised. Clause 41 announces the Government’s abolition of stamp duty land tax for first-time buyers purchasing properties under £300,000. This key part of the Government’s drive to ease the burden on young first-time buyers will go a significant way towards levelling the playing field in those people’s favour. It is notable, and equally lamentable, that this particular policy, which predominantly assists the young, appears to be something that the Labour party rejects and indeed derides. I commend the clauses and schedule to the Committee.
Question put and agreed to.
Clause 40 accordingly ordered to stand part of the Bill.
Schedule 11 agreed to.
Clauses 41 and 8 ordered to stand part of the Bill.
New Clause 4
Review of relief for first-time buyers
“(1) The Commissioners of Her Majesty’s Revenue and Customs shall undertake a review of the impact of the relief for first-time buyers introduced in Schedule 6ZA to FA 2003.
(2) The review shall consider, in particular, the effects of the relief on—
(a) the public revenue,
(b) house prices, and
(c) the supply of housing.
(3) The Chancellor of the Exchequer must lay a copy of a report of the review under this section before the House of Commons no later than one calendar week prior to the date which he has set for his Autumn 2018 Budget Statement.”—(Jonathan Reynolds.)
This new clause requires a review to be published prior to the Autumn 2018 Budget on the impact of the relief for first-time buyers, including its effects on house prices and on the supply of housing.
Brought up, and read the First time.
Question put, That the clause be read a Second time.
Business without Debate
Madam Deputy Speaker (Mrs Eleanor Laing)
With the leave of the House, we will take motions 2 and 3 together.
Ordered,
Human Rights (Joint Committee)
That Mark Pritchard be discharged from the Joint Committee on Human Rights and Alex Burghart be added.
Regulatory Reform
That Mark Menzies be discharged from the Regulatory Reform Committee and Mr Simon Clarke be added.—(Bill Wiggin, on behalf of the Selection Committee.)
RBS Rural Branch Closures
(7 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Ian Blackford (Ross, Skye and Lochaber) (SNP)
I begin by declaring an interest as a customer of the Royal Bank of Scotland. I hold an account in one of the branches that has been slated for closure.
The Proclaimers might put it this way: Bannockburn no more. Beauly no more. Biggar no more. Carnwath no more. Castlebay no more. Comrie no more. Douglas no more. Gretna no more. Inveraray no more. Kilwinning no more. Melrose no more. Stepps no more. Tongue no more. Those are 13 locations that RBS is clearing out of in Scotland—abandoning its customers and leaving those places with no local bank. We do not accept that those and the other branches of which the closure has been announced should be shutting their doors, and we demand that RBS reverse its plans.
In those 13 communities in which RBS has announced closures, it is the last bank in town. RBS made a commitment that it would not close the last branch in any location, but here it is, isolating 13 communities that will be left with no branch banking facilities. RBS now says that the commitment not to close the last bank in town no longer applies. The pronouncement that RBS would not close the last bank in town was right when it was made in 2010, and it remains the right thing to do in 2017.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
In addition to the towns and villages that my right hon. Friend has just mentioned, branches in Grantown, Aviemore and Nairn in my constituency—they are vital to the tourism industry—are also scheduled for closure. One fifth of the highlands economy is made up of tourism, and it is mostly cash-based. Does he agree that it is not good enough for the UK Government to stand by while what the Federation of Small Businesses calls a “hammer blow” is delivered to small businesses in the highlands?
Ian Blackford
I absolutely agree with my hon. Friend. Of course, it is not just about those 13 branches. There is justified anger in many communities surrounding the 62 branches signalled for closure in Scotland and the 259 in the United Kingdom. RBS is turning its back on communities throughout the United Kingdom, and it will find that those communities call on it to think again.
RBS is a bank that we all have a stake in. We collectively own just short of 73% of the company. We rightly bailed the bank out in 2008, at a cost of £45 billion. We own RBS. We saved RBS in order that it could continue to offer banking services to our communities, to individuals and to businesses.
Stephen Gethins (North East Fife) (SNP)
I thank my right hon. Friend for the powerful case that he is making. Is he aware that the closures that were recently announced are not the only ones? Some months ago, many of us campaigned against closures in Cupar, Leven and Anstruther, which have also been left without RBS branches.
Ian Blackford
I absolutely agree with my hon. Friend. The closures have a cumulative effect.
Several hon. Members rose—
Ian Blackford
I know that many people want to intervene, but I will try to make some progress because of the time. I will take some interventions later.
Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
Just before my right hon. Friend makes some progress, will he give way?
Ian Blackford
Nice try. Having a bank on the high street that collects and issues cash and provides other banking services is instrumental to the economic wellbeing of all our communities. Individuals and businesses rely on the access in person to banking services. Why did we save RBS, if there is no recognition that there is a liability on the bank to serve its customers and communities? Customers who have been loyal to RBS for generations find branches being closed on them. That is happening to people such as Cyril French, who lives in Plockton and is a customer of RBS at the Kyle branch. Cyril is 87 and has Alzheimer’s. The staff at the RBS branch are of enormous assistance to him when he goes on his weekly visit to the branch. What is Cyril to do if the bank closes? The next nearest RBS branch would be in Portree on the Isle of Skye, more than 40 miles away. On highland roads, this would take more than an hour, and he would have to be taken there either by family members or by his carer. Is that what Cyril should have to endure to visit a local bank?
Let us think about the local businesses that rely on the bank for depositing and collecting cash. Where are they to go? Let us take businesses such as the thriving Eilean Donan Castle in Lochalsh, which uses the Kyle branch. It is 43 miles from the next nearest RBS branch in Portree. Eilean Donan Castle is a thriving tourist destination, with over 540,000 visitors a year. It deposits millions of pounds of cash a year at the Kyle branch. Its insurance policy demands that it has as many as three staff members to take the cash to the bank. The impact on it of their having to drive to Portree rather than Kyle would be considerable in terms of time and staff resource.
When customers visit their local branch, they will often do other shopping, go for a coffee and such like. The closure of the last branch in Beauly in my constituency will drive valuable business away from the town. Personal customers and businesses will go to Dingwall or Inverness and will more than likely take their other business with them to these places. Closing the last bank in town has a similar effect to the removal of services such as local schools, and it undermines the sustainability of our communities.
Brendan O’Hara (Argyll and Bute) (SNP)
As my right hon. Friend knows, there are three Royal Bank of Scotland branches in my Argyll and Bute constituency—in Campbelltown, Inveraray and Rothesay—which are earmarked for closure. Is he aware of the profound anger and the sense of betrayal that is felt by rural communities across Scotland at these brutal closures? The bank closures are completely undermining the great work, being done by so many, of saying to the rest of the UK and the rest of Europe that rural Scotland is open for business. These bank closures must stop.
Ian Blackford
I agree with my hon. Friend. That is why I say to the Royal Bank of Scotland that it should please listen to the justifiable anger that there is throughout the country. RBS has been a much-loved institution, and one that has been cherished by our communities. We are appealing to RBS to think again, to stop and to reverse these closures.
Jim Shannon (Strangford) (DUP)
I congratulate the right hon. Gentleman on bringing this matter to the House for consideration. I have had five banks close in my constituency: three Ulster Bank branches, one Trust Bank branch and one Bank of Ireland branch. Does he agree—many in the House will suspect this to be the case—that people, especially elderly people, will not use banking services, but will keep their money in their house? Is there not a fear that that will lead to more robberies, more violence and more unrest?
Ian Blackford
I hope that that is not the case, but the hon. Gentleman raises a justifiable concern about the safety of our elderly citizens in their community, and it is another good reason why RBS should think again.
Caroline Flint (Don Valley) (Lab)
I think all of us want to make sure that small branches in our rural and semi-rural areas are kept open. Does the right hon. Gentleman agree not only that, when these branches close, funds for small businesses shut down, but that, when the last bank in a community closes, as in Bawtry in my constituency, it is a major blow to the community the bank serves?
Ian Blackford
The right hon. Lady is absolutely correct. The bank manager, in particular, is a valued member of the community. He understands the community he works in and he understands the businesses, and that link is a vital one to retain.
Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)
Will the right hon. Gentleman give way?
Ian Blackford
I must make some progress, but I will try to take interventions later.
The scale of the closure announcement is breathtaking, and RBS needs to think again. It simply goes too far. I say to RBS tonight: let us work together and put these closures on hold. Let us work with RBS to sustain its ability to do business in its branches in the rural communities. Let us understand the challenges that it faces and rally community support to enable RBS to remain an integral part of our communities.
RBS is trying to create a picture of these branches as a relic of the past, saying that demand for branch banking has declined and that customers are not utilising the branches. Let me tell the House about the reality for the branches in my constituency that are earmarked for closure. I obtained these figures, which are for the last calendar year, from RBS: Mallaig has 1,001 customers with 10,098 transactions; Kyle has 2,436 customers with 25,000 transactions; and Beauly has 3,439 customers with 29,000 transactions. These are not small numbers. Almost 7,000 of my constituents in Ross, Skye and Lochaber rely on RBS providing branch banking services in branches that are earmarked for closure.
Neil Gray (Airdrie and Shotts) (SNP)
I congratulate my right hon. Friend on securing this debate. RBS has closed the Shotts branch in my constituency and is about to close the Airdrie branch, having given customer numbers that many in my constituency dispute. He is making a very important point. If my constituents are to have any confidence in the closures, RBS needs to be transparent about the number of customers using the branches.
Several hon. Members rose—
Ian Blackford
I will come on to that aspect, but I must apologise that to get through my remarks, I will not take any interventions for the rest of my speech.
I received the numbers that I issued a couple of minutes ago from RBS two weeks ago. I have asked repeatedly for the relevant figures for all the branches in Scotland that are earmarked for closure. RBS has refused to release the figures. It has published figures for bank use detailing only those that use the bank every week of the year. According to RBS, only 11 customers use Mallaig on a weekly basis, 27 visit Beauly and 51 use Kyle. We know the reality. As opposed to the 51 regular customers trumpeted for Kyle, there are actually 25,000 transactions. If we focused on the so-called 51 customers, we might be sympathetic to the demands from RBS to close the bank, yet the fact that there are 25,000 transactions a year allows me to conclude that the branch is still relatively busy.
Why doesn’t RBS come clean and tell us the number of transactions in all the threatened branches? I ask the Minister to put pressure on Royal Bank of Scotland to come clean and tell us the truth about the number of transactions in all the branches in Scotland and throughout the United Kingdom. It is a disgrace that RBS has not released the full figures and I stand here asking RBS to do so publicly: do not hide behind so-called commercial confidentiality; it simply will not wash.
Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)
Will my right hon. Friend give way?
Dr Cameron
I have been contacted by extremely vulnerable constituents regarding the closures that are planned for Strathaven and Lesmahagow, including those with learning disabilities and disabled members of the community who find it difficult to travel or use the internet. Does my right hon. Friend not think that RBS is letting down the most vulnerable in our constituencies?
Ian Blackford
My hon. Friend makes a valid point. That brings me back to why I hope RBS reflects on what it has done. It has simply gone too far. Let us work together to protect the interests of our communities, and particularly the vulnerable citizens within them.
RBS has given the figures for three branches in my constituency. It should publish the others and let us see the full picture of the demand for branch banking. Let us have an honest debate. RBS needs to be transparent. I can tell RBS that people in all the affected communities are angry and want it to engage properly with them. RBS has simply not thought this through properly.
There has been no public consultation on the closure plans. Why not? Yesterday in the Sunday Mail, RBS stated:
“We are not required to consult with communities in advance.”
It went on to say:
“We find that many customers wished they had used other ways to bank earlier when they get comfortable.”
The sheer arrogance of those statements is breathtaking. Let me say clearly to RBS: customers want to use branch banking; stop spinning and treat customers with respect.
I thank the Unite union, which has been in touch with me over the past few days. I state publicly that I will work with Unite and the workforce to seek to limit job losses. Here again, RBS has to come clean. I am indebted to an RBS whistleblower who has contacted me in the light of public statements that RBS has made. It is claimed by RBS that the full-time equivalent job losses in Scotland are 165. I am informed that the actual number of workers being cut is 321. I am told UK-wide the figure is 1,446 jobs against the 685 on a full-time equivalent basis that has been published. The expected redundancies across the UK in a worst-case scenario are 971, including 97% of the 216 customer service officers in the branches affected; 86% of the 246 associate personal bankers; 84% of the 126 customer service managers; and 49% of the personal bankers. It is clear that the chances of redeployment within the RBS network will be slim for a lot of staff members.
Those figures are in a paper forwarded to me in a document about restructuring the branch network. I have told RBS I have been given details of the figures contained within the report. RBS is not only turning its backs on its customers—it is turning its back on its staff members. We are talking about valuable jobs in the rural economy. We are talking about a loss of opportunities for young people in rural economies. The leaked report goes on to say:
“Our personal banking strategy is to give our customers choice and offer outstanding service that is effortless every day and brilliant when it matters.”
I do wonder who could write such meaningless management-speak. When branches are closed, there is a withdrawal of service. Spinning to say outstanding service is being delivered is simply unacceptable. RBS has even had the gall to say customers would get a better service. How? One suggestion from RBS is to use post offices. In Munlochy on the Black Isle, RBS shut its branch. “Not to worry,” it said, “you can use the post office.” The only problem was that the post office shut six months later. Somewhere along the line, RBS has to take responsibility for its own customers and not pass the right of service on to a third party. They are RBS customers.
The intended closure of the branch in Castlebay in Barra would be funny if it was not so serious. There will be no bank on the island of Barra. It reminds me of the line from “Whisky Galore”, the Ealing comedy: “There is no whisky.” The cruelty in this case is that there will be no bank. The journalist Rita Campbell of the Press and Journal made a trip last week from Barra to the nearest bank in Lochboisdale, a journey of 62 miles, including a six-mile ferry crossing. It took seven hours and 10 minutes to reach Lochboisdale and return to Barra. How can RBS treat its customers in such a shameful way? RBS must reverse the closure of the branch in Barra and elsewhere.
We must also press the UK Government to accept their responsibilities. Collectively, we own RBS. Above all else, RBS was saved to provide banking services to our communities. We paid a heavy price to bail out RBS. There are taxpayers in every community that is threatened with the ending of banking services. Can I ask the Minister what notice the Government were given, as the majority shareholder, of the closure plans? What discussions have the Government had with RBS? Will the Government summon Ross McEwan, the chief executive officer, to the Treasury and tell RBS that in the interests of all our communities the closure plan must be stopped? It will not wash.
The Government have to accept their responsibilities as the majority shareholder. I say to the Minister: do not rise to your feet and tell us it cannot be done, it is a commercial decision and the Government cannot intervene. The Government have intervened before. When it was announced that Stephen Hester, the previous CEO, was leaving RBS, the then Chancellor George Osborne was interviewed on the “Today” programme and said the following:
“Let’s be clear, it was a decision of Stephen Hester and the board but, of course, as the person who represents the taxpayer interest, and we have got a huge stake in the Royal Bank of Scotland because the previous government put a huge amount of taxpayers’ money into it, of course my consent and approval was sought.”
Just dwell on the words:
“my consent and approval was sought.”
It was right for the Government to give their approval on a member of the management team and it is right for the Government to give their approval or not on decisions that would remove access to branch banking from many of our citizens. It is clear that the Government can act. The Government must act. A failure to halt is a failure to act in the national interest and the interest of our citizens. It would, Minister, be an abrogation of responsibility.
Yesterday, the Secretary of State for Scotland—I can see him sitting on the Front Bench, and I welcome him to the debate—was quoted in the Sunday Mail. He said:
“Branches are a lifeline for many people, especially in rural areas. RBS needs to remember its responsibilities to customers and reconsider these harmful moves.”
On this occasion, I agree with the Secretary of State, and I hope that he will join me in asking the Government to take their responsibilities seriously. If the office of Secretary of State for Scotland has any authority, this call from the Secretary of State must result in a halt being called to the plans. Does the Secretary of State for Scotland have any authority with the Treasury? Will the Minister act tonight? Call in the RBS management and put a stop to these closures.
Tonight, the Minister has it in his gift to listen to these calls and act. Stand up and be counted or, like RBS, the UK Government will be turning their back on our constituents.
The Economic Secretary to the Treasury (Stephen Barclay)
I commend the right hon. Member for Ross, Skye and Lochaber (Ian Blackford) for securing the debate. The strength of feeling generated on both sides of the House by this announcement from RBS is evident from the high attendance at a relatively late hour.
Stephen Barclay
I will happily give way, but obviously the right hon. Member for Ross, Skye and Lochaber has taken 22 minutes of a 30-minute debate, so time is somewhat limited.
Ian Paisley
I appreciate the fact that the Minister has given way, and he is absolutely right to focus on the interest across the House. The leader of the Scots Nats has tonight managed to unite this House—Unionist, nationalist, Conservative and Labour—on an issue that affects all our constituents, from the highlands and islands to the west of Ulster. Many banks are closing. Ulster Bank, which is of course a sister company of the Royal Bank of Scotland, is closing many branches. Is it not time for the Government to put in place a special measure to have a national review of where banks that they own—and that the taxpayer owns—are situated?
Stephen Barclay
The hon. Gentleman is right; this is an issue on which many Members of the House from all parties have strong feelings. Indeed, I have been lobbied extensively by many of my colleagues who are in the Chamber this night, including in particular my hon. Friends the Members for Berwickshire, Roxburgh and Selkirk (John Lamont) and for Ochil and South Perthshire (Luke Graham), who have been vociferous in speaking up for their constituents on this issue.
Luke Graham (Ochil and South Perthshire) (Con)
As my hon. Friend knows from our representations, we do not believe that the Royal Bank of Scotland is serving our constituents or its customers appropriately. Furthermore, the mitigating factors it is proposing, such as offering digital online services and post office services, do not work in our communities where the broadband is poor and the post offices are too small or insufficient for our local population.
Stephen Barclay
As a rural constituency MP, I recognise the importance of bank branches in our communities and, specifically, many of the challenges of travel in rural communities. Of course, RBS will have noted the comments about the staff impact made by the right hon. Member for Ross, Skye and Lochaber, and he will be well aware that RBS has a duty to consult its staff. I expect that it will be keen to respond to him on the specific allegation he made in the House this evening.
Ged Killen (Rutherglen and Hamilton West) (Lab/Co-op)
I am alarmed this evening to hear the number of staff who might be made redundant, but I am also concerned about the staff in the remaining branches. There have been six bank closures in my constituency and businesses are contacting me to say that in the local branches they are now going to they are waiting more than 30 minutes to get to the counter. Obviously, there is now a massive impact on the staff in those branches. Does the Minister share my concerns?
Stephen Barclay
The reality is that the picture will be more nuanced, because RBS is investing more than £8 million in its branch network this year. It is investing more than £11 million next year. Indeed, it is relevant to point out in response to the concerns raised that customers will often vote with their feet. The right hon. Member for Ross, Skye and Lochaber mentioned Kyle twice. I understand that there is a branch of Lloyds 0.05 miles from the bank that is closing there, and another branch within walking distance of the one that is closing in Aviemore, which he also mentioned.
Douglas Ross (Moray) (Con)
We heard earlier that the right hon. Member for Ross, Skye and Lochaber had united the House, and he has, but it would have been nice if he had taken some interventions from Conservative Members, because I think that they might have been helpful. The Minister mentioned customers voting with their feet. Does he agree that it was deplorable of RBS, when it was closing the Forres branch, to tell my constituents to go to Nairn, only for the Nairn branch to be closed by RBS a few weeks later? Surely, that is deplorable behaviour, which no one can accept.
Stephen Barclay
As my hon. Friend will know, the decision made by RBS was an operational decision, independent of the Government. It is the RBS board that makes the strategic and management decisions, including decisions in respect of its network. That framework has been endorsed by the Labour, Liberal Democrat and Conservative parties.
Several hon. Members rose—
Stephen Barclay
I am going to make some progress. The right hon. Member for Ross, Skye and Lochaber has left me only three more minutes in which to do so.
On 4 December, I had a conversation with the Scottish Government Minister for Business, Innovation and Energy, in which he recognised that the branch network decision had been a commercial decision. In its manifesto, written only this summer, the SNP said that RBS should be returned to the private sector and should deliver as much value as possible to the taxpayer.
Simon Hart (Carmarthen West and South Pembrokeshire) (Con)
Will the Minister give way?
Simon Hart
I shall be very brief. A number of Members of Parliament find it very difficult to engage with RBS and NatWest about closures when they tell us that it is all about footfall—about the number of people who go into their branches. Employees tell us one thing and the banks tell us another. Perhaps the Government would have more influence than us in establishing what the true figures are. Let them mislead Ministers publicly rather than us privately: that would be helpful to all Members.
Stephen Barclay
My hon. Friend refers to the true figures. The banking market is changing. As he will know, the use of cash has fallen by a fifth in the past decade. The number of branch visits has fallen by a third since 2011. More than a third of UK adults regularly use banking apps. Three fifths of customers are interacting with their current accounts via mobile apps, and more than 600,000 customers over 80 are registered with internet banking. The House must address the reality that the way people bank is changing, and that trend will accelerate as Open Banking comes on stream in January and FinTech progresses. I know from my recent visit to Edinburgh that a number of additional FinTech jobs will be created. The issue is not whether it is possible to prevent changes in the banking market, but how the impact on RBS customers can be mitigated.
As for the representations made by Members, RBS has given six months’ notice—more than the three months required by the access to banking standard—to hold discussions, in which I urge Members in all parts of the House to engage, about how facilities such as mobile banking can be used to mitigate some of the impacts. One of the key sources of mitigation is the post office network, in which the Government have invested significantly: 7,000 more branches have been modernised in the past three years alone. There are more post office branches than there are branches in the entire network of all the banks combined, and 99% of retail customers and 95% of commercial customers now have access to banking services at post offices. One form of mitigation will be for customers to vote with their feet—[Interruption.]
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. Members must stop shouting. The Minister is just finishing his speech.
Stephen Barclay
I was left a bare eight minutes in which to respond, Madam Deputy Speaker, and I have been generous in taking interventions. I have very little time in which to make some final progress.
At the time of the autumn Budget, recognising the importance of this issue and the concerns expressed by Members on both sides of the House, I wrote both to the Post Office and to UK Finance, which represents banks, to further raise public awareness of the banking services offered by the Post Office and, indeed, to ensure that we receive value for money from the £2 billion that the Government will have invested in the post office network between 2011 and 2018. The Government also introduced the access to banking standard, to ensure that customers are properly notified of the alternatives that are available. It is important for us to use the time that we now have in the six months between this announcement and branch closures to ensure that customers can use other services or use post offices as an alternative.
Financial Assistance to Industry
(7 years ago)
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The Minister for Climate Change and Industry (Claire Perry)
I beg to move,
That the Committee has considered the motion, that this House authorises the Secretary of State (Greg Clark) to undertake to pay, and to pay by way of financial assistance under section 8 of the Industrial Development Act 1982, compensation to eligible energy intensive industries in respect of a proportion of the indirect costs of funding the renewable obligation (RO) and smallscale feed in tariffs (FIT) totalling more than £30 million and up to a cumulative total of £565 million maximum.
It is a pleasure to serve under your chairmanship, Ms Buck. I hope not to detain the Committee too long, but it is extremely important that we consider this substantial and necessary motion.
The motion was laid before the House on 6 December and is being made under the Industrial Development Act 1982. I draw the Committee’s attention to the very helpful explanatory memorandum that my officials circulated ahead of time to enlighten Members about the more technical aspects.
Claire Perry
Well, it was unusual to have it, and it was rather a helpful process.
In order to meet our climate targets, we have implemented a number of policies designed to incentivise generation of energy from renewable sources. As we know, the costs of such policies are recovered through obligations and levies on suppliers, who pass those costs to end users, usually in their electricity bills. Such costs can put the most energy intensive industries at a competitive disadvantage. Indeed, as set out in the clean growth strategy, our industrial electricity prices for large consumers in 2016 were the second highest in the EU15, after Italy. That can place some of our most important strategic and productive electricity-intensive manufacturing industries at a competitive disadvantage and increases the risk of businesses relocating due to the costs associated with meeting our climate targets, which no one wants to see.
We have taken steps to reduce the cumulative impact of these policies on industrial energy prices for sectors such as steel, paper, plastics, cement and chemicals. At the Budget in 2014, the coalition Government committed to compensate energy intensive industries for the indirect costs of the renewables obligation and feed-in tariffs. The compensation scheme was launched in January 2016. It provides for eligible energy intensive industries to receive compensation for up to 85% of the costs of funding the RO and FIT. We have now paid more than £352 million under the scheme to 147 companies. That has been estimated to have reduced industrial electricity prices by £17 per megawatt-hour in 2016, or around 15% of an eligible company’s electricity bill. The scheme has played a significant role in supporting the competitiveness of these vital industries.
We have tried to focus our resources on sectors that are most exposed to electricity price rises—those that are both electricity-intensive and exposed to international competition. Committee members will agree that those are incredibly important strategic industries that offer highly productive jobs right across the UK.
Under section 8 of the Industrial Development Act, Parliament must authorise the amount of compensation we can pay to these companies for the indirect costs of funding the RO and FIT as the amount exceeds £30 million. In March 2016, we authorised spend up to a cumulative total of £371 million. The motion seeks authorisation to pay up to a cumulative total of £565 million. That is a maximum number—it is not a target—and is intended to enable Government to continue to pay RO and FIT compensation to eligible EIIs until replacement exemption schemes are introduced. I know that many Committee members served on the various Committees in which we introduced those pieces of legislation.
The spending review and autumn statement 2015 set out our intention to provide an exemption from the policy cost, to ensure that EIIs have long-term certainty and remain competitive. Those exemptions are intended to replace the current compensation schemes. I will not go back through the arguments for why exemptions are better than the compensation method; suffice it to say that they are quicker, provide much more certainty of cash flow and are welcomed by the companies.
Sadly, it has taken longer than originally expected to secure state aid approval from the European Commission for the move from compensation to an exemption. We have received approval for the renewables obligation scheme, which we will implement from 1 April 2018. State aid considerations for the FIT scheme are more complex and will take longer to resolve, which is why we need approval to maintain the current compensation system while we deliver on the state aid requirement. The compensation scheme will continue for a little longer, until we have state aid approval, and costs will therefore arise in excess of the £371 million that was originally authorised. However, as I said, they will be capped at £565 million as a result of the motion, which I hope the Committee approves.
It is crucial that we continue to provide compensation until an exemption comes in. The sectors that are eligible for the relief employ around 230,000 workers and have gross value added of more than £30 billion—2% of the UK economy—and turnover of around £115 billion. About 60% of the businesses have exported products in the past 12 months. Crucially, many of the companies that are eligible for the compensation are located in areas of relative economic disadvantage and are a vital and strategic part of our industrial base. As Members will know, we want to work with these industries through the industrial strategy to boost workers’ earning power, improve living standards and create jobs so that everyone across the country can share the benefits of our economic success.
Energy intensive industries need to play their part in reducing emissions. Eight sectors, including steel, chemicals, glass and cement, are responsible for around two thirds of industrial energy use and two thirds of industry’s greenhouse gas emissions. They have worked effectively with the Government to produce industrial decarbonisation and energy efficiency action plans, which we look forward to bringing forward with the various players in those sectors.
I am content that the financial assistance outlined in the motion will benefit the UK’s energy intensive industries, and that section 8 of the Industrial Development Act is the appropriate means by which to make such payments. I therefore commend the motion to the Committee.
Dr Whitehead
It is a pleasure to serve under your chairmanship, Ms Buck.
There is good news and bad news. The good news is that the Opposition do not intend to divide the Committee. The principle that energy intensive industries should be compensated in some way for the costs they incur in meeting green and social levies that they would not incur were they non-exempt industries is clear, and we support it. Nor do we have a quarrel in principle with the idea that, because of particular circumstances that I will come to, the ceiling for the compensation that is paid to those industries should be raised from £371 million, which was the amount originally agreed back in 2015, to £515 million.
However, we have some concerns. The first is about the principle of moving to giving back 85% of the costs incurred by energy intensive industries in paying green and social levies by means of a levy for the future rather than a compensation arrangement for the present. We know from recent secondary legislation to effect that measure on the renewables obligation and FITs that that adds substantial costs to the energy bills of non-exempt industries and general consumers, over and above what they already pay in green and social levies. There is a plus-plus effect on their bills; they pay the green and social levies in any event, and an additional one as a result of moving from a general taxpayer-funded compensation scheme to a general levy scheme. For a medium-sized business, that puts £6,700 on to an average year’s energy bill. I am not making that figure up; it is in the impact assessment for the Renewables Obligation (Amendment) (Energy Intensive Industries) Order 2017, which went through recently. It is a substantial additional burden to bring about the levy arrangement.
The bad news, I guess, from the Minister’s point of view, is that we do not support in the long term the idea that the arrangements should be transferred from a general taxation compensation to a levy-based compensation arrangement. Certainly, were we in a position to make a change, we would want to do so in the long term. However, we are where we are for now, and it is important to get the compensation arrangement right. The other bad news, then, is that I have a couple of questions for the Minister about what exactly getting it right means in the context of the transition between a compensation arrangement and a levy arrangement.
As the Minister has indicated, there is a considerable gap between the date when it was hoped there would have been transition between compensation and levy arrangements, and the actual date. It was originally supposed to be the spring of this year. It will now be April 2018 at the earliest for the RO and FITs. At the time, it was intended that in addition to a transition between compensation and levy arrangements for the RO and FITs, there should be a new levy arrangement with respect to new contracts for difference coming on stream, to be put in place when CfDs were tenable.
The RO arrangement has effectively come to an end for new entrants as of March 2017 and, although the programme will run for a further 10 years, it is effectively a ghost programme. It will continue to carry out the obligations that have been entered into for their 15-year period, but no new ROs will come on stream. Instead, for larger renewable energy concerns there will be contracts for difference.
Some of those contracts for difference were entered into in 2016 or so, but they were not in existence at the point when the arrangements for a levy for contracts for difference were first entered into. Consequently the question did not arise at that point of whether to compensate energy intensive industries for the obligations they might have to pay for organisations that had received CfDs. No CfDs had been received at that point. That is not the case for the renewables obligation, because that started in 2002 and the tail of those ROs is running through the system and will continue to do so, as I have mentioned, well after 2018.
The question arises whether the motion before the Committee includes the possible consequences of energy intensive companies actually having to pay for CfDs, bearing in mind that originally it was considered they should not pay for them. When the changeover was originally determined, those CfDs would not have existed, whereas now they will exist, because we are a year behind essentially in effecting the changeover.
The figures in the draft regulations produce, as it were, a neat increase from the original control total of £371 million to the new cumulative total of £565 million—a difference of £194 million, which is almost exactly what the impact assessment on the RO and FITs levy changes suggested would be the annual cost of the central estimate of an exemption arrangement. In the impact assessment, £196 million was stated to be roughly the same as what would have been paid per annum in compensation before the exemption scheme was considered. The suggestion is that the £194 million pays for a one-year extension of the obligations that were there as far as the renewables obligation and feed-in tariffs were concerned, and does not take account of any possible payments that might have to be made as a result of CfDs coming on stream and the scheme changeover being delayed.
My question to the Minister therefore is: has that been taken into account? If it has not been taken into account, should it be? If it should be taken into account, is there any sort of cost implication involved in making those calculations? My next question to the Minister is about the way in which the payments have been calculated for energy intensive industries under the compensation scheme. In the response to the consultation in 2016, on the idea of a new levy for ROs, FITs and CfDs as far as energy intensive industries were concerned, the Government stated:
“We are also considering options for a statutory mechanism to recover and redistribute any over-exemption that EIIs have received in error.”
The suggestion in the consultation was that a number of payments had been made to energy intensive industries under the compensation scheme that might well not have been accurate, might have well been paid in error and might have been overpaid. I have seen nothing yet, as far as I know, whereby a statutory mechanism can be introduced to recover those costs, if indeed they are still outstanding.
In the context of asking the Committee to agree a further £194 million in compensation payments, it would be prudent to make it clear what is being done to ensure that the first lot of compensation payments were accurate. If they were not, schemes could be set up to recover what had been taken—possibly in error—so that the original amount of compensation was right and that any new compensation should not be strewn with those errors as well.
If the Minister has any information on either of those points, I would be grateful, because they are important in any discussion of whether we have a complete solution to the problems of, as it were, the overrun of the period for changing from the compensation scheme to the levy scheme, and indeed whether we have a complete solution that allows us to leave the Committee Room happy that we have done all we can to ensure that the compensation scheme ran its course in the best possible way and translated to the levy scheme in the best possible way.
I cannot resist reminding the Minister of the response she gave to my written question the other day. I asked whether the changeover from the compensation scheme to the levy scheme meant that, as far as ROs and FITs were concerned, there would be a new levy. The answer she gave was that it was not a new levy, because there had been a previous arrangement in existence. My understanding of our discussion this afternoon is that there had been no previous arrangement in existence. In those circumstances, it might be a good idea for the Minister to provide me with an answer to my written question that reflects that.
Alan Brown (Kilmarnock and Loudoun) (SNP)
It is a pleasure to serve under your chairmanship, Ms Buck. I will be brief.
In terms of where energy policy is just now, I fully agree with the motion. I agree with the Minister that exemption rather than compensation is beneficial to the companies in terms of cash flow and managing the process. I share the shadow Minister’s concerns about levies being added in future to consumers’ bills and, in particular, bills for medium-sized businesses. The Minister mentioned the industrial strategy and creating jobs, including higher-paid jobs, which clearly I agree with. She also highlighted the fact that energy intensive industries account for two thirds of greenhouse gas emissions.
We need a coherent energy policy. As the industrial strategy develops further and has more meat on its bones, we need to see a clear pathway, with research and development money that aligns with energy intensive industries, so that they can cut down their energy usage, and the wider development of schemes such as carbon capture and storage, which I have long argued for. In the bigger picture, in terms of managing bills for businesses and consumers, we need to have onshore wind companies being able to bid for CfDs again. The Government need to end their nuclear obsession. There is no doubt that Hinkley is adding costs for consumers and businesses. We need a more rounded policy.
Claire Perry
I am grateful to the hon. Members for Southampton, Test and for Kilmarnock and Loudoun for their typically thoughtful comments about what we are trying to do.
I will try to answer all the points that were raised. I know that if I do not, the hon. Member for Southampton, Test will write to me. I want to pick up his point about his parliamentary question, rather than asking him to resubmit it. It is not a new levy. These exemptions are adjustments to the existing scheme, so I do not think they are classified as a new levy, but if he wants to put that question to me again, I am happy to ask the Department to respond.
We are not debating the idea of a switch from compensation to a levy. Businesses absolutely appreciate the fact that this is much more cash-flow positive for them and much less hassle. It reduces the risk of potential overpayments, which the hon. Gentleman raised. It is about smoothing cash flow for them and giving them certainty. As we know, whether the money is coming out of consumers’ pockets as taxes or in energy bills, ultimately we are all investing in this renewable transition together.
I want to pick up the point about the maximum amount of burden being put on businesses and slightly correct the hon. Gentleman’s statement about medium-sized businesses. It is actually medium energy-using businesses. All sizes of business, from small and medium-sized enterprises to large businesses, are eligible to bid into the scheme. The test is whether the energy cost is 20% of their profits plus something—I should know that. Essentially, any size of business can bid into this scheme. That is important. In the round, this is a cost increase of less than 1% of energy bills.
Dr Whitehead
If I did not put my point carefully enough, I apologise. I was seeking to suggest that the effect of non-exempt industries and companies being liable for the costs of green and social levies and this new levy would add £6,700 a year to the bill of a medium-sized non-exempt company.
Claire Perry
To clarify, a medium-energy user could be any size company. It might be a very large company with a very small energy footprint. As I said, on average, because we do not know by what revenue the £6,700 is divisible, it is about 1% of the total cost for consumer bills.
The point is about who we get to pay for the investment in the renewables of the future, for which we have pretty much cross-party support; we know that we need to make that transition. The good news is that thanks to the policy frameworks put in place by the coalition and Conservative Governments, we are reaching a point where renewable energy is being delivered subsidy-free. I opened the country’s first subsidy-free solar farm a few months ago, and we purchased offshore wind at £57 per MWh in the latest auction. Renewable companies, having been subsidised to get to this point, do not now require subsidy going forward.
It is important that we communicate why we are doing this. To address the point about overpayments made by the hon. Member for Southampton, Test, it is obviously right and indeed required under state aid laws that we recover any overpayments, which are infrequent. That process is continuing. Of course, if there is an exemption scheme, it is far less likely that the Government will effectively overpay on that basis.
I also want to point out that given the critical nature of many energy-intensive industries, there is an extremely long supply chain of different-sized businesses that depend on the health and wellbeing of those industries. The key test for the sector deals that we are putting together with those industries is by how much they can drive up the UK content in their supply chain. By making them more cost-competitive, we are boosting the whole UK supply chain, which is extremely important.
It was asked how we had got to the numbers. Effectively, the increase that we are debating in the motion covers renewables obligation compensation for the final two quarters of 2017-18 and FIT compensation for the final two quarters of this year and all of 2018-19. That is how those numbers stack up. I was asked how the measures relate to the CfD point. Because that is an exemption scheme of its own, this will not combine the two. They are completely separate schemes.
I wanted to pick up the point about research and development, which is crucial. In both the clean growth strategy and the industrial strategy, we have committed to the biggest spending increase on R and D that any Government have ever made, with £2.6 billion going into innovation in the clean space. The hon. Member for Kilmarnock and Loudoun and I have had many conversations about carbon capture and storage technology in which we agreed that it was vital to bring it forward. I look forward to getting those projects moving.
In conclusion, we know that businesses want us to do this, and it is extremely relevant now. It appears that we have consensus on making the changes. On that basis, I commend the motion to the Committee.
Question put and agreed to.
Draft Environmental Protection (Microbeads) (England) Regulations 2017
(7 years ago)
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The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Dr Thérèse Coffey)
I beg to move,
That the Committee has considered the draft Environmental Protection (Microbeads) (England) Regulations 2017.
It is a pleasure to serve under your chairmanship, Mr Austin. We will be debating legislation to tackle microbeads in the use of rinse-off personal care products. “Blue Planet II” has shone a spotlight on our seas, and it is clear that they are in danger from many issues, including plastic waste. Plastic has become integral to our modern-day lifestyles, but millions of tonnes of plastic enter the global ocean every year, which is why we must take greater care and action to reduce if not eliminate pollution of our marine environment.
The draft regulations will ban the manufacture and sale of rinse-off personal care products containing plastic microbeads. Significantly, the ban is twofold. First, it will ensure that products containing microbeads may no longer be produced in England. Secondly, it will ensure that such products may not be sold or exported from the country. That will reduce the unnecessary release of plastic into the marine environment and lessen the harm to marine organisms caused by that form of microplastic. The ban has been worked on in conjunction with the devolved Administrations, and they too will introduce similar bans on manufacture and sale, likely in July.
Microbeads are small plastic particles. For the purposes of the draft regulations, “microbead” means
“any water-insoluble solid plastic particle of less than or equal to 5 mm in any dimension”.
Microbeads are added to many personal care products for their exfoliating effect. It has been suggested that one shower alone can send 100,000 microbeads into the water system and, subsequently, into our seas and the marine animals that live there. Personal care products containing microbeads are calculated to add 35,000 tonnes of plastic a year to the marine environment. Once released, those microbeads are impossible to recover.
Vernon Coaker (Gedling) (Lab)
The impact assessment talks about “other products”, which will not be covered by the regulations. Will the Minister tell us, now or later in her remarks, what the other products containing microbeads that will not be covered by the regulations are?
Dr Coffey
I shall certainly endeavour to do so. I have at least one example, and I am sure the hon. Gentleman will prompt me again if I do not cover the extent of the regulations.
It is extraordinarily difficult to directly measure the effect of microbeads per se on the marine environment. However, as microbeads are a form of microplastic, evidence concerning microplastics can be used to inform our view of the environmental impacts of microbeads. It is thought that ingestion of microplastics by some marine organisms can reduce digestion of food, affect reproduction adversely and be passed along marine food chains. Evidence indicates that chemical pollutants can leach from and attach to microplastics, risking increased exposure to toxins when ingested by marine organisms.
I want to recognise the efforts that the industry has made to address the problem of microbeads. A number of manufacturers and retailers have already stopped using microbeads in their products or have committed to do so. We want to ensure, however, that all companies follow that approach. The draft regulations will also create a level playing field for industry and certainty for consumers. Natural alternatives to microbeads do exist. They are readily available and, indeed, were used successfully in personal care products before plastic microbeads were introduced.
We considered whether the ban should extend to other products, including leave-on toiletries and cleaning products. Our initial assessment is that leave-on toiletries tend to be wiped off and the material discarded via normal waste streams, but we have asked the Hazardous Substances Advisory Committee to review the evidence on that. As for cleaning products, the trade bodies have shown that no such products for sale in this country include microbeads. Some countries have opted to ban only those plastic particles added for exfoliating and cleansing purposes, but our objective is to minimise marine microplastic pollution. Therefore, our ban covers all microplastic particles in those rinse-off cosmetics and personal care products. That is what makes it one of the toughest bans in the world.
The approach we have taken is based on clear evidence and, as a result, has support from a wide range of stakeholders. Only by working together can we be the first generation ever to leave the environment in a better state than we inherited it. I would like to think that that approach is another strong example of the proud and continuing leadership role that the United Kingdom has played in protecting the marine environment, not just around our coastline but throughout the world, including our overseas territories. With this legislation we will deliver one of the strongest bans—if not the strongest—on microbeads in the world. I commend the draft regulations to the Committee.
Holly Lynch (Halifax) (Lab)
May I join the Minister in saying what a pleasure it is to serve under your chairmanship this afternoon, Mr Austin? I am grateful to the Minister for her introduction to the new measures. The Labour party welcomes this statutory instrument and agrees that it takes positive steps towards tackling the growing problem of plastic pollution in our seas and oceans.
A recent poll suggests that there is real appetite for such measures, with 85% of the public wanting action to stop plastics polluting our seas. I would imagine that that figure is in no small part due to David Attenborough’s visually stunning yet desperately alarming series, “Blue Planet II”, which has meant that marine degradation is being discussed in living rooms all over the country. We welcome much of the content of the SI and will be supporting it today, but there are some omissions from the proposals before us, so I will take this opportunity to seek clarification and reassurance from the Minister on elements of them.
It would be remiss of me not to pay tribute to the members and Chair of the Environmental Audit Committee for their influential report published last year that thrust the issue on to the parliamentary agenda. It brought to our attention the fact that up to 219,000 tonnes of microplastics are entering the European marine environment every year. Microplastics are not simply pollutants in our oceans and waterways. Recent research found that 83% of drinking water samples collected across the world were polluted with plastic particles. The United States had the highest contamination rate, at 94%. European nations, including the UK, Germany and France, had the lowest contamination rate, yet plastic fibres were still detected in 72% of the samples tested.
The small size of microplastics means that they are easily ingested by marine life, with plastics found in fish and sea creatures living as far as 7 miles beneath the surface of the sea. Consumers are rightly concerned that these plastics are entering the food chain, so we must explore any and all measures to keep plastic waste from being ingested by the fish eaten in homes all over the UK.
I was pleased to see that the Government have changed some of the language around the definition of microbeads. In the consultation document from February, microbeads were described as being less than
“5 mm in size in every dimension”.
I welcome the amendment of that description to
“less than or equal to 5 mm in any dimension”.
That will assist us in going further and delivering a more comprehensive solution.
Getting into the detail of the SI, there are a number of areas where we would appreciate some clarification. Will the Minister provide further detail on the definition of “plastic” in the regulations? Does she understand the definition to include a full range of the different types of polymers, biodegradable plastic alternatives and any combinations of those materials? There are concerns about the different types of plastic, which I will address in turn if the Committee will bear with me. Semi-synthetic polymers are mostly derived from naturally occurring polymers by chemical modifications, but despite that they still have the same detrimental effect when they enter our seas and oceans. Will they be covered by the ban?
Combinations of synthetic and natural polymers are produced when blended plastics have been created from mixtures of synthetic polymers and naturally occurring polymers, such as starch, cellulose or wood. These blended products can still be expected to become plastic litter in marine environments, so will the Minister say whether they are covered by the regulations? Not producing a list of specific synthetic polymers is the right call. Environmental groups share my concern that any attempt to do so would risk allowing those who do not appreciate the spirit of the law to seek like-for-like replacements, which would allow the problem to continue.
Will the Minister also clarify whether the proposed definition of microbead covers semi-solid particles, such as synthetic waxes used in personal care products? I am aware of concerns among environmental groups that these substances, such as polyethylene waxes, are equally non-degradable and could continue to pose a threat to the marine environment even after the ban we are discussing today.
My greatest reservation about the regulations not closing off enough loopholes concerns the decision to restrict the measures to rinse-off cosmetics and personal care products. I am disappointed that the regulations do not take the totality of substances containing microplastics that have the potential to be washed down the drain and work back from there to deliver a truly comprehensive ban. I am sure the Minister will be aware of the polling conducted by YouGov on behalf of environmental groups, which found that many products classified as leave-on under cosmetics regulations are routinely washed down the drain. It found that 60% of people who use such products as sun lotion wash it off directly down the drain. When the evidence base is there, why are such products not in the scope of the regulations?
Cleaning products are not covered by the partial ban either. Although UK-manufactured cleaning products may not contain significant quantities of microplastics, I am concerned that imported products often do. Again, environmental groups have expressed concern about the availability of such products on the UK market. A coalition of environmental groups outlined that point earlier this year in a letter to the Secretary of State for Environment, Food and Rural Affairs. They stated:
“Based on the available scientific evidence, there is no justification for limiting a ban…to just one industry and not others in light of the stated intention to reduce the risk and severity of impacts of microplastics and to provide a level playing field for industry.”
They argued that the Government should go further, stating that
“extending the ban to cover cleaning products would ensure that microplastic ingredients are not used in current or future formulations and would ensure a level playing field.”
It is vital that the Minister addresses those concerns.
I would like to take the opportunity to probe further on the enforcement of this measure. We all know that new environmental protections are only as good as the enforcement measures that are put in place. It is envisaged that the regulations will be enforced by local authorities and their trading standards officers. What training and guidance will be given to those officers? At the moment, I am not satisfied that they will have the resources to police the microbead ban, given the existing pressures on that service and the cuts it has endured.
I am uneasy about the assertion that non-compliance rates are expected to be so low that, after the initial £38,000 cost of the familiarisation year, enforcement will cost only £660 a year. Although I was pleased to read in the impact assessment that
“72% of major cosmetics companies are expected to have ceased to sell cosmetic products containing microbeads by 2017,”
I am of course concerned about the remaining 28%.
The Environmental Audit Committee specifically drew attention to the problem of labelling. It is currently not possible to tell from packaging whether a product contains microbeads. If the ban is to be upheld, enforcement bodies will need greater clarity about what cosmetic products contain without having to resort to chemical analysis, which I imagine would cost significantly more than £660 per annum. Can the Minister clarify whether further thought is being given to product labelling? That would help both consumers and enforcement agencies to make informed decisions.
Although I welcome the SI and we will not object to it, it is a shame that the Government are satisfied with being able to say that it is the first piece of legislation of its kind, rather than that it is the best and most comprehensive ban it can be. More broadly, I read the fairly scant detail on the BBC today about the Secretary of State’s anticipated four-point plan to tackle plastic pollution. I hope that, following the plastics consultation announced in the Budget last month, there may be opportunities to go further in dealing with what is undoubtedly one of the biggest environmental challenges of our time.
Kerry McCarthy (Bristol East) (Lab)
It is a pleasure to see you in the Chair for what I believe is your first outing, Mr Austin. I hope you will find it a rewarding experience that you will want to repeat.
I, too, support the SI, although a little reluctantly. As my hon. Friend the Member for Halifax said from the Front Bench, it is not ambitious enough. As part of our debates in the Chamber last week about the European Union (Withdrawal) Bill, we discussed whether the House should have the ability to amend statutory instruments. If that had been possible, I would have tabled amendments to the draft regulations. Given the scale of the microplastics problem, we need to be ambitious and radical, and we need to be ahead of everyone else.
Other countries are introducing similar bans. The USA has the Microbead-Free Waters Act of 2015, which covers only rinse-off products. New Zealand is bringing in a ban on the sale of personal care products containing microbeads from July next year, and Taiwan is doing the same. Canada plans to ban microbeads in shower gels, toothpaste and face wash by 1 July 2018, and in natural health products and non-prescription drugs from 1 July 2019. My first question to the Minister is: have we looked at what Canada is trying to do to see whether we can replicate that here?
It is almost obligatory to mention “Blue Planet” in such discussions. I point out on behalf of my hon. Friend the Member for Bristol West, who is a Whip and cannot speak in the debate, that the BBC’s natural history unit is in her constituency. We both have many constituents who take great pride in being involved in that unit, which is truly the jewel in the BBC’s crown. While I am in self-congratulatory mode, I will also say that the report of the Environmental Audit Committee—of which I am a member—on microbeads was trailblazing and important. I will now get on to the less self-congratulatory and more depressing stuff.
Our starting point should be to look not at what is easy to ban but at the harm done by microbeads and all microplastics. I have no idea how these things are calculated, but it is estimated that there are 5.25 trillion plastic particles weighing nearly 269,000 tonnes in the ocean, and we have heard that 100,000 microbeads can be washed down the sink in a single application of a rinse-off product. For example, Neutrogena’s Deep Clean, which is an exfoliating scrub, has 300,000 microplastic ingredients in just one tub. That is the scale of the situation.
When microplastic gets into the ocean, small animals mistake it for food and risk starvation either because they believe their stomachs are full—instead their stomachs are full of plastic—and they starve as a result, or because of blockages in their intestines, causing death. Microplastic can also be ingested by filter feeders such as bristle worms, sea stars, sea urchins, sea slugs and many other things that my researcher listed for me but that I cannot pronounce so will not read out. They become prey for larger marine creatures, so the microplastic accumulates further up the food chain and eventually ends up in the human food chain too.
Microplastic also starves coral species by clogging their digestive systems—in essence, starving the coral reduces its growth and spread. We know about the plight of coral reefs because of ocean acidification and ocean warming, but microplastic is another factor that causes great harm. As has been said, over time microplastics will accumulate toxins attracted to their surface—pesticides, flame retardants, motor oil and other industrial chemicals —so they too are entering the food chain.
The scale of the problem is immense. As my hon. Friend the Member for Halifax and organisations such as Greenpeace have said, the ban should not be limited only to rinse-off products. It should also include products such as sunscreens and deodorants. The Minister said that there is not much evidence that they enter the water—she said that they are wiped off—but clearly, if people go for a swim wearing sunscreen and deodorant, that will get into the water pretty quickly or when they have a shower back in their hotel room.
There are plenty of products that people can use that do not contain harmful microbeads. I find this frustrating. There is a ban on animal testing of cosmetic products. It is easy to find alternatives to such products and the same is true of products containing microbeads. Why do we let the market simply lead the way and say that consumers are able to choose? Labelling is an issue and consumers may not necessarily know what they are really buying. Why do we not take the example of the best companies, which have phased out such products, and say that everyone else has to follow suit?
Following the ban on testing cosmetics on animals, people are now pushing for a ban on such testing with household products, and I think that the same should apply to products containing microplastics. Although the UK cleaning products industry says that it does not use microplastic ingredients in any product, that is not true of products of non-UK manufacturers that can be sold and used here. I do not see why the ban cannot be extended to them.
The Plastic Soup Foundation, which campaigns for plastic-free oceans, also supports a ban on microbeads in leave-on as well as rinse-off products. It has called for reconsideration of the exemption of polymers from REACH—the registration, evaluation and authorisation of chemicals scheme. The Minister has appeared before the Environmental Audit Committee to talk about what happens to REACH post-Brexit, which is a whole other can of worms that we could open. Does she think that polymers should be included under REACH or whatever the British equivalent will be once we leave? The foundation is calling for the European Union to impose and enforce a ban on all polymer ingredients that are persistent, bioaccumulative and toxic to ecosystems.
I have used the term “microplastics” rather than “microbeads” throughout because, if we look at the harm they can cause to our aquatic environment, we will see that it is pretty meaningless to separate the two. Only a very small percentage of microplastics in our oceans are made up of microbeads. A 2016 Japanese study put the figure at 9.7% and European studies have put it as low as 0.1% or, at the most, 4.1%.
Most microplastics in our oceans are larger plastics that have broken down from bottles, packaging, old fishing nets and so on—in other words, anything that has not been recycled or disposed of correctly—so a ban on microbeads is clearly not enough to make significant inroads into reducing plastic pollution in the ocean. We must look at the bigger picture, tackle the amount of single-use plastics used and produced, introduce a deposit return scheme for plastic bottles and so on.
The Environment Secretary announced a four-point plan today, but the slowness with which the Government are approaching this agenda is frustrating. I have asked questions in the Chamber about what they are doing about plastics pollution, and they have very proudly said, “We put the tax on plastic bags and are introducing a ban on microbeads,” but that is simply a drop in the ocean. We must go much further, much more quickly.
Mr Ranil Jayawardena (North East Hampshire) (Con)
It is a pleasure to follow the hon. Member for Bristol East, whose passion is beyond question. It is also a pleasure to follow not only the Minister but the hon. Member for Halifax, and to hear the consensus in this arena. I must confess that I have been watching “Blue Planet II” delayed, having recorded it, but I watched the final episode yesterday. People want us to tackle this issue in this place, and I am pleased that the Government are taking clear action to do just that.
I want to make three brief points. I note that the industry has taken voluntary action to deliver much change already. Why? Because consumers have acted. Consumer power is absolutely critical in this sphere. We all know that, as we seek their support at the ballot box, and we must demonstrate to them through action such as this that we are listening to their views. That is what we are trying to do with these regulations. It is great news that more than 70% of producers have already removed microbeads. The Government have engaged with the industry and consumers have made their views known to it, but we must do more. These regulations are a great next step.
We do not want overburden business and consumers. We want to ensure that consumers can afford the products they need and that businesses are able to adapt, which is why it is great that there are so many alternatives that can be used instead of microbeads. The Government have analysed the issue and I am pleased that they do not expect additional costs as a result of any product reformulation to be any more than zero. It is important that the net impact on suppliers is zero, as we do not want to overburden consumers or put up barriers that prevent people from buying the things they need. The alternatives will therefore be used.
It is positive that the offences created by the regulations are crystal clear. It will be an offence not only to manufacture but to supply. The clarity that the Government have instituted is most welcome not only to consumers across the country but, most importantly in my case, to people across North East Hampshire. I commend the Minister, the Secretary of State and the Government on taking this action.
Vernon Coaker
The hon. Member for North East Hampshire is absolutely right to say that the Committee is unanimous in welcoming these regulations, but clearly we are all impatient. We all want more to be done yesterday. Nobody is being churlish about welcoming these regulations, but it is incumbent on the Committee to challenge the Government to do even more. With that in mind, I welcome the action the Government are taking and their attempts to make progress.
The various notes about the regulations mention protecting the environment, and people have talked about “Blue Planet II” and so on, but this is not about protecting the environment; it is about saving the environment. We are at a crossroads as a country and globally, and we have to make some clear decisions. Unlike the hon. Gentleman, I have not watched the last episode of “Blue Planet II”, which deals with some of the major environmental consequences. One can watch it and feel that the situation is absolutely terrible and unbelievable and that we have to do something about it, but that is not enough. We are all shocked and horrified, which is why it is good that the Government have introduced these regulations.
The Minister was right, as was my hon. Friend the Member for Halifax, about encouraging consumer confidence. Consumers can make a huge difference, but they need information, so labelling is important, as it is in many areas, in enabling people to make particular choices when they go into a shop.
The Minister talked about our setting an example to other countries, which is absolutely right. Will she say a little more about how we intend to do that? We can do it through the various international bodies we belong to, notwithstanding Brexit. We can do it through the United Nations. However, the Government need a plan for how they intend to set the example. The regulations apply to England. I understand the devolved nature of these matters but if we are talking about a UK-wide approach, will the Minister explain how our actions relate to those being taken by Scotland, Wales and Northern Ireland?
I want to say something to the hon. Member for North East Hampshire: is it not disappointing that, given the outrage in this country and the way in which everybody speaks about the need to protect the environment, not every single major cosmetic company has already taken voluntary action? That is not only disappointing; it is absolutely incredible. There are major cosmetic companies on the list. There is no secret about which have signed and which have not, because the information is on the impact assessment. It is brilliant that 70% have done so, but why not the other 28% or 30%? It is astonishing. The managing directors and shareholders will have stood up at their board meetings and talked about their social conscience and the need for companies to reflect on their social responsibilities. I bet many of them have watched “Blue Planet”, but that is not enough. That is why I welcome the regulations: they say to the small number of companies—just over a quarter of them—that have not voluntarily moved that we are going to legislate.
I hope this resonates loud and clear: it is not good enough in 2017—nearly 2018—for major companies that make large sums of money to ignore their social responsibilities when it comes to something that every single person in this country demands that we do more about. The Minister should name those companies—I will not do it, unless she wants me to do so—that are listed in the public information available to the Committee in the impact assessment. Big companies have not acted and they should be held to account.
Catherine West (Hornsey and Wood Green) (Lab)
Does my hon. Friend agree that ordinary citizens feel a real sense of urgency when they watch those programmes and become educated about the environment? However, there is a real lack of ambition in the extent of this proposal and in the industry’s willingness to match how passionately people feel about this.
Vernon Coaker
My hon. Friend is absolutely right, and that was the major contribution I wanted to make. We can talk about that passion for reform and say that it is a good thing. The 70% of the major cosmetics companies that have already taken action should be complimented and held up as examples of what can be done. They obviously have to make a profit and do all the things we expect in the market economy we live in. However, as I say—I cannot labour this point enough—big companies have a social responsibility. It is good that the Government are bringing the regulations forward, but in a sense it is not only disappointing but makes one deeply ashamed of some of the ways in which people operate. They watch these environmental programmes, see animals tangled up or being poisoned and feel as affected by it as we all are, yet they take decisions in those companies that fail to recognise those consequences.
I will make a couple of other points, which were also raised by my hon. Friend the Member for Halifax. Will the Minister say a little more about the plastic microbeads not included in the scope of the regulations? Will she also say a little more about the further work that will be done by the Hazardous Substances Advisory Committee to see what action can be taken on other categories of products that might contain microbeads? I think all of us want to see that done as quickly as possible.
As the Minister will know, the impact assessment talks of 680 tonnes of microbeads used each year in the UK. If each microbead is less than 0.5 mm in size, goodness only knows how many microbeads must be needed to make 680 tonnes; I do not even know how they would measure that. Anyway, it must be an incomprehensible number, and that is just for usage in the UK each year. Has the Minister made any assessment of how much the regulations before the Committee will reduce that 680 tonnes? I am one for concrete examples, and it would be interesting, if that amount has somehow been measured as 680 tonnes, to know whether there is a scientific estimate of what the reduction in that amount will be.
As I understand it, some major retailers have said that they will not sell their own brands from now on. In the time between now and when the regulations come into effect, will they still be able to sell brands other than those they have manufactured? In other words, can they stop selling their own brands but sell products made by somebody else?
I see it will be 21 days from when the regulations are made before many of them come into effect, and 60 days for the other bits. Will the Minister say a little more about how quickly, after the regulations come into force, we can expect trading standards to actually use the powers and take action against people who might not be adhering to the legislation? In other words, it is clearly 21 days—or 60 days for some—until the regulations come into force. How long does the Minister think the transition phase will be, between day one when the regulations come into force and every single one of those other 28% of companies complying with the legislation and not selling products containing microbeads?
The regulations make one think about the consequences for human health if sea creatures are eating these things. That point is beyond the scope of the regulations, but it is worth making. I will finish where I started. I hope that my remarks are in no way seen as my saying that the regulations are not important, because they really are. As my hon. Friend the Member for Halifax said, the Opposition support the regulations; I and other Committee members clearly support what the Government are doing on this, and there is clearly more work to be done on what is not included in the regulations.
The Government and Parliament need to use the regulations as an example of the sort of legislation that Parliament will pass if industry and others fail to put their own house in order. It should act as a wake-up call. It is not good enough to be horrified; people need to act. They need to act now.
Dr Coffey
I will try to restrict my reply to the regulations. I could wax lyrical about marine litter and microplastics for a long time, but I assure the hon. Member for Halifax that if the particles in wax are less than 5 mm, they are included in the scope of the ban.
With regard to the definition of plastic, REACH does not define what plastics are but defines individual products. We felt that was not an effective way to achieve our aim, so the broader, well-known definition of plastic is used to ensure that we cover every single product. With regard to what products microbeads are used in and looking at other countries, as I articulated earlier, the very fact that we are banning any plastic particle less than or equal to 5 mm—we are not saying that it is only those microbeads that have a particular effect that are banned—is going further than the other countries mentioned. For the sake of doubt, nor have we limited the scope of what a rinse-off product is; it includes, but is not limited to, shower gels, body washes, intimate washes, liquid soaps, solid soaps and beaded hand cleaners. That will include things such as the Neutrogena product but also industrial products. Our farmers use Swarfega and similar, and the same will happen there. I could go on with a variety of things, including toothpaste, mouthwash, depilatory creams and gels, and similar elements.
We have asked the Hazardous Substances Advisory Committee to review the issue—the hon. Lady referred to this—of leave-on toiletries that can be absorbed or shed and are not designed to be washed off. I do not have a specific timeline for that at the moment, because the other thing we asked for in the consultation was a wider view on other products. The challenge with microplastics is that they extend to many sources. For example, the recycling of a lot of our plastic bottles goes to create things such as synthetic fleeces, which are popular with vegans because they are a way of keeping warm without using wool. Of course, they are also used extensively by people who are not vegans.
Dr Coffey
No. That is another example of products that have become part of everyday life. However, when they go through a washing machine, microfibres and microplastics are released. The regulations also extend to things such as tyres, because in tyre wear we see microplastics generated, washed on to the road, then into our water courses and so on. It is a challenge across a wide range of products. In particular, we focused on this because we know the evidence is already there. We know that our existing sewage treatments cover particles from about 6 mm upwards, so this is a specific way to try to address the problem by stopping at source the very generation of microbeads in products that are widely used. We wanted to tackle that.
If the hon. Member for Halifax has evidence that cleaning products with microbeads are available, she should please let me know and we can look at that. So far, the evidence we have seen is that no such cleaning products are available for sale. We need to ensure that, dare I say it, we regulate to address the problem in hand and not just create regulations for their own sake.
With regard to the devolved nations, yes, the consultation was UK-wide between the four Governments. We cannot dictate the processes by which they bring the ban into effect, but we are working with them to try to ensure that we coincide the ban that will come in due course.
As the hon. Member for Gedling knows, the 21 days will kick in from when the regulations are voted through the House—I think they have gone through the House of Lords today. Then, in essence, manufacture will become an offence, and then sale will become an offence. I suggest to the Committee that it will become more difficult for people to buy such products for resale in their shops. Of course, today the products are legal, so people can choose to sell them but, as we have seen, many companies have already taken action.
I point out that the regulations also cover the import of products, so if they are imported they still cannot be sold—that deals with that challenge. In terms of international actions, it might surprise the Committee to know that we had to get permission from the European Union and the World Trade Organisation. We initiated that on 28 July. We had to have a three-month process for objections, and there were none. We also have to go through other regulatory processes where we make the case, which is one of the reasons it takes so long. I think it was my hon. Friend the Member for Camborne and Redruth (George Eustice) who brought the issue to the attention of the Environmental Audit Committee when giving evidence some time ago. Members are right to pay tribute to that Committee, but that is an explanation of why it takes quite so long to reach the point we have got to today.
I do not think the regulations are necessarily the end of the process. I am sure that the Committee will want to be assured that we are taking appropriate action. We are addressing wider issues of microplastics getting into the environment. We need to continue to work with industry to ensure that it has time to develop alternatives.
The 680 tonnes is the amount used in cosmetics, and we recognise that not all of it ends up in the marine environment. I would not want to throw out a figure just to satisfy the hon. Member for Gedling. The point is that we are removing these microbeads at source so that there is at least a reduction from what we have today.
Dr Coffey
I think I have covered all the questions that I have been asked so far, and I recognise that the hon. Gentleman did not want to be churlish. We are going to press on and try to pass the regulations today, and I hope that they will then go through the House.
We have considered the regulations at considerable length. They are a good step and they are the toughest ban announced in the world so far, to the best of my knowledge. Enforcement will be down to local councils, but we believe clearly and strongly that manufacturers will know that it is an offence to create microbeads. Individual large stores and our wholesalers, from which smaller stores often buy their products, will also know that it is an offence to sell these products. I am confident that the supply chain for these products will collapse. I commend the regulations to the Committee.
Question put and agreed to.
Resolved,
That the Committee has considered the draft Environmental Protection (Microbeads) (England) Regulations 2017.
Ministerial Corrections
Education
(7 years ago)
Ministerial CorrectionsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Matt Rodda (Reading East) (Lab)
The Secretary of State for Education (Justine Greening)
Teacher numbers are at an all-time high: there are 15,500 more teachers than there were in 2010; postgraduate recruitment is at its highest level since 2012-13; and in 2015-16 we welcomed back 4,200 teachers into the classroom, which is an 8% improvement on the 2011 figure. However, we are absolutely not complacent; we continue to invest in teacher recruitment and are actively addressing the issues that teachers cite as a reason for leaving the profession.
[Official Report, 11 December 2017, Vol. 633, c. 13.]
Letter of correction from Justine Greening:
An error has been indentified in the response that I gave to the hon. Member for Reading East (Matt Rodda) during Questions to the Secretary of State for Education.
The correct response should have been:
The Secretary of State for Education (Justine Greening)
Teacher numbers are at an all-time high: there are 15,500 more teachers than there were in 2010; postgraduate recruitment is at its highest level since 2012-13; and in 2015-16 we welcomed back 14,200 teachers into the classroom, which is an 8% improvement on the 2011 figure. However, we are absolutely not complacent; we continue to invest in teacher recruitment and are actively addressing the issues that teachers cite as a reason for leaving the profession.
Women and Equalities
(7 years ago)
Ministerial CorrectionsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Gerard Killen
Does the Minister accept the figures contained in the “Intersecting Inequalities” report by the Women’s Budget Group and the Runnymede Trust, showing the disproportionate impact of tax and benefit changes on women from black and minority ethnic backgrounds, and will the Government issue an official response?
Justine Greening
I am aware of that work. Part of the challenge is that we need to see much more clearly the broader picture in relation to how Budgets and Government decisions affect BAME women. The analysis that the hon. Gentleman mentions does not take into account the impact of the national living wage, the changes we have made to childcare—introducing 30 hours’ free care—the work that we are doing on reducing the gender pay gap, the introduction of shared parental leave or the introduction of increased flexible working. The Institute for Fiscal Studies has been very clear that
“what is possible falls a long way short of a full gender impact assessment”,
and that is the underlying weakness in the analysis. [Official Report, 23 November 2017, Vol. 631, c. 1167.]
Letter of correction from Justine Greening:
An error has been identified in the response I gave to the hon. Member for Rutherglen and Hamilton West (Gerard Killen).
The correct response should have been:
Gerard Killen
Does the Minister accept the figures contained in the “Intersecting Inequalities” report by the Women’s Budget Group and the Runnymede Trust, showing the disproportionate impact of tax and benefit changes on women from black and minority ethnic backgrounds, and will the Government issue an official response?
Justine Greening
I am aware of that work. Part of the challenge is that we need to see much more clearly the broader picture in relation to how Budgets and Government decisions affect BAME women. The analysis that the hon. Gentleman mentions does not take into account the work that we are doing on reducing the gender pay gap, the introduction of shared parental leave or the introduction of increased flexible working. The Institute for Fiscal Studies has been very clear that
“what is possible falls a long way short of a full gender impact assessment”,
and that is the underlying weakness in the analysis.
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Stop HS2 Phase Two in Trowell
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Enslavement of Black Africans (Libya)
(7 years ago)
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Paul Scully (Sutton and Cheam) (Con)
I beg to move,
That this House has considered e-petition 205476 relating to the enslavement of black Africans in Libya.
It is a pleasure to serve under your chairmanship, Mr Walker. I would like to read the petition into the record. It reads:
“Put pressure on Libya to take action to stop enslavement of Black Africans.
CNN has released video footage of black Africans being sold into slavery in Libya. I am asking the UK government to put pressure on the Libyan government to take immediate action to stop these criminals from selling more people, to set current prisoners free, arrest the criminals and end this.”
I am delighted to welcome the petitioner, Constance Mbassi Manga, who has done a fantastic job in raising this issue and getting so many signatures in such a short space of time. I am delighted that she is able to join us today.
As of this morning, 265,272 people had signed the petition within only about three weeks of it going live, which is a real testament to people’s strength of feeling. It is interesting: the likes of Cara Delevingne, Naomi Campbell and Rihanna, and a whole load of rappers who are far too cool for me to even know who they are, have taken up this issue, put it on social media and shared it. All of that, including the petition system, is really part—not the end—of a campaign to make people aware of the horrific things going on in another part of the world that they might otherwise not have been aware of at all. Hopefully, as well as raising awareness, we can start to effect change.
It was international Human Rights Day a week last Sunday. A number of us were out and about, raising issues; I was talking about the situation that the Rohingya Muslim community face in Burma, the Tamils, the Ahmadiyya Muslims and a number of other issues that are close to me and to my constituents, given the various diaspora groups in my constituency. Only a week later, we are talking about something that we thought had long since passed. When the Prime Minister was Home Secretary, she brought in the Modern Slavery Act 2015—a fantastic achievement—which recognised that slavery still existed in hidden pockets of this country. However, this is not hidden; it is absolutely brazen and out-and-out across parts of Libya and its migrant routes. It has to stop.
I was chatting to the Minister a little while ago—I do not know if he will remember this—and we shared the view that when people believe that another group of people are subhuman, there is no depth to which they will not stoop in their treatment of them; they are treated worse than animals. People started being aware of this situation when the International Organisation for Migration started to hear stories and went to document people’s experiences, write reports and share what those voices were saying. However, it was only when CNN covered the issue a few weeks ago that it really came to the public’s wider awareness.
I want to read one piece of documented evidence from the IOM to illustrate what is happening. One of the operations officers in Niger reported on the rescue of a Senegalese migrant. He referred to him as SC, to protect his identity. SC was returning to his home after being held captive for months.
“According to SC’s testimony, while he was trying to travel north through the Sahara, he arrived in Agadez, Niger, where he was told he would have to pay 200,000 CFA—about $320—to continue north towards Libya. A trafficker provided him with accommodation until the day of his departure, which was to be by pick-up truck.
The journey—over two days of travelling—through the desert was relatively smooth for this group. IOM has often heard from other migrants on this route who report seeing the remains of others abandoned by their drivers—and of trucks ransacked by bandits who siphon away their fuel.
SC’s fate was different. When his pick-up reached Sabha in south-western Libya, the driver insisted that he hadn’t been paid by the trafficker, and that he was transporting the migrants to a parking area where SC witnessed a slave market taking place. ‘Sub-Saharan migrants were being sold and bought by Libyans, with the support of Ghanaians and Nigerians who work for them’”,
the IOM reported.
John Howell (Henley) (Con)
My hon. Friend is making an excellent speech. He mentioned Nigeria; when I visited it as the Prime Minister’s trade envoy, I had a discussion about this problem. We all agreed that if we did not help to get sub-Saharan Africa right, the catastrophe waiting to happen in Europe would be colossal, as more and more Nigerians put themselves in the hands of unscrupulous traffickers on the way to Libya and the Mediterranean coast. Does he agree that that is a realistic view of the situation?
Paul Scully
I understand my hon. Friend’s expertise and knowledge of the area and totally agree with him. There is a real risk. We can tackle the atrocities of the slave trade in Libya, and Libya’s power vacuum, but ultimately the biggest threat to that part of the world and many others is migration—and not necessarily just migration through conflict. Economic reasons, climate reasons and any number of other reasons are moving such a mass of people, which causes other situations.
Royston Smith (Southampton, Itchen) (Con)
On the power vacuum in Libya, the UK Government continue to support the Government of national accord, yet we hear that these things are becoming very much worse. Would it not be right for the UK to consider whether the Government of national accord are perhaps not the answer?
Paul Scully
I am grateful for the intervention. I will be interested to hear from the Minister on we can do to work towards democratic elections, and to create a mainstream Government in Libya, which clearly has not had one for many years. It is only by having a mainstream, democratically elected Government that we will be able to have a long-term view, whichever party makes up that Government. It will not necessarily be for us to pick a horse, run the country or tell it what to do, but we can help support it. We can work with the African Union and a local offering to help Libya create its own destiny and future, which hopefully will be much safer and a lot more secure.
Let me get back to SC. He was bought, and then brought to his first prison. The IOM said it was
“a private home where more than 100 migrants were held as hostages. He said the kidnappers made the migrants call their families back home, and often suffered beatings while on the phone so that their family members could hear them being tortured. In order to be released from this first house, SC was asked to pay…about $480…which he couldn’t raise. He was then ‘bought’ by another Libyan, who brought him to a bigger house—where a new price was set for his release…about $970…to be paid via Western Union or MoneyGram to someone called ‘Alhadji Balde’, said to be in Ghana.
SC managed to get some money from his family via mobile phone and then agreed to work as an interpreter for the kidnappers, to avoid further beatings. He described dreadful sanitary conditions, and food offered only once per day. Some migrants who couldn’t pay were reportedly killed, or left to starve to death.
SC told IOM that when somebody died or was released, kidnappers returned to the market to ‘buy’ more migrants to replace them. Women, too, were ‘bought’ by private individuals—Libyans, according to this witness—and brought to homes where they were forced to be sex slaves.”
It was Nima Elbagir and CNN’s groundbreaking report, and those pictures, that really brought the situation home to so many people in the west. CNN heard from its contact that two auctions were going on at the same time. Some people in the Libyan Government would say that those things happen only sporadically, but on this occasion there were two at the same time, and the one that was filmed was an overflow auction, because there were so many people to be sold. There was also a big buyer in town wanting to buy people—that is what I said: “buy people”—as commodities or merchandise, to work on farms. It is atrocious, and while I am speaking I am reflecting on the words I use. That episode brought the matter home. Officers from the International Organisation for Migration said:
“What we know is that migrants who fall into the hands of smugglers face systematic malnutrition, sexual abuse and even murder. Last year we learned 14 migrants died in a single month in one of those locations, just from disease and malnutrition. We are hearing about mass graves in the desert.”
The total population of migrants in Libya, based on estimates provided by embassies, is about 750,000, mainly coming from Egypt, Niger, Sudan, Nigeria, Bangladesh, Syria and Mali. Previously, under the Gaddafi regime, there were about 1.1 million; I think that that was the estimate. They were predominantly there as cheap labour. Of the 750,000 who are there now, about 450,000 at least do not see Libya as their final destination. They see it as being on a migration route to Europe and beyond. Those are the people in connection houses, who have been trafficked. They are the people who are beaten and whipped with wires—hundreds of thousands of people. They experience extreme insecurity in Libya, including arbitrary arrest by non-state actors, detention for indefinite periods of time, bonded labour, harassment and general exploitation.
There were other pictures on CNN of not the auction but the detention centres. That aspect of the matter is of huge concern, and I want to ask the Minister for his views. The people held there share small mattresses, and are effectively in a cage. That brings me back to what I said when I began my speech: they are treated worse than animals. How can we have reached a situation where that is anywhere close to the case?
The 450,000 people who come through Libya, seeing it as part of their migration route, go to the north coast, to a crossing point, pay another trafficker to get them into a boat, and go predominantly to Italy—to Lampedusa, a small island that simply cannot cope. I went, as a member of the Council of Europe, to Lesbos, to see some of the hotspots there where the Syrian refugees come from. There were a number of north Africans there and some were protesting and throwing things at the bus I was on, wondering why the Syrians were getting preferential treatment. Having seen what they go through to get there, it is possible to understand their concern.
We need to look at how the Italy-Libya deal is framed. I understand that it is a bilateral arrangement supported by the EU, but that it is being contested in the Libyan courts by human rights organisations based in Libya. I want to ask the Minister how robust the memorandum of understanding between the countries is, when there are reports of Libyan coastguards taking bribes to release migrants to traffickers. A second question leads on from that. The Department for International Development is doing fantastic work, as it tends to do. It is a world leader in the aid and support it gives. However, it is supporting more than 20,000 emergency interventions, involving healthcare, psycho-social support, hygiene kits and safe shelter. Can we be sure that we have robust accountability, to ensure that any support we give is not being fed into and supporting the cycle of trafficking, and that it is focused absolutely on the things I have specified?
It is good to hear that the IOM has managed to up its repatriation flights. The target originally was for 1,000 people a month to be taken back to their place of origin; that has gone up, and it is expected that 15,000 people will be repatriated to their original country this month alone. That is a good sign of the direction in which things are going.
I wonder whether DFID can get involved, either directly or through leverage of support from elsewhere, in trying to get accurate numbers. Together with the power vacuum, a problem that hampers what is being done is the fact that no one really knows the extent of the problem. There is work using various methodologies, but there is more to be done to get accuracy. Can we, for example, build up a phone network so that families from around the relevant part of sub-Saharan Africa can report in and talk about their loved ones—where they are, what has happened, the last time they saw them, and so on—so that we can begin to get more accurate figures?
Of course the UK Government will have a competing agenda. We want accountability, clearly, but as my hon. Friend the Member for Southampton, Itchen (Royston Smith) says, there is a need for stability and preparation for elections; we need to give support on the route towards elections, to get rid of the power vacuum. It is only a question of enforcement—everyone knows that slavery is illegal already, and there is nothing to be done to change the rule, but someone is needed on the ground to arrest the people in question and hold them to account, bringing them to court and applying the full force of the law to them. If, for any number of reasons, there is no one on the ground to do that at the moment, it will not happen.
Royston Smith
Slavery these days is completely different from the way people would have imagined it some years ago. Many of the people who are trafficked get themselves to the traffickers to get somewhere else. Should we be looking at the possibility of DFID or others educating people in their country, village or town of origin, so that they do not embark on the journey in the first place? Does my hon. Friend agree that that would be helpful?
Paul Scully
I absolutely agree, because it is a matter of pull factors, and stopping people having to make the choice to migrate over such a treacherous route. They have so far to go: there are human traffickers; people may just be ditched at the side of the road as I have described, or sold out of a bus in the back of a car park, and then sold on again and beaten with wires; they may then be on the Mediterranean on a boat—and the technique used with those small boats is that as soon as a navy cutter comes to the rescue, they are deliberately capsized to tip the people in the water. The rescuers have to pluck them out of the water; they cannot just pull the boat somewhere. To return to the Greek example, while I was there I met a Yazidi Christian—someone on a different migrant route—with a 10-day-old child. They had gone through that whole process. How the child, who by then was aged three months, was still alive, I shall never know. Those are the most treacherous circumstances, so anything that can be done to stop the migration in the first place must be the only course of action.
John Howell
I want to pick up on the previous intervention. I think that there is a huge role for British companies in educating people in their country. I went to see Unilever in Nigeria; it has eradicated modern slavery from its whole supply chain, and that has had a big effect in the effort to convince Nigerians that they should stay and make something of themselves in their own country. Unless we do that, we shall run into a lot of problems.
Paul Scully
My hon. Friend makes a typically insightful point, and it is right to use some of our big companies working in the areas in question to provide education and secondary industries. As we move into looking at trade agreements with Africa but while we are also a member of the EU, we could seek tariff reduction as well. Obviously a big concern is tariffs on the least developed countries, but with the slightly better-off countries such as Nigeria, the “Everything but Arms” rules do not apply. They are charged a lot in tariffs on coffee and chocolate and similar things, and cannot build up the secondary industries that would help to develop gainful employment, so that people would have a stake in their own area and not feel the need to leave to find a better life.
I have talked about the Modern Slavery Act 2015, and it is nearly 200 years since the Slavery Abolition Act 1833 that William Wilberforce worked for. Only last year there was a remake of the seminal television programme of the book “Roots” by Alex Haley. I watched the original version, but the one I watched last year seemed to be of a time gone by. There have been other fantastic films about slavery that have also really hammered their point home, but they give the sense that “This happened so long ago; isn’t it wonderful that we have stamped it out?”—but we have not; that is the news. It is still going on every day.
I ask the Minister to answer my questions. Finally, what more we can do as a country to support Libya, improve conditions and ultimately end the need for detention camps there?
Lyn Brown (West Ham) (Lab)
It is a pleasure to serve under your chairmanship, Mr Walker. As we heard in the extremely powerful opening remarks from the hon. Member for Sutton and Cheam (Paul Scully), there is incontrovertible evidence that slavery—that brutal and dehumanising exploitation—is taking place in Libya today.
As we know, modern slavery is shamefully common in our world and exists in our country. However, the images and words that have come out of Libya in recent weeks are shocking and have historical resonance: the victims are black Africans and the people who have enslaved them are not. The people who have been bought and sold in Libya have been violated in so many ways; they have experienced much violence and they have been betrayed and cheated at every step of their journey.
The personal stories make clear that the victims have paid, borrowing and scraping together money to start a journey to Europe because they believed an evil deception—but that was only the start of their exploitation. They are left utterly alone, terrified and without support in an unstable foreign country and under the control of people who care only about extracting every penny that they can from their “merchandise”. Foka, a Cameroonian, described the beatings he witnessed and endured at the hands of the traffickers, as he and others were cowed and forced to submit:
“There was torture like I’ve never seen. They hit you with wooden bats, with iron bars…They hang you from the ceiling by (your) arms and legs and then throw you down to the floor. They swing you and throw you against the wall, over and over again”.
Foka’s injuries were still visible when he made that statement.
The traffickers are not only exploiting young migrants through slave labour but making money from ransoms, as we have heard. Sometimes, to coerce a ransom payment, a migrant is forced to call a parent or relative and then beaten while the relative listens. The story of Victory, a young Nigerian man, is illustrative. First, he paid people smugglers, who lied and said they would get him to Europe. He then endured weeks of slave labour in Libya once he could no longer pay them, and he was then forced to find a ransom payment to set him free. His mother had to beg and borrow the money to save his life. Victory’s ransom was more than 1 million Nigerian naira, which would take 56 years to earn on the local minimum wage. Victory had already spent his life savings to pay the people who exploited him, and now his family may literally face a lifetime of debt while his exploiters continue to escape justice.
As we have heard, Mohammed Abdiker, of the United Nations migration agency, said that migrants who fall into the hands of smugglers face
“systematic malnutrition, sexual abuse and even murder…14 migrants died in a single month in one of those locations, just from disease and malnutrition. We are hearing about mass graves in the desert.”
The UN estimates that there are anything from 700,000 to 1 million migrants currently in Libya, with 70% from sub-Saharan Africa. Evidence shows that 30% of adults and 40% of children have been forced to work against their will. That is a massive number. So many people enslaved—so many children.
I would like the Government to outline what we are doing to stop the enslavement and sale of human beings in Libya and the trafficking of people towards the Mediterranean. I understand that France is to work with the UN’s sanctions committee for Libya to identify individuals or organisations involved in trading human beings. That committee can require UN member states to freeze assets owned or controlled by individuals on its list and can impose a travel ban. Does the Minister support that proposal, and will he work to ensure that that committee has all the information it needs?
Action against slave traders must be the priority; they have to be shut down. However, there is obviously a broader context. Large numbers of desperate people from sub-Saharan Africa are stuck in Libya. That was not their intended destination, and it is getting harder and harder for them to move on, partly because of the actions taken by our Government, in concert with many other European Governments, to make it harder for migrants to cross the Mediterranean.
Those actions have generally been taken with good intentions, motivated by a desire to shut down trafficking routes. However, shutting down the traffickers who run routes up and down the Mediterranean is clearly only half done at best; the terrible re-emergence of slavery in Libya is testament to and a consequence of that. If we want to reduce harm by closing those routes, that strategy cannot stop at the shores of north Africa—action needs to be taken in Libya and, equally, in countries to its south.
Social media is a critical tool for the perpetrators of modern slavery. It is how traffickers advertise, spread lies and recruit victims, and it enables them to run their amoral trade. Social media companies, whether they like it or not, have a role to play in disrupting this trade, and I hope the Minister will comment on any conversations he has had with those companies in his remarks.
Paul Scully
The hon. Lady rightly raises social media. However, does she agree that social media has also played a positive role in getting this petition out and this issue raised? The one caution I urge is that some of the photos doing the rounds to raise awareness of the slave trade are actually not related to the slave trade. It is important that, when we share photos, we share accurate photos, which is not always easy to do.
Lyn Brown
I am sure the hon. Gentleman is absolutely right: social media can play a very useful role in our society. However, we need to understand that it can be used by completely unscrupulous people to lure others into slavery and ultimately, possibly, to their deaths. Social media companies have to accept responsibility for what they do and find ways to help us to close down those traffickers.
The UN has understandably requested urgent funding—I presume the Government are considering that request—and 1,300 new resettlement places across the world for the most vulnerable African migrants in Libya. Niger has offered to take that number temporarily before the end of January, but a more permanent solution has to be found. The current situation is simply dire—so many people are vulnerable to slavery and all the abuses that go with it. Those people matter. African lives matter, and they need us to be their allies by taking action to end this today. This is not a situation that we can simply take note of and move on from.
Who these hope-filled, naïve, ambitious, desperate migrants were before they fell prey to the traffickers is no longer important. All are refugees now, needing help and a route out. We could and should do more to help them. I look forward to hearing from the Minister on how we plan to do just that.
Eleanor Smith (Wolverhampton South West) (Lab)
It is a pleasure to serve under your chairmanship, Mr Walker. I want to thank the hon. Member for Sutton and Cheam (Paul Scully) for introducing the debate and the 265,272 members of the public who signed the petition, who include 663 people from my constituency.
I was disturbed to see in November’s CNN footage that two black men were being sold as slaves—I could not believe that that was happening in this day and age, in the 21st century. As black descendants of slaves, we thought that that had been abolished. The footage showed a detention centre where rescued and escaped slaves were staying, and a young man explained his story. I am aware that the Minister has raised concerns with the Libyan Government about the human rights situation in Libya, but how can we be sure that the Libyan Government will do something about it given that they are struggling to establish their own authority?
Afzal Khan (Manchester, Gorton) (Lab)
I have been listening to the debate, and I thank the hon. Member for Sutton and Cheam (Paul Scully) for introducing it. What we have seen is shocking and horrific. At the heart of it is what is happening in Libya. Where we are now is due to poor planning. Does my hon. Friend agree that the Minister needs to do a lot more to help stabilise the situation in Libya? In our various institutions we have a lot of expertise—and we have a special duty, in the light of the role we have played in Libya being where it is.
The other issue is that our friends in the middle east are playing around with their rivalries, and innocent people are paying the price. Again, we should be using our influence to tell them to stop playing rivalry games in Libya. We need to see more stability in Libya and to stop what is happening.
Eleanor Smith
I totally agree. That was not in my speech, so I am glad my hon. Friend added it.
Although the Prime Minister has made tackling modern slavery a foreign policy priority, my question to the Government is: how will they actively tackle human trafficking and modern day slavery in Libya?
John Howell (Henley) (Con)
The number of refugees in the world is colossal; I think it is in the region of 60 million people. It is certainly more than the population of Britain. We need to remember that when we discuss the refugee situation and how to stop making it worse in the future. We have the opportunity in Africa to get the situation right the first time, and I hope we will take that opportunity.
In my intervention, I mentioned that I spend a lot of my time in Nigeria as the Prime Minister’s trade envoy. That is not just about trade; it goes right across the spectrum of political and DFID-related activities that occur in that country. I would like to say a little bit more about the conversations I had the last time I was there, because it is a very good example of how we can get it right if we try.
Nigeria has enormous problems with a terrorist group in the north-east and has contributed hugely to human trafficking in Africa. It has the potential to make an even bigger contribution, which I would not wish to encourage. Why would that occur? Why would people leave their homes and move away from where they live to entrust themselves to unscrupulous people traffickers on the coast of Libya? There are several reasons. One is clearly the terrorist situation in the country. The only way we will deal with that is not a military option but by ensuring that the growth we want to see in the country is shared out across it to the people who are participating in generating that growth. That goes to the heart of the second group of people involved, which is the population at large.
Unless we help to get sub-Saharan Africa right, which means contributing to the activities that Governments want to carry out to improve their countries so that growth can spread more evenly and more people can participate in it, the effect on Europe could be colossal. I mention Europe in that context because that is where we are and the perspective from which we are looking at the situation. We have to redouble our efforts as a Government and with companies there to ensure that that happens.
Many British companies are looking at the market in sub-Saharan Africa, and the Prime Minister’s emphasis on tackling modern slavery is providing an enormous competitive advantage to those companies. They can turn up in the Nigerian market and say, “We fully subscribe to the Prime Minister’s modern slavery agenda.” The people in Africa absolutely rise to that challenge, and it is really heart-warming to see.
As I mentioned, I have been to discuss this issue with Unilever, which is part-Dutch but principally a British company. It has been very successful in stamping out modern slavery from its entire supply chain. That company works, among other areas, in the agricultural sphere, in which many poor people are in need of something to live for and aspire to. It is a great triumph to have got rid of modern slavery, because that is just the sort of thing that will make the country right and ensure that people there have something to live for when they get up in the morning and go to work. I am very pleased to have been able to help with that.
I know there is a lot to do in the world in this area. For instance, there is a crisis that I do not think we have ever talked about in this Chamber: the second largest group of displaced people in the world is actually not in Syria or in Africa, but in Colombia.
I do not underestimate what we have to do to tackle this problem, but unless we are prepared to put the effort into tackling it and making sure our companies do the same, we will never solve it. That will not only be to the loss of Africa, which is an immensely rich and opportunistic continent—I mean that in the nicest possible sense of the word—with so much going for it, but it will also affect us. We all ought to bear that in mind. There is an element of self-interest in this, as there always has to be. By putting the emphasis on this issue and getting it right, we will help to make sure that the African situation does not extend into mass migration, with many millions of people putting themselves into the hands of unscrupulous people traffickers.
Marsha De Cordova (Battersea) (Lab)
It is a pleasure to speak under your chairmanship, Mr Walker. I pay tribute to every single individual who has signed the petition. It is also a pleasure to speak in the same debate as my hon. Friends the Members for West Ham (Lyn Brown) and for Wolverhampton South West (Eleanor Smith).
The recent news coverage of slavery in Libya and the slow and steady stream of harrowing footage emerging from the region, including cameraphone images, have shocked many of us. I have been contacted by a number of my constituents, many of whom identify as being from the African diaspora, who are outraged at what is going on. This is modern-day chattel slavery, and a window into practices that form part of a particularly traumatic collective memory for many communities. That human beings are again going through such horrific violence and injustice in 2017 is deeply concerning.
There has been an international spotlight on these practices since CNN broadcast its footage, but the reality is that they are not new. As more and more migrants make their way towards the Mediterranean, criminal elements have sought to exploit vulnerable migrants. That is of course not unique to north Africa. The trafficking of migrant women and children takes place in Europe as well as on the shores of Libya, but what Libya shows is how such wickedness and criminality can grow amid political turmoil.
The conditions that lead to migrants being exploited will not go away any time soon. Demographic changes on the African continent and climate change will see more and more migrants looking for opportunities in Europe. Just as “Fortress Europe” relied on Gaddafi to detain migrants, we now see a complex partnership between the EU and the Libyan authorities that seems to prioritise protecting European borders over the human rights of refugees and migrants.
Amnesty International has made some key demands to end these practices—demands that I support. I hope that the Government act on them and support Amnesty in its approach to the crisis. First, there is a clear demand by Governments that the arbitrary detention of refugees and migrants in Libya arbitrary. The second demand is that international partners work together to investigate all allegations of torture and other ill treatment of refugees and migrants in Libya, and to ensure that the suspected perpetrators are prosecuted in a transparent and fair trial to put an end to the vicious cycle of abuse. The other demands are for EU states to review how they co-operate on migration policies; to prioritise protecting the human rights of refugees and migrants instead of trapping people in Libya; and to recognise formally the United Nations High Commissioner for Refugees and allow the organisation to carry out its full mandate, including the protection of asylum seekers and refugees.
The stories and images from Libya are shameful, and I hope that the Government act to end these practices. In the words of my hon. Friend the Member for West Ham, African lives matter.
Chris Law (Dundee West) (SNP)
It is a pleasure to speak under your chairmanship, Mr Walker. I begin by thanking those who initiated the petition and have secured over a quarter of a million signatures—an incredible feat. It is vital that we bring this hugely important issue to the forefront in Parliament today, and from what I have heard in the previous speeches, all of us in this Chamber feel very passionate about this matter.
As we have heard today, the world’s most vulnerable people, fleeing war and poverty back home, are being abused and auctioned off as slaves in Libya. According to reports, the trade works by preying on the tens of thousands of vulnerable people who risk everything to get to Libya’s coast and then across the Mediterranean into Europe. That has been described as the deadliest route on earth. The International Organisation for Migration, which provides services and advice on migration to refugees, estimates that there are up to 1 million migrants in Libya, and more than 2,000 have died at sea this year attempting to travel that route.
Most of the migrants in Libya are fleeing armed conflict, persecution or severe poverty in sub-Saharan Africa. Their journey usually begins with a deadly trek through vast deserts to Libya and then involves either braving the Mediterranean sea on rickety boats headed to Europe or struggling to survive in one of the overcrowded detention centres in Libya, many of which are run by smugglers. As a result, many of those detention centres are the scene of widespread torture, rape and forced labour, according to the United Nations. When they get too crowded, people are sold off like goods in an open market. Testimony from the International Organisation for Migration states that
“they get off the bus and they are quickly put into a kind of murder machine, an extortion machine. They are robbed of their possessions…They are forced, they are tortured…And then they are sold. Unbelievable, but they are sold in open, public auctions: $400 for a labouring man, maybe a bit more for a woman who can be put in the sex trade. And this is what’s happening across the country.”
As we have heard today, recent news footage of scenes reminiscent of the 19th century, when the slave trade was rife, shows auctioneers advertising a group of west African migrants as
“big strong boys for farm work”
and referring to the migrants in Arabic as “merchandise”. That disturbing footage has served as a wake-up call for some and has rightly sparked outrage across the globe. Hundreds of thousands of people have now signed the petition demanding that more be done to stop the sale of vulnerable people in Africa. On 9 December, thousands of protesters descended on the Libyan embassy in London in an anti-slavery march. That followed protests across Europe, including in Stockholm, Paris and Brussels.
Libya is by no means unique: modern-day slavery is widespread around the world. It is happening in developed as well as undeveloped countries. There are estimated to be—wait for it—more than 40 million people in modern slavery in the world today. Forty million people; that is just under two thirds of the population of the UK. What is particularly shocking is that it is happening in the open, particularly in Libya, where people can go to a farmhouse, place a bid and end up “owning” a fellow human being.
The UK Government’s response to modern slavery has been slowly improving in the past few years. An example of that is the passing of the Modern Slavery Act 2015, which of course is very welcome. However, it is time for the Government to go further, with concerted, co-ordinated global action, and to lead from the front. Tackling forced labour, modern slavery and human trafficking should be an absolute priority for the UK Government, both here and abroad. I ask the Minister to tell us here today what further steps the UK Government will take in order to lead the international approach to tackling this crisis.
Experts say that reports of slavery coming out of Libya from human rights groups and non-governmental organisations have been falling on deaf ears for a very long time. The UK Government must put pressure on Libyan leaders to stop the illegal markets, and those committing these unspeakable crimes must be brought to justice. We would like to see all UN member states working together to implement and enforce a protocol against human trafficking and slavery. That is not just a moral duty for the UK; it is a duty based on the active role that this Government has played in recent years and in conjunction with NATO in Libya.
This slavery did not come about in a vacuum. The atrocities revealed in the recent footage are the direct result of NATO’s military intervention to topple Gaddafi, which created a lawless society. There are now three Governments: one in the east, one in the west and one backed by the UN, none of which are able to govern. The UK Government had next to no strategy to support and reconstruct post-Gaddafi Libya. Indeed, a report by the Select Committee on Foreign Affairs stated that those failures led to the country becoming a failed state on the verge of all-out civil war. It is against that backdrop that the slave trade is booming. The human rights situation in Libya can be improved only under the stability of a united and representative Government, and the UK Government must work alongside international partners to support UN efforts towards that goal.
Furthermore, the EU goes to great lengths to stop migrants coming into its territory. That even includes training the Libyan coastguard to stop boats reaching Italy. As a partner of the EU, the UK is complicit with the EU as it has pushed to tighten its borders and has not provided alternative safe routes for migrants and refugees.
Amnesty International, in relation to its report published last week, said:
“European governments have not just been fully aware of these abuses…they are complicit in these abuses.”
In other words, it is nothing short of a policy of containment. Amnesty International went on to say:
“European governments have shown where their true priorities lie: namely the closure of the central Mediterranean route, with scant regard to the suffering caused”.
The reality is that that has led to hundreds of thousands of refugees and migrants finding themselves trapped in Libya and exposed to horrific abuses, some of which we have heard about today. We will not be able to put an end to the tragedy in the Mediterranean if we do not create significant legal migration routes. It is also important to address the root causes of the crisis if it is to be resolved. We must ensure that people can find a dignified future in their home country. The UK Government need to work with the international community to co-ordinate efforts to tackle the root causes of large movements of people, including forced displacement, unmanaged migration, human trafficking and, of course, the ever increasing slave trade. Will the Minister therefore illustrate in some detail what steps the UK has taken to influence its EU partners to develop safe routes for people fleeing war, armed conflict and persecution?
In short, what we have heard today is that the reports coming from Libya are of violations of human rights and human dignity on an unthinkable scale, and I am sure that all of us in this Chamber agree that they have no place in our world. It goes without saying that the UK cannot stay silent or stand by in the face of such inhumane atrocities, as it has done in the past and continues to do. It is therefore time for the UK to join the international community and act now through multilateral diplomacy with the EU, NATO and the UN Security Council, where the UK still has significant influence, and to take all measures to end slavery in Libya and help to rebuild and reconstruct a stable and secure country.
Fabian Hamilton (Leeds North East) (Lab)
It is a pleasure, as always, to serve under your chairmanship, Mr Walker.
I would like to start by congratulating, as other hon. Members have, those who organised the petition that has prompted this very important and timely debate, especially Constance Mbassi Manga. I understand that as of 2 pm today, 265,278 signatures had been received, of which 666—I do not know whether that is significant—were from my constituency.
I also want to congratulate the hon. Member for Sutton and Cheam (Paul Scully), who opened the debate. He read us the text of the petition, and it is important to remember what is in that. He talked about the Modern Slavery Act, which other hon. Members have referred to. It is a very important piece of legislation that I hope will help to pave the way for this country being a prime mover in the abolition of slavery worldwide. He also pointed out that what is happening in Libya is not hidden, and it has to stop—all hon. Members have agreed with that. He mentioned the role of the International Organisation for Migration, which I will speak of again in a minute, and talked of the inhumane treatment of human beings who are being bought and sold as commodities. Sadly, 200 years since Wilberforce and the abolition of slavery in the UK, slavery still exists in other parts of the world. The hon. Gentleman also asked what more we can do for Libya.
My hon. Friend the Member for West Ham (Lyn Brown) talked of her shock, and the violence towards and the betrayal of those cheated by an evil deception and left utterly alone and terrified in a foreign country, where they suffer torture, beatings and violence by traffickers. She also talked of the systematic abuse of those migrants and of their murder. The UN estimates that there are about 700,000 migrants in Libya at the moment. It is estimated that 40% of the children are forced into labour, as she mentioned. What are the Government going to do? She said something that has been echoed by many speakers this afternoon: “African lives matter.” All lives matter.
We then heard from my hon. Friend the Member for Wolverhampton South West (Eleanor Smith), who mentioned her shock, as a black descendant of slaves, that this can still be happening in the world. There was also an intervention from my hon. Friend the Member for Manchester, Gorton (Afzal Khan), who said that we have to do something about the state of Libya.
The hon. Member for Henley (John Howell) talked of his role as the Prime Minister’s trade envoy to Libya and, I imagine, the Maghreb countries as well—I do not know.
Fabian Hamilton
Just Nigeria; okay, sorry. The hon. Gentleman asked why people would leave their homes and trust themselves to unscrupulous traffickers in Libya, but we have had the answer this afternoon from many hon. Members who have contributed. He said that unless we get sub-Saharan Africa right, the effect on Europe could be colossal. I agree with him, but it is absolutely vital that we destroy this appalling practice of slavery not just because of the effect that it will have on us in Europe, but for the sake of the welfare of our fellow human beings on that continent.
John Howell
I did make it clear in my speech that we need to get rid of slavery both for the sake of Africans’ lives, and for the sake of our lives. It is a win-win situation.
Fabian Hamilton
I entirely accept that. I do not think that any hon. Member in this room or in this House would condone what is going on, not just because of the effect on us but because of the effect on those individuals, families, communities and nations. I totally accept that.
My hon. Friend the Member for Battersea (Marsha De Cordova) made a very powerful contribution. She talked of the harrowing footage that CNN showed, which shocked us all. She said that her constituents were extremely upset because many of them have that collective memory of slavery, and that she was shocked it was still happening in 2017. She said that these practices are, of course, not new and that this exploitation of the vulnerable has grown under the political turmoil. She also mentioned that climate change had a role in migration, as other hon. Members have done. She asked whether the Government could make their feelings felt on ending the arbitrary detention of migrants in Libya, and also talked of a vicious cycle of abuse.
I am sure that, like the petition organisers, everyone in this House was utterly appalled at the video footage of the apparent slave auction. That was something that we felt had been left behind in the world in a previous century, but sadly and tragically it is very much still with us today.
On its website, CNN talked about the United Nations-backed Libyan Government of national accord, or GNA, who apparently say that they are keen to address violations against illegal immigrants but call on regional and global partners to provide assistance. The website says:
“Libya ‘is going through difficult times which affected its own citizens as well. It is, therefore, not fair to assume responsibility for the consequences of this immigration, which everyone unanimously agreed that addressing this phenomenon exceeds the national capacities,’ the GNA statement read. ‘We affirm again that the practical solution is to address the real reasons that drive people to leave their home countries, treat them and develop final solutions for them,’ it continued.”
CNN went on—this was back in November—to say:
“On Tuesday, Libya’s Ministry of Foreign Affairs reiterated that a committee has been established to investigate the auctions but asked ‘the international community to intensify in a spirit of responsibility and joint co-operation to assist Libya.’”
It says, as we know and have heard this afternoon from many hon. Members, that:
“In recent years, Libya has been flooded by migrants hoping to travel to Europe. The United Nations estimates there are now between 700,000 and a million migrants in the country. Those who have crossed the Mediterranean have shared stories about beatings, kidnappings and enslavement. The UN Secretary-General António Guterres said Monday”—
I guess that is Monday last week—
“he was ‘horrified’ at reports of migrants being sold as slaves, which could amount to crimes against humanity.”
They certainly do, from what we have heard this afternoon. The website continues:
“Guterres called on the international community to unite on the issue and said the auctions were a reminder of the need to manage migration flows in a humane manner that addresses the root causes, increases opportunities for legal migration”—
which has been referred to by many hon. Members this afternoon—and, most importantly,
“cracks down on smugglers…Mohammed Bisher, head of the government’s Anti-Illegal Immigration Authority, said detention facilities are overwhelmed and he urged countries from which migrants travel to take more responsibility. ‘We are 278 million Libyan dinars (nearly $210 million) in debt. We have to provide food, medicine, transportation... If the African Union wants to help, they can help,’ Bisher told CNN. Bisher said Italy has been providing some assistance, co-ordinating with Libyan officials and, in some cases, helping with deportation but more needs to be done.”
The Guardian reports:
“The latest reports of ‘slave markets’ for migrants can be added to a long list of outrages [in Libya]”.
It says that Mohammed Abdiker, IOM’s head of operation and emergencies, says:
“The situation is dire. The more IOM engages inside Libya, the more we learn that it is a vale of tears for all too many migrants.”
It continues:
“Even growing international awareness of the problems migrants face is being exploited. IOM has had credible reports of criminals posing as aid groups that help migrants to lure in people who have escaped or bought their freedom and want to return home.”
How horrific is that, Mr Walker?
“The organisation is working to spread awareness across west Africa of the horrors of the journey through the personal stories of those who return. Though most migrants know the boat trips to Europe are extremely risky, fewer realise they may face even worse dangers in Libya before even reaching the coast.
‘Tragically, the most credible messengers are migrants returning home with IOM help,’ said spokesman Leonard Doyle. ‘Too often they are broken, brutalised and have been abused. Their voices carry more weight than anyone else’s.’”
In the short term, it is clear that action is needed from Her Majesty’s Government, including protests and maybe even sanctions. My hon. Friend the Member for West Ham made some suggestions, as did my hon. Friend the Member for Battersea. We must ensure that the Libyan Government stamp out such practices and that humanitarian assistance is provided for individuals from other countries left displaced and destitute in Libya after the civil war, including, where possible, help to return home.
In the medium term, it is obvious that Libya needs stability and order. It needs to move away from its current lawlessness in which life is cheap and human labour is bought and sold—not in the interests of British corporate investors, as the Foreign Secretary has argued, but in the interests of the Libyan people themselves, to whom we owe an enormous debt.
I would like to mention somebody who is about to leave the Foreign Office: our current ambassador to Libya, Peter Millett, whom I am fortunate enough to know extremely well. Just two and a half months ago, I had the opportunity to meet him in Tunis, where he is based because it is too dangerous for him to be in Tripoli. He briefed me on the current state of lawlessness, disorganisation and effective lack of any governance in the country to which he is supposed to be ambassador. Tragically, and sadly for me, he is leaving the service at the end of December, but I know that he will carry on being an important factor. He will continue to lobby and talk about the horrors that he has seen with his own eyes and about what he thinks can be done. He will be a great asset to our country long after he leaves the service.
That brings me to the long term. It behoves all of us in this House to reflect on the shocking failure to prepare for the aftermath of our intervention in Libya in 2011. I believe that it was a lesson unlearned from Iraq and repeated even while the Chilcot inquiry was conducting its work. It was as a direct consequence of that failure to plan for the aftermath, and the abandonment of Libya to civil war, anarchy and the scourge of Daesh, that so many Africans from neighbouring countries—whether there as mercenary soldiers, migrant workers or refugees from other related conflicts—were left penniless, helpless and defenceless against exploitation by slavery gangs. We must all take our share of the responsibility for their plight. We must do whatever we can now to alleviate it. That is the very least that we can do.
The Minister for the Middle East (Alistair Burt)
It is a pleasure to serve under your chairmanship, Mr Walker. I thank all colleagues who have taken part in this debate, as well as my hon. Friend the Member for Sutton and Cheam (Paul Scully) for opening it. Like everyone else, I also thank those who have worked so hard to raise the petition. I think we would all say that the fact that so few colleagues are here does not reflect the level of interest in the House; this debate has landed on a particularly busy day in the House. I venture to suggest that almost every single Member of the House of Commons would have wanted to listen to the speeches made today, and probably to make one themselves. Those who have done so much work to raise the petition should not doubt that they have done a great job. The way in which the House has conducted itself in this debate and the speeches that have been made reflect colleagues’ concern.
The hon. Member for Leeds North East (Fabian Hamilton), who spoke for the Opposition, did my job in running through the speeches. I thank him; I will not repeat the process because he summarised extremely well what colleagues said. I am coming to the substance of the debate, but I take issue with the statements about the intervention in Libya and the aftermath. I was there; I was the Minister responsible at the time. The hon. Gentleman praised Peter Millett; I know how hard diplomats worked in the immediate aftermath of the events that removed Gaddafi. There were elections. We worked to create a civil administration out of nothing, because Gaddafi had left nothing. There was an absolute commitment by those in Libya. They wanted no boots on the ground. There was a limit to what they wanted from the outside world. We tried. The circumstances are clear now: the efforts were not successful, despite all the work that was put in.
There was no abandonment of Libya, but the depth of the damage done by 40 years of Gaddafi and the failure to create any institutions left a bigger hole than probably anyone understood at the time. There were a series of consequences, for which it is impossible to pin blame purely and simply, beyond on those who created the misery in the first place and who were overthrown. That is of only partial consequence now. What is important is to deal with what is happening at present, and that has been the substance of the debate.
Chris Law
I want to touch on that important point. We learned some painful lessons around Iraq. In terms of our involvement in Libya, was there preparedness and thought about medium to long-term plans and strategies at the end of the conflict, whatever its outcome, or was it a posthumous question at the end of, “Oh God, here we are now—what do we do next?”
Alistair Burt
During the conflict, nobody quite knew how it would end, because the circumstances were happening on the ground, militias were forming and so on. NATO played a part after the Arab League made a presentation to the UN demanding intervention because Benghazi was going to be attacked and people were going to be slaughtered. Let us not forget the reasons why the intervention happened in the first place: the determination to save civilian lives in Benghazi, prompted by the Arab League and the UN, was highly significant.
All the way through the conflict, the sense was “What happens next?” That is why people went in afterwards to seek to build a civil administration and prepare the ground for elections. Those took place, and a Government were established, but the fallout since then has been a combination of pressure from Islamist forces that came into the process afterwards and the inability of those who formed the militias to agree among themselves about how to support the politicians in civil Government. It was thought through, but it could not be imposed.
People themselves must create their own institutions. I remember people at the time praising the fact that there were not boots on the ground determined to do it for the Libyan people—they were doing it for themselves. It was thought through, but for every particular conflict and difficulty, it seems that a new adverse reaction is created, and that is what we are living through now. I will come to that and what we are trying to do, because it is most important.
Anyone who has seen the horrific footage of slave markets in Libya cannot possibly have been unaffected by it; it is appalling. I also put on the record our admiration for the journalists who got the footage. When I saw the pictures of them going into that place, my first thought was, “They’re going to be killed.” How could anyone go into those circumstances unarmed, knowing that the people conducting the auction were who they were and what the outcome was likely to be. If they treated the lives of those whom they were buying and selling with such disdain, what would they think of reporters who were there to expose them? We thank the CNN crew who did such a remarkable job.
We will always remember some of the things that came out of the footage, such as the talk of merchandise, as the hon. Member for West Ham (Lyn Brown) mentioned. The hon. Member for Battersea (Marsha De Cordova) spoke of wickedness, as did my hon. Friend the Member for Sutton and Cheam. We discussed the fact that once someone has a mindset of treating someone else as not human, there is virtually nothing that they will feel unable to do. That has been the scourge of the region and other parts of the world for too long.
The Government share the deep concern and alarm expressed about modern slavery, the formation of the conditions that have produced the migration, and what migrants face in Libya today. As the hon. Member for Dundee West (Chris Law) reminded us, we must not forget that the men, women and children enslaved in Libya typically began their journeys hundreds or even thousands of miles away. They are likely to have fallen foul of traffickers and organised criminal gangs that pay no heed either to the desperate human suffering caused by their despicable trade or to international borders. That is why our work to help the victims of traffickers, prevent others from falling victim to them and shut down the trafficking networks that exploit migrants must be carried out on an international scale, as all hon. Members have said.
Let me first brief hon. Members on the UK Government’s work to tackle modern slavery globally and then focus on the situation in Libya. My right hon. Friend the Prime Minister has identified modern slavery as
“the great human rights issue of our time”.
She sponsored the Modern Slavery Act 2015, which more than one hon. Member has referred to this afternoon. Eradicating modern slavery is one of our top foreign policy priorities. As we know, modern slavery exists here, too, although not to the degree that we saw on those awful videos. It is everywhere, and tackling it is a cause that unites decent people everywhere.
It is not acceptable that slavery still exists in the 21st century. We reckon that this vile trade generates around £150 billion a year for traffickers and organised criminal groups. As a criminal enterprise, it is second only to the drugs trade. Trafficking of people is horrific and criminal, but it generates huge amounts of money and that is why it goes on.
We are pressing for concerted and co-ordinated global action. We are strengthening the international consensus to support migrants, tackle modern slavery and take a comprehensive approach to migration. The hon. Member for Dundee West asked what we were doing internationally. At the UN General Assembly in September, the Prime Minister convened world leaders to launch a call to action to end modern slavery. She also committed to using UN sanctions to target people traffickers and strengthening the ability of Libyan law enforcement agents to tackle these criminals. The hon. Member for West Ham is absolutely correct that if the people responsible can be identified individually, there are sanctions that can be applied. Most of us would like very serious sanctions to be used against them.
We are also doubling our aid spending on modern slavery to £150 million. That money will be used to address the root causes of slavery, strengthen law enforcement capacity in transit countries and provide support for the victims of these horrific crimes. Their ordeal does not end when they are released; it goes on in their memory.
The UK is committed to addressing illegal migration across the Mediterranean, including through work in Libya and further upstream. Hon. Members mentioned the need to bring different elements together; the UK supports a comprehensive approach that addresses the drivers of illegal migration and reduces the need for dangerous onward movements. That includes not only breaking the business model of smugglers and the trafficking rings that prey on the desperation of migrants, but providing vital protection to victims. The UK’s National Crime Agency is working with Libyan law enforcement, enhancing its capability to tackle the people-smuggling and trafficking networks.
Our new £75 million migration programme will specifically target migrants travelling from west Africa to Libya via the Sahel. It will provide critical humanitarian assistance and protection; assist those along the way who may wish to return home; give information about the dangers ahead; and offer vulnerable people meaningful alternatives to treacherous journeys through Libya and Europe. It will also include a scale-up of reintegration support in countries of origin, particularly for those returning from Libya.
The UK is conscious of the links between migration, people-smuggling and modern slavery. We are increasingly building modern slavery programming into our migration work. We have also assisted vulnerable migrants with voluntary returns. UK bilateral funding has helped more than 1,400 individuals to escape the challenging circumstances in Libya and return home. The hon. Member for Leeds North East spoke about the voices of those involved; as the recent programme demonstrated, it is those voices that are most powerful in dissuading others from leaving.
If I may make a wider point, a significant amount of our international development contribution of 0.7% of gross national income is designed to be used in countries where we want to support the provision of alternatives for people who feel that their smartphone shows them a different life. We must not neglect how easy it now is for people to find out what is happening elsewhere. There are safer alternatives to leaving, but that can happen only when international development work of the kind that we are engaged in bears fruit.
Lyn Brown
I am sorry to interrupt the Minister’s flow, because what he is saying is really helpful, but two questions emerge from it. First, the UN has asked for additional funding; does he know of any additional money that we are contributing to deal with the slave trade? Secondly, advertisements are encouraging young people in sub-Saharan Africa to leave their homes in search of a better life via traffickers. Has any contact been made with social media companies to get hold of the people advertising those routes and deal with them?
Alistair Burt
The answer to the hon. Lady’s second question is that I do not know. I pick up on what she says as something new, and I am not aware of any specific action we have taken on it; I am confirmed in that view by a brief glance at my officials. However, it is a really interesting point. I am also not aware of what is being done internationally. As we have all discussed, this is not a problem that the UK can deal with on its own, and no one is asking us to. The point about the process of persuading people and contacting social media is very interesting; social media are capable of so much good, but can cause so much ill when used carelessly. I will look into that matter specifically and ensure that the hon. Lady and other hon. Members are aware of what action we might take.
As the Prime Minister made clear last year, we stand ready to support the UN further. I have no new figures, but a £150 million programme was recently announced and additional money is going through. Part of that goes to UN agencies that we work with on enforcement issues and humanitarian support.
Hon. Members also mentioned Libya’s stability. Ensuring Libya’s stability and helping the Libyan Government of national accord to restore unity, take control of their southern and coastal borders, and rebuild the economy is the best way to tackle the organised criminal groups that are making Libya a transit route for illegal migration. Let me update the House on the present state of affairs in Libya with respect to the Government and reconstruction.
I was pleased that the hon. Member for Leeds North East referred to Peter Millett, who will indeed retire quite soon and who has had the most difficult time in recent years, having been unable to work in Libya. Like the hon. Gentleman, I have visited him, both in the compound in Libya and in Tunisia.
The Government of national accord are supported by a UN resolution. We are working with them and with UN Special Representative Ghassan Salamé on the negotiations to move the governmental process forward, which have reached a critical stage. The Libyan political agreement is being adapted and extended. Ghassan Salamé is spending his time trying to bring the various parties together to put the right names into the presidential council and work through a political process that is exceptionally difficult because of huge vested interests and a degree of distrust between the parties. The UN special representative and our own ambassador have worked so hard to address those difficulties. The ambassador was recently in Benghazi; he was able to get into eastern Libya for the first time in some years and talk to people there.
Libya is still a divided country in many ways, and the political process is absorbing a huge amount of time. Of course, that means that law enforcement agencies on a national scale are very difficult to drive and control, because on the ground both money and guns talk louder than a national Government. We would be foolish to think anything else. We therefore have to continue to strengthen that national Government, so that they have both the authority and the physical ability to enforce what needs to be done about these gangs.
The Libyan Government have indeed been strengthened. I saw Libya’s Deputy Prime Minister recently to express our concern about what the television coverage has shown of the auctions. The Libyan Government had committed to establishing a commission to look further into the issue and see what they could do, and the United Kingdom and other countries need to be clear that we will support the enforcement efforts they need to take. Commissions are one thing, but everybody in this Chamber wants to see some action, which can only be carried out with international support for those who are driving it forward.
To achieve further and long-term sustainable progress, we also need to invest upstream in countries of origin and transit. Africa continues to account for the largest percentage share of UK bilateral official development assistance expenditure allocated to a specific country or region. It received approximately £2.9 billion in 2016, or 51% of our bilateral ODA spend, and much of that money is designed to take away the root drivers of migration. I have no doubt that the determination to do that is strongly shared by every Member of the House, including all those who are here today.
The African Union can indeed play its part. The recent summit agreed to establish a joint European Union-African Union-United Nations migration taskforce aiming to accelerate assisted voluntary returns, to bring sub-Saharan nationals back to their own countries from Libya and to provide resettlement for the most vulnerable, including those we saw in the cages and at the auctions. Again, that can be done only by combined work, and we are engaged in that work. The first meeting of the taskforce took place in Brussels just at the end of last week, and the UK strongly endorses ongoing efforts by the EU, the AU and the UN to address the trafficking and exploitation of vulnerable people upstream in Africa, including the declaration on assisted voluntary returns at the recent EU-Africa summit. We also look forward to receiving further information on the new joint migration taskforce, following the agreement reached at that summit.
Colleagues have mentioned support for Nigeria. So far, the UK has committed £2 million to establish a joint border taskforce in Lagos by partnering with the Nigerian Government. That taskforce is designed to identify and protect potential victims of trafficking, and to arrest and prosecute traffickers in line with international compliance standards. The taskforce’s centre will support and expand on the 335 prosecutions that have already been made by Nigeria’s national agency for the prohibition of trafficking in people, and it is linked to efforts to combat illicit financial crime, including through asset seizures.
We have also announced a further £12 million to tackle modern slavery in Nigeria. That funding will help to support victims, build criminal justice capacity and promote alternative livelihoods. My hon. Friend the Member for Henley (John Howell) was right to say that commercial practices can play a part. Just as companies have been concerned in the past to make sure that fair trade was part of their ethos as they worked to provide commodities, so they must be absolutely and completely vigilant about slavery and illegal trafficking, and there must be the harshest sanctions against those that breach those rules; there is no doubt about that.
I will just deal with a couple of further issues. First, I will make clear it again that we do engage the Government of Libya and the Libyan authorities on the issue of migration and modern slavery. In August, the Foreign Secretary urged Prime Minister Sarraj to respect the human rights of migrants, and as I have said, I raised the human rights situation with Deputy Prime Minister Ahmed Maiteeq just a few days ago. Again, however, we do not underestimate the difficulties that the Libyan authorities face, which can be resolved only when the political situation in Libya is itself resolved.
Humanitarian support is also vital, because we must also deal with that strand of the issue. Since October 2015, we have allocated more than £175 million in response to the Mediterranean migration crisis, including substantial support for Libya. I mentioned earlier that migrants who find themselves in slavery in Libya come from many hundreds of miles away. That is why we have to take a comprehensive approach to migration, addressing the root causes as well as working to alleviate the conditions that migrants face.
We have a flagship programme to address some of the drivers of modern slavery in Nigeria’s Edo state, which is the country’s trafficking hub. As I said earlier, our work with the joint border force in Lagos and the work that I announced earlier also make a difference. We have a new £75 million programme, as I mentioned earlier, focusing on the route from west Africa through the Sahel to Libya. That includes a new £5 million allocation of support in Libya, which was announced today by the Secretary of State for International Development. That is designed to provide humanitarian aid and protection to migrants and refugees, some of whom are in detention, as part of the work we announced at the June European Council.
Also this year, our aid and development programmes have supported more than 20,000 emergency interventions for migrants and refugees in Libya, as my hon. Friend the Member for Sutton and Cheam mentioned in his opening remarks, providing everything from food to healthcare, from hygiene kits to emotional support and safe shelter. We have also provided tailored services for women and girls, to protect them from the heightened risks that they face of trafficking and sexual and gender-based violence.
At the December European Council, the Prime Minister also announced a further €3 million for the EU trust fund for the north of Africa window, which includes countries such as Libya. The funding will be used to protect vulnerable migrants in north Africa, to tackle the root causes of irregular migration and to create opportunities for people to find jobs.
We are committed to ending modern slavery wherever we find it, in this country or abroad. In Libya, that is a complex task. It requires us to convince migrants to build a bright future for themselves at home, which we will do only by helping to strengthen economies right across the continent of Africa. It also requires a Libyan Government to emerge who control all of Libya in the interests of all Libyans, as well as a concerted international effort to put the traffickers behind bars. We are working to accomplish those goals, so that these shocking slave markets can finally be consigned to the past. It also requires the human heart to be changed, so that people are no longer treated as “the other” and no longer can the wickedness of slavery live.
I remember speaking just a few years ago in the Wilberforce debates, as we discussed the passage of our anti-slavery legislation, and I realised even then, as we spoke to different audiences, that slavery was still going on. Indeed, it was reckoned at the time that there were more slaves in the world then than there had been in Wilberforce’s time. To be dealing with this issue today is especially distressing. African lives matter; all lives matter; and this House says so.
Paul Scully
Thank you very much, Mr Walker, for calling me to wind up the debate, and I also thank the Minister for his typically comprehensive and open response to the questions that have been put to him today. It does not take experiments such as the Stanford prison experiment and other psychological research experiments to see how bestial people can be to other people. We need only look at Rwanda, the situation in parts of Rakhine state in Burma and obviously the slave trade that we are discussing here today to see such bestial behaviour happening every day.
I will also just say thanks again to Constance Mbassi Manga and the signatories to the petition; to the supporters who have raised the issue on social media to bring it to the public fore; and to Nima Elbagir from CNN and her team who, as we have heard, bravely reported this story. I spoke to Nima this morning and she is really fired up for following up the story, to make sure that some action comes out of it.
This has been a very good debate, and I will not go through what has been said, as I must be brief. I will just say that, although there have been calls on our time today from the main Chamber and elsewhere, we have hopefully done what we aimed to do, which was to tell the story of the people in Libya who are on the frontline and who are suffering. We must tell those human stories to raise the profile of the issue and to add depth to the coverage of it, so that we can try to find solutions. I very much thank everybody who has taken part in the debate today.
Question put and agreed to.
Resolved,
That this House has considered e-petition 205476 relating to the enslavement of black Africans in Libya.
Written Statements
Energy Council
(7 years ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Richard Harrington)
My noble Friend, the Parliamentary Under-Secretary of State for the Department for Business, Energy and Industrial Strategy (Lord Henley) has made the following statement:
The Energy Council will take place on 18 December in Brussels.
The Council will aim to agree a total of four general approaches on elements of the clean energy package. These are on the regulation on governance of the energy union; the directive on renewable energy; the regulation on electricity; and the directive on electricity.
The day meeting will also include information from the Commission about recent developments in the field of external energy relations and a presentation from the Bulgarian delegation on their upcoming presidency.
[HCWS364]
Industrial Action: E-balloting
(7 years ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Margot James)
Section 4 of the Trade Union Act 2016 makes provision for the Secretary of State to commission an independent review concerning electronic balloting for the purposes of ballots held under section 226 of the Trade Union and Labour Relations (Consolidation) Act 1992.
It was announced that Sir Ken Knight would be undertaking the independent review on 3 November 2016.
The Government were particularly keen to understand the electronic and physical security of electronic balloting methods, including the risks of interception, impersonation, hacking, fraud and, misleading or irregular practices, as well as whether any system could safeguard against the risk of intimidation of union members and protect anonymity of ballot responses. During the review Sir Ken Knight issued a call for evidence and conducted a number of roundtables with key stakeholders to hear their views.
The review is published today and I would like to place on record my thanks to Sir Ken for his work. Under the terms of the Trade Union Act 2016, the Secretary of State is now required to consider the review and, in preparing his response, must consult relevant organisations, including professionals from expert associations to seek their advice and recommendations. Accordingly, we will now consider Sir Ken’s review and respond in due course.
Copies of the review will be laid before both Houses.
[HCWS365]
Cash Ratio Deposits
(7 years ago)
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The Chief Secretary to the Treasury (Elizabeth Truss)
Cash ratio deposits (CRDs) are non-interest bearing assets deposited with the Bank of England by banks and building societies. They are used by the Bank to finance its policy functions, in particular its efforts to secure price stability and the stability of the financial system in general, from which these institutions are key beneficiaries.
The CRD scheme was extended to include building societies, and was placed on a statutory basis, when the Bank of England Act became law in 1998. The scheme has been reviewed every five years since. The last review in 2013 resulted in the CRD ratio being increased from 0.11 % to 0.18%, following a public consultation. As part of the 2013 review, the Government committed to reviewing the scheme again within five years. The Treasury, working closely with the Bank, will now begin that review.
The review will include an assessment of the detailed arrangements of the scheme as well as the continuing suitability of the scheme itself compared to alternative sources of funding. It will also address the impact of the scheme on the eligible institutions. The broad conclusions of the review will be the subject of a public consultation.
[HCWS361]
ECOFIN
(7 years ago)
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The Chancellor of the Exchequer (Mr Philip Hammond)
A meeting of the Economic and Financial Affairs Council (ECOFIN) was held in Brussels on 5 December. EU Finance Ministers discussed the following items:
Early morning session
The Eurogroup President debriefed Ministers on the outcomes of the 4 December meeting of the Eurogroup, and the Commission provided an update on the current economic situation in the EU. The Chair of the European Fiscal Board (EFB) presented to Ministers the annual report from the EFB. Ministers also exchanged views on the proposed US tax reforms.
Strengthening of the Banking Union
The Council took note of progress reports on the European deposit insurance scheme, and the banking package, and received information from the Commission on the state of play of the action plan to tackle non-performing loans. This was followed by an exchange of views.
Current financial services legislative proposals
The Council presidency provided an update on current legislative proposals in the field of financial services.
VAT administrative co-operation
The Commission provided information on its proposals relating to measures on VAT administrative co-operation.
Council conclusions on “The EU list of non-co-operative jurisdictions for tax purposes”
Ministers agreed Council conclusions on the EU’s list of non-co-operative jurisdictions for tax purposes.
Council decisions on the implementation of the stability and growth pact
Ministers agreed a Council decision to close the UK’s excessive deficit procedure (EDP), and a decision and recommendation on Romania’s compliance with EU fiscal rules.
European Semester 2018
The Council presidency presented the annual growth survey 2018 and the alert mechanism report 2018, and discussed a Council recommendation on the economic policy of the euro-area.
EIB proposal to establish a European development bank
Ministers received information on a proposal to create a new subsidiary to the European investment bank that will be dedicated to development.
[HCWS362]
Building Safety Programme
The Secretary of State for Communities and Local Government (Sajid Javid)
Earlier this year, the Home Secretary and I asked Dame Judith Hackitt to carry out an independent review of building regulations and fire safety. I am pleased to inform the House that Dame Judith has published her interim report today. It is available at: www.gov.uk/government/publications/independent-review-of-building-regulations-and-fire-safety-interim-report, and copies are being placed in the Libraries of both Houses.
The publication of Dame Judith’s interim report is an important milestone. The Home Secretary and I welcome the report, its findings, and the extensive engagement Dame Judith has carried out with industry, residents, building control bodies, fire and rescue services, Government and other key partners.
It is my intention to update the House further regarding the publication of this report in an oral statement this afternoon.
This interim report provides a strong foundation for the next phase of the review. We will continue work with Dame Judith and other partners over the coming months as she finalises her recommendations and I look forward to updating the House on Dame Judith’s final report in the spring.
[HCWS359]
Armed Forces Covenant: Annual Report
(7 years ago)
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The Secretary of State for Defence (Gavin Williamson)
I am today laying before the House the 2017 armed forces Covenant annual report. The Armed Forces Act 2011 set out the requirement for the Defence Secretary to report progress annually to Parliament. The Covenant is a promise by the nation to ensure that those who serve, or have served, and their families are treated fairly and suffer no disadvantage. The sacrifices made by serving personnel, veterans and their families should be recognised accordingly. The report describes what the Government, and wider society, have done to uphold the principles of the Covenant across the UK.
The Covenant is not only a debt owed by the nation to the armed forces community, it is also a mutually beneficial partnership between the military family and the wider society that they serve. The annual report highlights just some of the excellent initiatives being taken in local communities to deepen relationships and that the publication of the report today coincides with the announcement of 02 as the 2,000th business signing of the Covenant demonstrates the ongoing success in building partnerships with the private sector.
A consistent theme of this year’s report is a drive toward co-ordinating services across the core areas of the Covenant. The launch of the Veterans’ Gateway, funded by the Covenant and delivered by a Royal British Legion led-consortium, and the work of the Department of Health-led Transition Intervention and Liaison Services, in close co-ordination with Defence, are just two examples of working across organisational boundaries to provide a more coherent and focused service to the people that need it the most.
In the public sector new guidance for local authorities published this year will help to improve the consistency of delivery at a local level. As well as identifying examples of best practice the guidance explains how local support groups and organisations can share resources to help integrate military and civilian communities.
The mobile nature of service life can lead to disadvantage in a number of areas, one of which is access to education. The inclusion of service children as a target group for universities in their fair access agreements, acknowledges this and the ability to identify service children when moving between schools will help to minimise the impact to their education.
The Government’s new ministerial Covenant and Veterans Board will also ensure a more co-ordinated approach, confirming that providing support to service personnel, veterans and their families remains a top priority, and the report also sets out the key commitments for 2018.
The report has been compiled in consultation with other Government Departments, the devolved Administrations, and the external members of the Covenant reference group.
I am grateful to them all for their contributions, and their continued support as together we ensure our armed forces community receive the support they deserve.
[HCWS360]
National Action Plan on Women, Peace and Security: Annual Report
(7 years ago)
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The Secretary of State for Foreign and Commonwealth Affairs (Boris Johnson)
I wish to inform the House that the Foreign and Commonwealth Office, together with the Department for International Development and the Ministry of Defence, are today publishing the 2017 annual report on progress against the UK’s third National Action Plan on Women, Peace and Security.
Published on 12 June 2014 (HC Deb, 16 June 2014, c. 72-4WS) the National Action Plan sets out the Government’s objectives on the Women, Peace and Security agenda for the period 2014-2017. It provides the direction to our work to put women and girls at the centre of conflict prevention, response and resolution.
The report published today outlines our progress against the National Action Plan over the last 12 months, including our work in our six focus countries of Afghanistan, Burma, the Democratic Republic of Congo, Libya, Somalia and Syria as well as an overview of our wider progress on the Women, Peace and Security agenda over the three year life of the National Action Plan and the commitments we made in October 2015 at the UN Security Council High Level Review of Resolution 1325 on Women, Peace and Security.
The progress report has been published on gov.uk. I am placing electronic copies in the Parliamentary Libraries.
[HCWS363]
Automatic Enrolment
(7 years ago)
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The Secretary of State for Work and Pensions (Mr David Gauke)
The Government have published their “Automatic Enrolment Review 2017: Maintaining the Momentum” as a Command Paper (CM 9546). A copy of the accompanying analytical report, which underpins this review, has been placed in the House Library.
Since 2012, over 9 million people have been automatically enrolled into a workplace pension and over 900,000 employers have met their duties. The workplace pension participation rate for eligible men and women in the private sector is now equal. By 2019/20 we estimate an extra £20 billion a year will go into in workplace pension savings as a result of automatic enrolment. This is helping people achieve greater financial security in later life, and encouraging a culture of saving.
The review sets out our ambition to build on the success of automatic enrolment to date, with a comprehensive and balanced package of proposals to continue to normalise pension saving, namely:
confirming that automatic enrolment should continue to be available to all eligible workers regardless of who their employer is;
making saving the norm for young people, by lowering the age for automatic enrolment from 22 to 18, to bring an extra 900,000 people into workplace pensions;
supporting all those who are automatically enrolled, particularly those with low earnings and multiple jobs, to save more for retirement by removing the lower earnings limit so that their contributions are calculated from the first pound of earnings.
Recognising the diversity of the 4.8 million classified as self-employed, for whom a single saving intervention might not be effective, we will work to implement our manifesto commitment by testing targeted interventions aimed at the self-employed, which are set out in the review report, to identify the most effective options to increase pension saving among self-employed people.
We will also work to ensure that the rules around automatic enrolment for those working in atypical ways or in non-standard forms of employment are clear, and that enforcement of the automatic enrolment duties for employers remains robust. The Government’s forthcoming response to Matthew Taylor’s review of modern working practices, which is due to be published shortly, is relevant to this work. My Department will continue to work closely with the Department for Business, Energy and Industrial Strategy, HMT and HMRC to ensure suitable alignment and clarity is achieved across our policies.
The review also calls upon the pensions industry, employers, and the wider advisory and intermediary community to work with Government on better, simpler, engagement. Our aim is to help savers understand the benefits of workplace pension saving, so that they are better able to plan for security in retirement.
It is the Government’s ambition to implement changes to the automatic enrolment framework in the mid-2020s, subject to discussions with stakeholders around their detailed design in 2018/19, finding ways to make the changes affordable, and followed by formal consultation with a view to introducing legislation in due course. The discussions with stakeholders will allow us to build consensus on the shape and design of the package, helping develop our detailed plans and implementation timetable, which can then form part of the formal consultation.
The Government are grateful to the review’s external advisory group, chaired by and made up of experts from within the pensions industry, and those representing member interests and employers. This group has provided invaluable insights and constructive challenge in shaping the review.
The 2017 review also outlines findings from the statutory review of the alternative quality requirements for defined benefit schemes (under section 23A of the Pensions Act 2008), and the alternative quality requirements (under section 28 of the Pensions Act 2008).
Annual thresholds review
Running concurrently with this review of automatic enrolment, the statutory annual review of the automatic enrolment earnings thresholds has been completed for the 2018/19 tax year.
The Government will lay an Order before Parliament in the new year which will include the following thresholds for 2018/19: £6,032 for the lower earnings limit of the qualifying earnings band and £46,350 for the upper limit of the qualifying earnings band.
The automatic enrolment earnings trigger will remain frozen at £10,000.
This will ensure that a period of stability and consistency is maintained ahead of the increases in contributions from April 2018, while also ensuring that those, for whom it makes economic sense to save, continue to be brought into workplace pensions and have the opportunity to build up meaningful savings.
A copy of the automatic enrolment earnings trigger and qualifying earnings band for 2018/19: supporting analysis has been placed in the House Library. These papers will be available today on www.gov.uk website.
“Automatic Enrolment Review 2017: Maintaining the Momentum” sets out a clear direction of travel to build on the successes of the policy to date, and move forward the Government’s ambition for a more robust and inclusive savings culture; specifically supporting younger generations, lower earners, and women with the opportunity to build up pension assets for a more secure retirement.
[HCWS366]
Employment, Social Policy, Health and Consumers Affairs Council
(7 years ago)
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The Minister for Employment (Damian Hinds)
The Employment, Social Policy, Health and Consumer Affairs Council met on 7 December 2017 in Brussels. As Minister of State for Employment, I represented the UK.
The Council agreed a partial general approach on the long-term care and family benefits chapters of the revision of regulations on co-ordination of social security systems—(883/04 and 987/09). The UK explained its abstention due to a parliamentary scrutiny reservation.
The Council agreed a general approach on the European Accessibility Act. The UK supported the aims of the proposal but registered an abstention, reflecting concerns about the clarity of text.
The Council received a progress report on the draft directive on equal treatment (Art. 19) and the draft directive on work-life balance.
The Council gave political agreement to the directive implementing a social partner agreement on the implementation of amendments to the Maritime Labour Convention.
As part of the semester process the European Commission presented the annual growth survey 2018, the draft joint employment report, the alert mechanism report and the draft recommendation on the economic policy of the euro area. They also sought the views and gained the approval of member states on the employment and social aspects of the recommendation on the euro area.
The Council adopted Council conclusions on the following three topics: the future of work: making it e-easy; enhancing community-based support and care for independent living; and on enhanced measures to reduce horizontal gender segregation in education and employment.
Under any other business, the Commission presented information on the EU action plan 2017-2019 on tackling the gender pay gap and on concluding the year of focused actions to eliminate gender-based violence. The Swedish delegation and the Commission presented information on the Social summit (Gothenburg, 17 November 2017) and the Bulgarian delegation presented the work programme of its incoming presidency.
[HCWS357]
Personal Independence Payment
(7 years ago)
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The Minister for Disabled People, Health and Work (Sarah Newton)
Later today, I will publish Command Paper 9540 “Government’s response to the Second Independent Review of the Personal Independence Payment (PIP) Assessment”. The review was carried out by Paul Gray and published on 30 March 2017.
Alongside this, the Department is publishing interim findings from wave 2 of the PIP claimant survey which focuses on the assessment and decision stages of the PIP claim, and seeks claimants’ feedback and experiences of these.
The response outlines my Department’s intentions in relation to the recommendations suggested by Paul Gray in his second independent review. It also provides an update of the actions my Department has taken against the recommendations identified in the first independent review.
My Department has accepted or partially accepted all of the recommendations in the latest review.
PIP is a modern benefit, which can be flexible and responsive to change, where we identify improvements to be made. While this completes the legal obligation to review the implementation of PIP, we remain committed to understanding how the benefit is working and to continuous improvement in this space. Furthermore we remain committed to working closely with claimants and the organisations who represent them, and will continue to do so.
This response will be laid before Parliament and made available on the www.gov.uk website.
[HCWS358]
House of Lords
Retirement of a Member: Baroness Sharples
The Lord Speaker (Lord Fowler)
My Lords, I should like to notify the House of the retirement, with effect from today, of the noble Baroness, Lady Sharples, pursuant to Section 1 of the House of Lords Reform Act 2014. On behalf of the House, I thank the noble Baroness for her much-valued service to the House.
Unpaid Internships
Lord Holmes of Richmond
To ask Her Majesty’s Government what steps they are taking to enforce minimum wage legislation to end the practice of unpaid internships, and whether they have considered any legislative change.
Baroness Vere of Norbiton (Con)
My Lords, existing legislation already prohibits the practice of using unpaid interns as workers, and therefore we believe that further legislation is not necessary. What is needed is for employers to play their part by being good employers and making sure that they pay at least the national minimum wage for all interns from day one.
Lord Holmes of Richmond (Con)
My Lords, in the light of low rates of reporting, lower rates of investigation and a near absence of prosecutions, does my noble friend not agree that it is time to deploy all of HMRC’s powers and to introduce legislative reform to put an end to the pernicious practice of unpaid internships once and for all?
Baroness Vere of Norbiton
I thank my noble friend for his question and of course for the enormous amount of work he is doing in this area. There has been a step change in the amount of resources that HMRC has to tackle this problem. Funding has doubled from £13 million to £25.3 million in 2017-18. In two years, we have doubled the funding. The Government are taking this issue very seriously and we are recruiting extra compliance officers so that we can proactively identify those exploitative businesses that go on to exploit interns.
Baroness Royall of Blaisdon (Lab)
My Lords, if there has been this step change, why did the recent IPPR report show a dramatic increase in the number of unpaid internships? I fully agree with the noble Lord, Lord Holmes, that it is not fair to get a leg up if others cannot afford one. As a trustee of City Year UK, an excellent charity which works with social action, I am a strong supporter of youth social action, which is very different from unpaid internships. Will the Minister confirm when the youth full-time social action review will be published?
Baroness Vere of Norbiton
My Lords, I will have to write to the noble Baroness on the last point, but I will say that accurately predicting the number of unpaid interns in this country is extremely difficult. There are no accurate forecasts. To return to prosecutions, it is interesting to note that from a criminal perspective, we prosecute only those companies that are the most pernicious offenders but that HMRC takes action on a civil basis through the civil courts. In 2016-17, 1,134 businesses were taken through civil proceedings and we clawed back nearly £11 million for 98,000 workers. That is progress, but I recognise there is much more we can be doing.
Baroness Gardner of Parkes (Con)
My Lords, will the Minister assure me that any action the Government take in this respect will not damage the numbers of wonderful people volunteering for charities and various organisations, where they are doing a lot of good? That should be kept quite distinct from internship.
Baroness Vere of Norbiton
My noble friend makes a very important point; it is one of the reasons why further legislation might be difficult and would have unintended consequences. In 2015 1.93 billion hours were volunteered by people in this country. I think all noble Lords will agree that that is marvellous, but it was 7% less than the hours volunteered in 2012. We need to keep our volunteers able to do the work that they do because it is extremely valuable.
Baroness Burt of Solihull (LD)
My Lords, on the wider point about minimum wage contraventions, the Minister has outlined the steps that the Government are taking to tackle what she rightly described as a scourge, and those steps are welcome. However, on the point of criminal convictions, between February 2014 and September 2016 only three employers were prosecuted under the criminal law. Although criminal prosecutions are effective in enabling people to get back money that is owed to them, what steps is the Minister taking to bring the full weight of the law to the most extreme cases of non-compliance?
Baroness Vere of Norbiton
My Lords, as I have already mentioned, during the time that this legislation has been in place there have been 14 prosecutions and, as I said, those were for the most pernicious and serious cases. We tend to choose the civil route so that people can get their funding much quicker. However, there is one other way in which we can ensure that employers step up to the plate and stop exploiting workers: only last week we named and shamed an additional 260 companies across the country that are not doing right by their workers. I do not know whether noble Lords have had a chance to look through their local media, but I have recently, and it is interesting to note how often local media pick up these stories and ensure that people in their local communities understand what their local companies are doing.
Lord Forsyth of Drumlean (Con)
My Lords, can the Minister explain to me the difference between an internship and work experience? Will she go out of her way to praise those employers who give young people the opportunity to have work experience, which is so important in order to gain employment in the current market?
Baroness Vere of Norbiton
My noble friend gets to the heart of the matter because this is about social mobility. We have to ensure that placements are available; for example, people who are on work experience placements as part of a university degree are not liable to the minimum wage in those circumstances because those places would not exist if that requirement were not needed. We must pay tribute to all companies that take young people and give them the confidence to proceed in their career as they want to do.
Lord Watts (Lab)
My Lords, just because the Minister says things are improving does not mean that they are. Can she provide to the House and put in the Library the information on which she is basing her claim?
Baroness Vere of Norbiton
I will certainly see what evidence I can find and put it in the Library. As I have already said to noble Lords, it is very difficult to give an accurate forecast or indeed any evidence as to how many people are in unpaid internships. What is important is the extra money that will mean that HMRC can be far more proactive about the work that it does. This is up to third parties as well. I encourage the noble Lord and indeed all noble Lords: if they see a person working and they should be getting paid, it is up to all of us to take responsibility and report that behaviour so that it can be dealt with.
Lord Mendelsohn (Lab)
My Lords, the Minister made some important points about being able to identify the right level of evidence. Further to the letter sent by her noble friend the Minister to the noble Lord, Lord Holmes, where we are looking at the body of evidence, why does Her Majesty’s Revenue and Customs have no records of prosecutions in relation to interns? If Her Majesty’s Revenue and Customs has never measured it, how can she make such claims?
Baroness Vere of Norbiton
I think I said earlier that there have been 14 criminal prosecutions under national minimum wage legislation, and that none of them related to interns. However, there is much further activity going on in civil action, some of which will relate to interns, but we do not have centralised data.
Disaster and Emergencies Preparedness Programme
(7 years ago)
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Baroness Sheehan
To ask Her Majesty’s Government what assessment they have made of the Disaster and Emergencies Preparedness Programme.
The Minister of State, Department for International Development (Lord Bates) (Con)
My Lords, DfID has monitored and assessed the disasters and emergencies preparedness programme through annual reviews, which are publicly available, and an external evaluation was conducted. Based on this information, the core part of the programme will run its course and end in March 2018, as planned, and the innovation window will run its course and end in March 2019, again, as planned.
Baroness Sheehan (LD)
I thank the Minister for his response, but does he agree that the disasters and emergencies preparedness programme has shown that investing in preparing for humanitarian disasters is a lot more effective than responding in a hurry? I am glad that he has cleared up some of the confusion about when the programme will end. What might be replacing this very cost-effective programme?
Lord Bates
The noble Baroness is right: UNICEF and the World Food Programme have identified that every £1 spent in preparedness can save £2 in humanitarian assistance. It is absolutely right that we are spending approximately £175 million this year on resilience and prevention programmes. We looked at the specific DEPP programme she mentions. It was very complex in how it delivered. The overheads were quite high at about 25%. We have said that we would like to take a good look at it again to see whether we can deliver a more effective programme, but our commitment to preparedness and humanitarian intervention remains absolutely the same.
Lord Collins of Highbury (Lab)
My Lords, the key feature is that the World Humanitarian Summit said that this a priority area. Irrespective of the outcomes of the specific programme, how will DfID approach this subject in its priorities? Will it comply with the World Humanitarian Summit and develop programmes? Tell us exactly how we will continue to make the savings that he described.
Lord Bates
We will certainly do that and comply with the Grand Bargain—we were a driving force behind it. That is why we have set out that preparedness and resilience ought to be a key part of the UN’s mission. We have said that and withheld a proportion of its core funding to ensure that it lives up to it. That is also why we are the largest contributor to the UN Office for the Coordination of Humanitarian Affairs and the central emergency relief fund. We recognise the importance of that and will continue to live up to our obligations.
Baroness Falkner of Margravine (LD)
My Lords, I think the Minister said that the programme will end in March 2018—in other words, in a few months. How many of their 45 NGO partners in this programme have the Government consulted, and did they consult them in writing or orally? Finally, I understand that the external evaluation was conducted by the Harvard Humanitarian Initiative. Is that report available for public assessment? If not, when can we expect to see it?
Lord Bates
On the last point about the Harvard review, yes, we have it on DevTracker, which is a website for all contracts: all the reports are listed there. On the 45 NGOs that play an important part in delivery, DfID chairs that committee, so they were informed at the meeting in October or November. We underscored our commitment to this area and the significant amount of money we are putting in to humanitarian response, but also underlined to them our concern about some of the overhead costs that might be attributed to the complexity of the scheme as it currently stands.
Baroness McIntosh of Pickering (Con)
My Lords, will my noble friend take back to his department and the whole DfID team that the loss of Rebecca Dykes in these circumstances is felt very deeply? Can we pay tribute to the work that she and all the DfID team do, often in very dangerous circumstances, particularly at this time of year, for humanitarian purposes?
Lord Bates
We can certainly do that. It is obviously a very distressing time for Becky’s family but also for the people who worked with her. It reminds us of the sacrifice made by over 1,200 DfID personnel who work around the world, often in the most difficult and dangerous environments. The family have asked that we respect their privacy at this time and allow the facts to be established. We will of course recognise that wish.
Lord Berkeley (Lab)
My Lords, as the Minister will know, disasters and emergencies happen in the UK as well. Has he looked at what would happen to the Isles of Scilly, which are served by one 40 year-old ferry half the year round, if something happened to that ferry? What might be the contingency plans?
Lord Bates
The noble Lord has caught me out. I did not have the Isles of Scilly in my brief. If he had gone for Antigua and Barbuda, I would have been able to answer him. I am happy to look into that and respond to his question.
Children: Mental Health Assessments
(7 years ago)
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Baroness Tyler of Enfield
To ask Her Majesty’s Government, further to the remarks by Lord Nash on 23 November 2016 (HL Deb, col 1947), what progress they have made with testing new approaches to mental health assessments for looked-after children which were due to commence in April or May this year.
The Parliamentary Under-Secretary of State, Department for Education (Lord Agnew of Oulton) (Con)
My Lords, the pilots were delayed by the general election but will start next year. Delay has enabled the design to effectively address the problems identified by the noble Baroness, Lady Tyler, and the Education Select Committee. In particular, we have taken forward recommendations of the expert working group on the mental health of children in care, which the Government commissioned to look at how to improve mental health and well-being support for looked-after children. We are currently identifying an organisation to support implementation.
Baroness Tyler of Enfield (LD)
I thank the Minister for his Answer and will not dwell on my disappointment that it has taken so long to get the pilots off the ground. It will now be important to understand how these pilots will fit with the new trailblazers announced in the Green Paper to trial new mental health support teams working with schools. Does the Minister agree with me that it would make sense for at least one area to trial both the new children-in-care assessment pilots and the new mental health support teams to see how they best fit together?
Lord Agnew of Oulton
My Lords, we will work with our delivery partner to identify pilot sites, and there will be an up-front commitment to help meet any needs that are identified during the assessment process. One advantage of the delay is that we now have the mental health Green Paper, and we are trying to dovetail as much of the work from that into these pilots as we can.
Lord Dubs (Lab)
Will the Minister join me in congratulating Hammersmith council, which on Thursday took in to look after a Syrian refugee boy from Greece who has serious mental health needs? Is it not a good sign that a local authority is doing that and showing what can be done for vulnerable refugees with mental health needs?
Lord Agnew of Oulton
My Lords, I certainly congratulate the local authority on that great work. A number of pilots are operating across the country—over 80—experimenting with different ways in which to help these vulnerable children. Only last week, Ealing had an open day to showcase some of the work that it has been doing for vulnerable children, and invited every other local authority in the country. It has been able to reduce the number of children going into care, and to save money as well. So there is a lot going on and, with the launch of the pilots that I have discussed with the noble Baroness, Lady Tyler, we will be doing a lot more on this.
The Earl of Listowel (CB)
My Lords, I declare my interests in the register in children’s mental health. Can the Minister assure the House that the recommendations of the expert working group will be fully funded by the Government? In particular, will recommendations around children’s homes be fully funded? Children’s homes have the most damaged young people, who are placed there as a last measure, yet their staff are still very poorly qualified. David Berridge, the eminent academic, commenting on the predation on children in homes in Rotherham, said that we must start moving towards having higher qualified staff in children’s homes, given the complexity of their needs and their vulnerability to predation.
Lord Agnew of Oulton
My Lords, in answer to the first question, the expert working group made 16 recommendations and we will seek to include all of them in the construction of the pilot programme. In relation to secure children’s homes, we all acknowledge that these are some of the most vulnerable children in our society. There are 14 secure children’s homes in England, covering 133 welfare and 117 criminal justice placements. The mental health Green Paper underlined the need to increase the number of qualified staff working with vulnerable children and we will certainly look very carefully at that.
Lord Lexden (Con)
My Lords, should we not welcome the determined efforts being made by charities and other bodies to secure more places for looked-after children suited to a state or independent boarding school, where good, externally inspected care is available for pupils with mental health problems?
Lord Agnew of Oulton
My Lords, I very much agree with the noble Lord. At the moment we have the Boarding School Partnerships, an initiative which works with a number of local authorities and boarding schools to increase the number of referrals for children who might be defined as on the edge of care. My own home county, Norfolk, is one of the largest users of this scheme. It is doing a longitudinal study, which we hope will be released next year, to show the impact of these children being prevented from going into care by going to a boarding school. If, as I hope, this shows very strong improvements in these children’s lives, we will be showcasing it to other local authorities to encourage more of them to do it.
Lord Watson of Invergowrie (Lab)
My Lords, it would be grossly unfair, particularly during this season of good will, to hold the Minister responsible for the sins—or at least the prevarication—of his predecessor, the general election notwithstanding. As has been mentioned, the expert working group on improving mental health support for young people in care reported last month. I hope the Minister can give an assurance that the Government will show rather more urgency in response to that report than they have in testing new approaches to mental health assessments for looked-after children. These children are five times more likely to develop a mental disorder than children living at home with their families, but only one-third of those diagnosed accessed children and adolescent mental health services—known as CAMHS. Will the Minister ask the DfE to ensure that areas where CAMHS access is low will be prioritised when selecting the local authorities and clinical commissioning groups for those pilot studies?
Lord Agnew of Oulton
I reassure the noble Lord that we will be looking at all the recommendations of the expert working group, some of which included the points that he made. These include things such as establishing a virtual mental health lead, based on the success of the virtual school head process, and improving the strengths and difficulties questionnaires, which we discovered are not always being carried out as well as they should be. In the debate on 23 November last year, the noble Baroness made a point about the importance of assessing mental health at the same time as a young person’s general health assessment is carried out, so reducing stigmatisation. I hope this offers some reassurance to the noble Lord. It is quite right that he holds us to account, even in the Christmas period.
Lord Storey (LD)
My Lords, what happens if children are identified, through the pilot assessment, as having mental health needs but there is no capacity to meet those needs in the local area?
Lord Agnew of Oulton
My Lords, the pilots will be looking very much for the potential to join up with other government programmes that support the mental health and well-being of looked-after children. This will include the scope to link with the Green Paper proposals, which I have mentioned, and other related work such as NHS England’s testing of personal mental health budgets for looked-after children. There will be an up-front commitment to try to meet any needs that are identified during this assessment process.
Baroness Meacher (CB)
My Lords, is the Minister aware that although the Health and Social Care Act gave equal priority to mental and physical ill health, even today a very vulnerable mentally ill child suffering deep pain may wait 18 weeks or longer for any medical intervention while a vulnerable child with comparable physical pain can expect treatment within a day? Does the Minister find that acceptable?
Lord Agnew of Oulton
My Lords, I do not find that acceptable. As part of this process, we are looking at ways of ensuring that treatment for mental health issues identified in these vulnerable children is accelerated. We expect to have the invitation to tender for the pilot programme available in April next year, but, as I say, this is one of the issues that we are looking into.
UK Borders: Surveillance
(7 years ago)
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Lord Wallace of Saltaire
To ask Her Majesty’s Government what steps they plan to take to improve surveillance of the United Kingdom’s borders, including at smaller ports and harbours, coastal waters and private airstrips.
The Minister of State, Home Office (Baroness Williams of Trafford) (Con)
My Lords, the Border Force works closely with other law enforcement agencies, security services and international partners on an intelligence-led approach to identify unlawful maritime and aviation activity. It also uses a combination of cutters, radar, onshore assets and aerial surveillance to detect and stop small craft.
Lord Wallace of Saltaire (LD)
I congratulate the Government on the announcement that they are going to double the number of cutters around our coast from two to four. I think that means that we will have one cutter for every 3,000 miles of coastline if they all operate at the same time—rather fewer than the Dutch have for a far shorter coastline. Has the Minister read the Public Accounts Committee’s report of two weeks ago that points out that there are 21 departments and agencies in Whitehall concerned with the management of borders, not one of which is in overall control? Does she know of the report issued last March by the Independent Chief Inspector of Borders, which pointed out that nearly half the small ports on our east coast had not been visited by any member of Border Force in the preceding 15 months? The leave campaign talked about taking back control of Britain’s borders. Is it not the case that we do not have effective control of British borders at present and that perhaps we ought to consider putting more effort into that?
Baroness Williams of Trafford
My Lords, I note what the noble Lord says but, of course, it is not a question simply of the number of cutters and RIBs that we have in the sea. We are heavily reliant on the most effective method of border control: namely, the multiagency, intelligence-led information that we have. We deploy on the back of that intelligence and risk assessment. That is the most effective way of manning certainly our maritime borders.
Lord Robathan (Con)
My Lords, given what the noble Lord, Lord Wallace, has just said, would my noble friend the Minister confirm that it was a very good thing that we did not join the Schengen agreement when it came out, and that there were people in this country who wanted to join Schengen to show up their European credentials?
Baroness Williams of Trafford
I note what my noble friend says—but, as we move towards exiting the European Union, Border Force will make sure that its recruiting plans are flexible to ensure that its approach can be flexed as future requirements become clearer.
Lord West of Spithead (Lab)
My Lords, the Minister makes rather light of the real problem. There is no doubt whatever that all the departments and assets looking after our territorial seas and exclusive economic zone are not being co-ordinated at the moment. I know that there are plans to move forward, but it is not being done. The intelligence from the NMIC, which was established some five years or so ago, is very good but we are not co-ordinating assets, and we do not have enough assets. However, my question relates to our British Overseas Territories, each of which has territorial seas and exclusive economic zones. Indeed, we have responsibility for the largest area of ocean of any country in the world. In that circumstance, does it not make sense not to get rid of the offshore patrol vessels, which are relatively new, when the new ones come online, and to use those to look after these vast areas of ocean that at the moment are not being properly protected?
Baroness Williams of Trafford
The noble Lord makes a valid point about our offshore patrol vessels—and there are no plans to get rid of them. However, my point, which I hope I was not making lightly, was that the most effective work we can do at the border is intelligence-led work that is successful at pinpointing areas of high risk.
Lord Taylor of Holbeach (Con)
It is the Lib Dems’ turn, and then we will hear from the Conservatives.
Lord Paddick
My Lords, in April last year the then Home Secretary, Theresa May, confirmed in the other place that in 2016-17 the Border Force agency’s revenue budget, which covers staffing, would be 0.4% less compared with 2015-16. However, the Government insist that Border Force spending has been protected because spending on technology such as electronic passport gates has increased. Can the Minister explain what happens at many of the ports of entry where there are no electronic passport gates in the light of the reduction in Border Force staff? Can she also confirm that most of the time, even where there are electronic passport gates, there are not enough staff to keep them open?
Baroness Williams of Trafford
On the first part of the noble Lord’s question, he is absolutely right that we have invested in technology such as e-gates, and just before the Calais clearance, my right honourable friend Amber Rudd in the other place stated that £36 million would be committed to support France in the Calais camp clearance. However, on his main point, which is about people being at ports and borders at all times, if we lined this country wall to wall with people, it would still not be as effective as going after the intelligence-led risk, which operates so well.
Lord Kirkhope of Harrogate
My Lords, as someone who uses airstrips and small airfields in this country, perhaps I might ask the Minister to confirm that, as regards the operations of light aircraft and business aircraft, the regulations already in place are greatly enhanced to protect us and our borders from any illegal intrusions? Would she not agree that anything too onerous as extra requirements could harm our general aviation and business aviation unnecessarily?
Baroness Williams of Trafford
My noble friend is absolutely right that good measures and regulations are in place to ensure that our GA flights are notified to Border Force. We continue to assess 100% of them, aiming to meet all GA flights to ensure that flights are met by immigration staff and that all checks are completed.
CPS: Disclosure of Evidence
(7 years ago)
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Lord Morris of Aberavon
To ask Her Majesty’s Government whether the Attorney General, in his statutory supervisory role over the Director of Public Prosecutions for England and Wales, will take steps to satisfy himself that, in carrying out their work, the Crown Prosecution Service have adequate resources to fully disclose all relevant evidence that might support a defendant’s case, or undermine the prosecution’s.
Lord Morris of Aberavon (Lab)
My Lords, I beg leave to ask a Question of which I have given private notice.
The Advocate-General for Scotland (Lord Keen of Elie) (Con)
My Lords, prosecutors are obliged to disclose relevant material that could assist the defence case. That obligation is not determined by issues of cost. The Crown Prosecution Service is considering with the police a recent independent review by Her Majesty’s Chief Inspector of the CPS of disclosure policies and practice.
Lord Morris of Aberavon
My Lords, the then chairman of the Bar Council, Ms Heather Hallett QC, complained as far back as 1998 about non-disclosure. I believe I took steps to put matters right. Matters seem to have gone backwards since then. In the light of recent events, will the Attorney-General set up an independent inquiry, headed by a judge, to examine whether disclosure rules are being complied with, to ensure the timely delivery of justice?
Lord Keen of Elie
My Lords, disclosure in the context of criminal cases has not gone backwards since 1998. There is no present intention to set up an inquiry of the type referred to by the noble and learned Lord.
Baroness Chakrabarti (Lab)
My Lords, I think we can all agree that early and adequate disclosure is at the heart of a fair criminal justice system. Given that the senior independent prosecutor at the Bar who averted a recent miscarriage of justice, in addition to being a senior and experienced prosecutor, is a former Conservative MP, who described a system “creaking” for lack of resources, will the Minister please consider my noble and learned friend’s request and, in any event, return to this House with a Statement after more full and adequate consideration of what happened here?
Lord Keen of Elie
My Lords, the matter to which the noble Baroness, Lady Chakrabarti, alludes was a recent case in which the Crown withdrew and the matter did not proceed. There is to be a joint internal review by the CPS and the police to determine what occurred in that case. With regard to the case that she alludes to, the CPS has acknowledged that its standards may have fallen below what is expected and it has apologised to all the parties involved.
Lord Faulks (Con)
My Lords, one of the problems is that there is a great deal more to disclose than there once was in terms of the number of records that are kept. However, does not the obligation go both ways? Not only must the prosecution make sure that everything is available to the defence, but defence lawyers must make sure that every single piece of relevant information is disclosed to them and that it is analysed properly for the benefit of their client, which places a considerable burden on them. Is my noble and learned friend satisfied that adequate resources, by way of legal aid or otherwise, are made available to enable them to do this?
Lord Keen of Elie
I am obliged to my noble friend. It is of course important that the defence has the opportunity and the means to consider what requests should be made of the prosecution in the context of disclosure. Indeed, in the context of the case alluded to earlier, that point will be addressed.
Lord Judge (CB)
Could the review also look into this simple question? It is reported that it took 14 months for this young man to be charged, which means that he was on bail uncharged for 14 months. What on earth is the reason for that?
Lord Keen of Elie
My Lords, I am not able to determine why the charge took as long as it did in that case. I appreciate that investigations take longer in some cases than they do in others, but I cannot—
Lord Keen of Elie
I wonder whether noble Lords wish me to continue. I am obliged to the Opposition Benches. To give an example, there are instances in which a considerable amount of digital data relevant to a particular complaint have to be considered.
Lord Paddick (LD)
My Lords, in the case of Liam Allan, it was fairly obvious that this material should have been looked at, and what happened was either the result of lack of resources in the police service or in the Crown Prosecution Service or a deliberate attempt to pervert the course of justice. Can the Minister estimate how many people are unlawfully imprisoned as a result of similar mistakes having occurred in the past?
Lord Keen of Elie
I believe that the noble Lord probably knows the answer to his own question. Nevertheless, the alternatives that he advances do not exhaust the issue of why, if it occurred, disclosure was not made at an appropriate time, and that will be the subject of a joint high-level review by the CPS and the police. It is not for me, in this place, to anticipate the outcome of that review.
Lord Anderson of Swansea (Lab)
My Lords, will the conclusions of the proposed internal review be published?
Lord Keen of Elie
I do not anticipate that the review itself will be published, but I am confident that its conclusions will be.
Lord Cormack (Con)
My Lords, would not my noble and learned friend acknowledge that there is very widespread concern about this clear near miscarriage of justice? Could he at least say that he understands why people’s confidence in the police service has been significantly undermined?
Lord Keen of Elie
My Lords, again, I am not going to anticipate the outcome of the review that will be undertaken jointly by the CPS and the police in respect of this case.
Lord Pannick (CB)
My Lords, why is it that the full detail of the internal review should not be published, given the public interest in the matter?
Lord Keen of Elie
My Lords, at this stage it is anticipated that the conclusions of any review will be published, but it is not usual or normal for the full terms of an internal review to be put into the public domain.
Viscount Ridley (Con)
My Lords, will the review look at the culture of “sales targets” within the police—as it was described by the person in this case—as an issue?
Lord Keen of Elie
My Lords, I am not familiar with the term “sales targets” in this context. Clearly, a balancing exercise has to be carried out to ensure that, particularly in cases of this kind, complainants are able to come forward uninhibitedly and, equally, that anyone complained against is given a full and fair opportunity to put forward their defence. However, I reiterate that I am not familiar with the term “sales targets” in this context.
Lord Dholakia (LD)
My Lords, will the review take into account past cases in which injustice may have been done because of the failure to disclose information to the defence solicitors?
Lord Keen of Elie
My Lords, the terms of any review are yet to be determined, but it will be an internal review into the particulars of this case.
Lord Campbell-Savours (Lab)
But that is where the problem lies. The noble Lord’s question is relevant: what about all the other cases? I have handled a lot of cases over the years in which people have been accused of rape. What about those cases in which a mistake or error of judgment was made?
Lord Keen of Elie
My Lords, here is a criminal cases review board, which was set up to address the sorts of issue to which the noble Lord refers.
Baroness McIntosh of Hudnall (Lab)
My Lords, would the Minister concede that the reason this case has much wider relevance than the particulars of the individual concerned, however dreadful his circumstances may have been, is that it allows credence to be attached to the notion that there are more examples of injustice against people who are accused of rape than against those who have suffered rape? The review really ought to take that into account.
Lord Keen of Elie
I note what the noble Baroness says on that matter. I reiterate that it is fundamental that justice is fair to both the accuser and the accused.
Baroness Berridge (Con)
My Lords, as I understand it, a recent change in the Crown Prosecution Service is the demise of the disclosure offices, and those duties have been passed back to the police. Barristers are expressing concern about whether the police are adequately resourced or trained to do that. Will my noble and learned friend outline whether that is indeed the case and that there will be a time at which we will review whether that is also having an effect on disclosure?
Lord Keen of Elie
I am not in a position to say whether that is having an effect on disclosure, but that is why, at the highest levels, the CPS is looking at the outcome of the inspector’s review of the CPS disclosure policies and practice. No doubt that is an aspect of the review that will be taken into account.
Procedure Committee
The Senior Deputy Speaker
That the 2nd Report from the Select Committee Revisions of Private Business Standing Orders (HL Paper 34), and the proposed changes to those Standing Orders, be agreed to.
The Senior Deputy Speaker (Lord McFall of Alcluith)
My Lords, the report proposes amendments to the private business Standing Orders. Most of them are the product of the first stage of the review of hybrid Bill petitioning procedure, which my predecessor the noble Lord, Lord Laming, commissioned in 2016 together with the Chairman of Ways and Means in the House of Commons. They are intended to remedy a number of issues which came to light during the passage of the High Speed Rail (London-West Midlands) Bill by modernising and clarifying some of the procedures for petitioning against a private or hybrid Bill, and by enabling a Select Committee charged with considering petitions against a Bill to group petitions. A small number of changes not arising from the review are also proposed. These are also intended to modernise procedures relating to private and hybrid Bills. Noble Lords may also wish to know that amendments with similar effect to those set out in this report were agreed by the House of Commons on Tuesday 7 November. The details of the changes proposed are set out in full in the report. I hope that noble Lords will support these amendments, and I beg to move.
Lord Stevenson of Balmacara (Lab)
My Lords, I draw attention to the fact that I currently live near the agreed line of HS2 as it tunnels through part of the Chilterns and that I was a petitioner during consideration of the HS2 Bill in the House.
We owe a great debt of gratitude to those of our number who serve on Select Committees for hybrid Bills. I observed a number of sittings of the recent HS2 Bill and read all the transcripts of it. They did a heroic job. It is fair to say that they were heavily constrained by the Standing Orders in place at that time. I am very pleased that the House authorities have carried out a review of the Standing Orders currently used for hybrid Bills, and I support the changes recommended to the House this afternoon. I agree with all the points made by the Senior Deputy Speaker.
When a Select Committee of Parliament considers a hybrid Bill, it has an unusually direct engagement with thousands of individuals and organisations through the petitioning process. In that part of the hybrid Bill, Parliament is in effect acting as a planning authority for projects, with all that that implies. Since major infrastructure projects can have a devastating effect on individuals and businesses directly affected by them, it is very important for our reputation and for the trust that is placed in all of us that both Houses of Parliament do the best we can to allow those who wish to make representations to us to do so as simply and efficiently as possible. The changes in Standing Orders before us today try to make sure that the system and processes used for petitioning, whether in writing or in person, are not phrased, as they are at present, in archaic language or bedevilled by jargon and procedures from an earlier age. These procedures currently dissuade or even prevent people from participating to the full, and I therefore support the changes.
The decision to go ahead with this group of changes, which have, as has been noted, been agreed already in the other place, will of course greatly improve our procedures in relation to the next HS2 hybrid Bill, which is imminent. But there will be other Bills before too long and the papers before us represent merely the low-hanging fruit of the changes that might be required. I would be grateful if the House would consider at the appropriate time that other issues should be addressed. There should be separate Standing Orders for hybrid Bills that properly reflect 21st-century language, and they should be separate from those other Bills that currently share their procedures with us. Using and adapting the procedures set out for other Bills leaves far too many uncertainties and does not take the trick.
It is important that the House clarifies that, as with other Bills, the two Houses have co-equal powers in respect of hybrid Bills. The systems employed in hybrid Bills must be such that the public interest in the proposal is properly tested and Parliament must insist that there is full transparency. The systems must be permissive enough to allow those materially affected to be heard if they wish and to be represented and the physical conditions of these meetings must be greatly improved. Do they have to be held in Parliament?
It should be possible for a Select Committee to require issues to be grouped and marshalled and more can be done to deal with their outlier issues through correspondence. Where a compromise position is identified between the promoter and petitioner, much more effort and resources should be devoted to getting these dealt with properly and for them to be formally registered and agreed. I look forward to progress on these issues in the months ahead and I fully support the present arrangements.
Lord Foulkes of Cumnock (Lab)
My Lords, I have been known in the past to express some concerns about this issue and, on this occasion, I want to make it absolutely clear that the Senior Deputy Speaker should be commended for the work that he has done. It has been a long and detailed exercise carried out withMy second point is in relation to committees. The more ignorant observers of this House seem to think that getting up, asking questions and making speeches in this place, as I tend to do from time to time, is the only important work that this House carries out. That is as far from the truth as one can get. This House carries out a huge amount of detailed, painstaking and important work in committees. Incidentally, I tried to get the producer of the three documentaries on the Lords to film some of them. I was told that it was too boring. It may be boring, but it is very important—some of it is not boring, by the way.
We should try to get this message over, especially on these Bills. My noble friend Lord Elder and others served on the high-speed rail Bill. He spent hours, days and weeks on it for almost no public recognition or, even more importantly, awareness of what he was doing. We need to take every opportunity—I know the Senior Deputy Speaker and the Lord Speaker will do this—to shout from the rafters and explain, when we go to schools and other institutions, that a great deal of work by this House is done outside this Chamber and is not fully recognised.
Lord Berkeley (Lab)
My Lords, my noble friends have made some very interesting comments on this report. I join in congratulating the Senior Deputy Speaker on what he has achieved. One other thing we possibly ought to look at, given the fact that there may be two or three more hybrid Bills coming on HS2 and maybe other projects in future, is whether in certain circumstances there should be Joint Committees of both Houses, which would save quite a lot of reading time for MPs and your Lordships. More radically, we should consider using the same procedure used for building motorways these days through the Infrastructure Planning Commission—I think it is called that—and build railways that way. Railways are built with hybrid Bills for historical reasons—there were no motorways when the railways started and everything had to go through both Houses. It is a bit ironical that a motorway can be built using one procedure and a railway can be built using another. Maybe it is time to start looking at them both to see whether there are benefits in doing them all one way or the other.
Lord Howell of Guildford (Con)
My Lords, I take the opportunity to very strongly reinforce the words of the noble Lord, Lord Foulkes, who put very clearly the point that there are a vacuous and ignorant few outside the House for whom the only measure of activity is what goes on in and is spoken in this Chamber. The noble Lord is entirely right. A vast amount of work goes on not merely in parliamentary and sessional committees but in all-party groups and less formal groups connected to the outside, such as charities. This aspect of what the House of Lords does has so far not reached most of the media. It is time that we reinforce this message powerfully to get over the truth of what we really do.
The Senior Deputy Speaker
I thank noble Lords for their comments on the report. I welcome the warm words of support from the noble Lord, Lord Stevenson, for the changes to the private business Standing Orders being considered. He has been vigilant in ensuring that the work that the Chairman of Ways and Means in the House of Commons and I do is scrutinised. We have had many meetings on that. I look forward to many more as we take this through because, as he mentioned, this is low-hanging fruit.
The noble Lord has taken a keen interest in HS2 legislation and the hybrid Bill procedure more generally. He has first-hand experience of the procedure. I know that the House officials involved in the hybrid Bill review have been grateful for those insightful contributions to their work. As he rightly said, there is a great deal of further work to do on the low-hanging fruit. During 2018 this further work will be undertaken in conjunction with the House of Commons with a view to developing clearer and more modern Standing Orders applicable to private and hybrid Bills.
The noble Lord has identified a number of examples of what needs to be done. I have a great deal of sympathy with many of them. However, one that he mentioned that could be more problematic is the one about the House clarifying that, as with other Bills, the two Houses have co-equal powers in respect of hybrid Bills. That is because the House of Commons has to agree to any changes that the House of Lords wishes to make in additional provisions or whatever, as he said. I assure him that, while the mountain may be quite high, I will take up that issue with the Chairman of Ways and Means. I will ensure that each of the points that he has raised will be addressed in the forthcoming review stages. Either I will report back to him personally or my officials will do so.
The comments from the noble Lord, Lord Foulkes, were very important—and very welcome. The Select Committee and scrutiny work done by the House of Lords is really important—we undersell ourselves in that area. For example, by the end of this week, the EU committees in the House of Lords will have produced 28 reports. The House of Commons has produced two or three. I know that the environment is different there, but the big issues being discussed at the moment in Brussels—for example, the Irish border—were identified very early on in this House in the summer. Joint press conferences were given by the noble Lord, Lord Jay, in Dublin and the noble Lord, Lord Boswell, in London when that report was produced. The relevance of that report is very much alive, but the House of Lords undertook it a long time ago.
The noble Lord, Lord Patel, is coming to see me in relation to the Science and Technology Committee. It has the greatest number of followers on Twitter— some 60,000. He wants to enhance the footprint of the committee. That, too, will be very important in terms of Brexit. I do not know whether the noble Baroness, Lady Tyler, is in her place, but she produced a simple and easy-to-read ad hoc report on financial exclusion. She has come to me and said, “Look, Michael Sheen, the actor, is quite interested in this. Can we invite him into the House so that we can discuss this issue of financial exclusion?”. We do not sell ourselves enough in areas such as that. One of my tasks is to ensure that we do.
The noble Lord, Lord Berkeley, mentioned committees and speaking to groups. On behalf of the Liaison Committee, I am undertaking the first review of committees for 25 years. I have been around the groups—my last meeting this week will be with the Liberal Democrat group. I hope that there will be a call for evidence on that in the new year. We will look at issues such as Joint Committees. That issue will not be off the agenda. The point made by the noble Lord, Lord Howell, reinforced those made before. As chair of the International Relations Committee, he oversaw the report on the Middle East. I know how influential that report was, but we need more resonance.
Lord Cormack (Con)
Can the Senior Deputy Speaker confirm that the way in which committees are appointed will also be subject to some examination?
The Senior Deputy Speaker
I do not think that I am breaking any confidence in telling the House that the noble Lord has both written to me on this issue and come in through the door of my office to discuss it. I therefore cannot deny that that will be on the agenda.
With the enlarged footprint of our debate today, I commend the Motion.
Environmental Protection (Microbeads) (England) Regulations 2017
(7 years ago)
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Lord Gardiner of Kimble
That the draft Regulations laid before the House on 27 November be approved.
Relevant document: 13th Report from the Secondary Legislation Scrutiny Committee
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Gardiner of Kimble) (Con)
My Lords, it is a privilege to introduce these regulations. Microbeads are small plastic particles which have been added to many personal care products. One shower alone can send 100,000 microbeads into the water system and subsequently into our seas and the habitats of the marine animals that live there.
Most significantly, once released into the environment, it is impossible to recover microbeads or remedy the effects that could subsequently emerge. These regulations will ban the manufacture and sale of rinse-off personal care products containing plastic microbeads. The range of personal care products that can contain plastic microbeads is considerable, from products such as shower gels, face scrubs and toothpaste to hand-cleaning products such as Swarfega. Subject to your Lordships’ consent and a positive outcome in the other place later today, these regulations will be signed tomorrow and 21 days from that point of signature the manufacture in England of any rinse-off personal care product which uses microbeads as an ingredient will be banned. Six months from that point, a further ban will come into place to prevent the sale of any rinse-off personal care product containing microbeads. Crucially, this means that those products will neither be able to be imported and sold here nor able to be exported.
We know that there are various sources of plastic entering our seas and oceans due to human behaviour. Recent estimates suggest that up to 12.2 million tonnes of plastic are entering the global ocean every year and 80% of the plastic that is in the ocean has come from land-based actions. Furthermore, it is estimated that personal care products containing microbeads contribute 35,000 tonnes of plastic into the global oceans each year. Put simply, this cannot go on and our generation must act. We have a responsibility as individuals and as a Government not to shirk the global challenge of marine pollution. We must act together to stop this pollution at source and there is no time to lose. Anyone who disputes this should be prescribed a course of “Blue Planet II”.
The regulations before your Lordships help us take a step forward. This will reduce the unnecessary release of plastic into the marine environment and lessen harm to marine organisms caused by this form of microplastic. We have been working closely with the devolved Administrations. Very few cosmetics and personal products are manufactured in Scotland, Wales or Northern Ireland. The ban on both manufacture and sale of microbeads will come into effect on the same day there as the English ban, which is likely to be 9 July. I hope your Lordships will accept the need for these regulations and that the need is pressing. The approach here is another strong example of the continuing role that the UK has taken to protect the marine environment, not just not around our coastline but throughout the world, including our overseas territories. This legislation will deliver one of the strongest, if not the strongest, bans on microbeads in the world. There is clearly much more work to be done, both at home and internationally, on marine litter and pollution and the protection of our seas and oceans.
Evidence concerning microplastics has provided us with information about the potential environmental impacts of microbeads. Ingestion of microplastics by some marine organisms can reduce digestion of food and adversely affect reproduction. They can also be passed along marine food chains. In addition, we know from current evidence, some funded by Defra but also available from other sources, that chemical pollutants can leach from and attach to microplastics, with the potential that these could increase exposure levels of toxins when ingested by marine organisms. Microplastics themselves may also contain potentially harmful chemicals.
I recognise the efforts that industry has taken to address the problem of microbeads. A number of manufacturers and retailers have already stopped using microbeads in their products or have committed to do so, but we have now reached a stage where we have to take more decisive action. Natural alternatives for microbeads do exist. These are readily available and, indeed, were used successfully in personal care products before plastic microbeads were introduced. The approach we have taken is based on clear evidence and as a result has the support of a wide range of stakeholders. Our action on microbeads is a further demonstration of our commitment to address marine litter and protect our seas and oceans. This is an important measure. Marine pollution is no respecter of boundaries and we must work collaboratively, but today we have a particular opportunity for our country to send out the strongest of signals. I beg to move.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, I am delighted to welcome these regulations to ban the production of microbeads in water-soluble cosmetics. I agree with absolutely everything that the Minister said. I declare an interest as a district councillor; it will become clear why later on.
As the Minister said, there are other suitable non-plastic alternatives available to the cosmetics industry. Around 72% of manufacturers have already switched from plastic microbeads to other, more sustainable alternatives, but this leaves 28% of UK cosmetics manufacturers to fall into line. At the end of 2016 and the beginning of 2017 there was an extensive public consultation, which supported the ban on microbeads. As the Minister said, currently that applies only in England but it is expected to be extended to Wales, Scotland and Northern Ireland in July next year. The cost of the ban is approximately £500,000. This is clearly a manageable sum for the largest cosmetics manufacturers. Smaller, local manufacturers do not use microbeads and so are unaffected by this legislation.
As the Minister said, these microbeads are small plastic particles which move through the sewage system and out into the sea, where they are consumed by marine life, sometimes adversely affecting digestive systems. The impact assessment states:
“There is little evidence of the impact to human health”,
although the Department of Health is conducting a review. Fish digestive systems, where microplastics are likely to get caught, are usually removed when preparing fish for human consumption. This is a personal warning to me as I am a great fan of sprats, which I eat whole. Perhaps I will have to change my eating habits.
That apart, my only real concern relates to the enforcement of the regulations surrounding the ban. This is to be allocated to local authorities. As most noble Lords are aware, local authorities have had their budgets cut drastically and are finding it extremely difficult, if not impossible, to make their income stretch over the services they deliver. To add another burden to them could mean that the regulations are not properly enforced—not because local authorities would not wish to do it but because they simply may not have the money to carry out the function effectively. I flag this up to the Minister and seek reassurance.
Regulation 2 relates to who will be enforcing the regulations. Sub-paragraph (d) states that this will be,
“in relation to an area in the rest of England, the county council for that area or, where there is no county council for that area, the district council for that area”.
So is it only county and district councils which will be carrying out the enforcement in most of England? In sub-paragraphs (a), (b) and (c) there is no mention of metropolitan areas apart from London or of unitary authorities. Is this an unfortunate omission? Are these areas excluded? Have I missed something? I would be grateful to the Minister for some clarification.
That apart, I am absolutely delighted to support these regulations, and thank the Minister for his very helpful briefing. I very much look forward to further bans on the unnecessary use of plastics, which the Secretary of State announced this morning.
Baroness Jones of Whitchurch (Lab)
My Lords, I am grateful to the Minister for his clarity in introducing this secondary legislation, and for discussing some of the issues arising from it in advance of today’s consideration. If I could take a small amount of credit for the fact that this SI is before us today, I think I was the first person to raise the issue of microbeads in your Lordships’ House several years ago. I can still remember the look of growing dismay on the faces of noble Lords in the Chamber, who realised for the first time that this plastic was not just an environmental issue, it was actually getting into the food chain and potentially contaminating their fish supper.
Since then, awareness of the dangers of microbeads has risen significantly and the more the public have become aware of them, the stronger the call for microbeads to be banned. The latest polling shows that some 85% of people want action to stop plastics polluting the oceans. As well as concerns being raised on a cross-party basis, both here and in the Commons, there have been some very effective campaigns by Greenpeace, the Marine Conservation Society and other NGOs. As has been said, the wonderful work of David Attenborough and the “Blue Planet” series has also helped to harden attitudes against the wider contamination of the sea by plastics.
Lord Wigley (PC)
My Lords, I intervene briefly to warmly welcome the statement by the Minister. This issue demands urgent attention, and I am glad to see the Government doing this. I have a couple of brief questions. First, with regard to the delay in implementing equivalent steps by the devolved regimes, will he confirm that this is not because of any lack of enthusiasm but is a question of process and that some other steps to this end are being considered by the devolved regimes? Secondly, will he confirm that there is no question of allowing the import of products containing microbeads, particularly from the United States, and that the Government will withstand this with all the means they can?
Lord Gardiner of Kimble
My Lords, I am most grateful for the contributions that have been made because they symbolise the fact that when there is an environmental imperative, very little else matters and unity of purpose is important. I am most grateful to the noble Baronesses, Lady Jones of Whitchurch and Lady Bakewell of Hardington Mandeville, for their endorsement of these proposals.
In response to the noble Lord, Lord Wigley, the reason for the slight difference is purely that, I understand, there are hardly any manufacturers of cosmetics in the three other countries of the United Kingdom. Therefore, it will be brought together with everything in July. I certainly do not want to suggest that there is any sense of delay. There is unity of purpose across the United Kingdom. These regulations are about manufacture, sale, import and export. We are going to have a very robust regime in this country. Potentially New Zealand might have the strongest regime—there is a slight argument about that—but we intend to have the strongest ban that we can.
A number of points were made. The noble Baroness, Lady Bakewell, raised the issue of local authorities. I am looking at the interpretation and I will want to look at it fully because there is no intention of leaving any body out of this. I note the references to the City of London, the rest of London, the council of the Isles of Scilly and, where there is no county council, the district council. I am very confident that this would be a shire county or a metropolitan district, but I will clarify that because there is no intention of being lax about any part of the country on this point.
The noble Baroness, Lady Jones of Whitchurch, made a number of points. At this stage we think that there is a distinction between run-off and leave-on products, because leave-on products tend to be removed in other ways and disposed of in bins and other receptacles which we believe lessens their chance of ending up in the marine environment. However, we have asked the Advisory Committee on Hazardous Substances to look at other sources of microplastic, including industrial cleaning products, with regard to their potential to harm the marine environment. As soon as we have had that, we will know more. Our assessments have indicated that industrial cleaning products used and manufactured in the UK contain a small number of microbeads, but I do not want to discount that. We will be asking the advisory committee to look at that thoroughly.
On the question of training and guidance for trading standards officers, which both noble Baronesses raised, it is essential that we ensure that people who will be asked to do this job are well trained. Officials in Defra have worked closely with local authority trading standards bodies to develop a guidance document for enforcement officers to use. This document contains information about likely products and ingredients that we have gathered from cosmetics associations and experienced trading standards officers to help surveillance.
The document also sets out a series of tests which officers may conduct to help them determine whether or not a product contains microbeads. Officials met a large number of trading standards officers who work at borders around the UK, who informed us that they will be able to inspect products for microbeads alongside the safety testing they already do. We have also committed initial funds of over £100,000 to support the potential increased burden on the Ministry of Justice.
The noble Baroness, Lady Jones of Whitchurch, also asked about labelling. These regulations will ban the manufacture, sale, import and export of all products in this category. We are confident that the ban will stop the use of microbeads in personal care products, and therefore that a new law on labelling will not be necessary. However, we will of course continue to consider these matters because, again, we genuinely want to make progress on ensuring that our oceans and seas are in a better condition.
As I and other noble Lords have mentioned, this whole area needs to be dealt with in collaboration internationally, with the EU and other nations. The importance of the environment is consistently discussed at the international fora in which this country participates—whether it is the G7, the G20 or the UN. We have ensured that at recent meetings, especially at the UN Environment Assembly, we were clear on the reasons for our ban and that we support action to improve our oceans. Fortunately, many other countries, including the United States, Canada, Australia, New Zealand and France are already working on similar bans. Although not all are as strong as ours, the majority of them will come into effect in July this year. The EU is currently considering its position, and other countries such as India are looking to make similar legislative changes. Of course, we will make sure that we use future events to get our message across and show leadership in this area.
I sense the importance to your Lordships of the global lead that we surely must take in terms of further plastic pollution and cleaning up our oceans for the next generation. This country has a long tradition of taking action regarding caring for the marine environment. More recently, this legislation has taken 15 months of hard work. I believe that the success on plastic bags is remarkable, with the reduction in the number of plastic bags found on beaches and the marine environment. We have just finished consultation on a potential deposit return scheme, and we are on track to establish more marine protected areas. We are also looking at how we can increase recycling and decrease the reliance on plastics in our everyday lives.
It is clear that there is much more to be done to tackle the issue of marine pollution. It is a problem that we must not and cannot shy away from. Reducing marine litter at the source will be key to beginning the work towards improving ocean health. The action proposed through this legislation shows that the United Kingdom is determined to face the issue of marine litter head-on by reducing the flow of plastic litter into the oceans. For these reasons, I beg to move.
Sub-national Transport Body (Transport for the North) Regulations 2017
(7 years ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Sugg
That the draft Regulations laid before the House on 16 November be approved.
Relevant documents: 11th Report from the Secondary Legislation Scrutiny Committee
The Parliamentary Under-Secretary of State, Department for Transport (Baroness Sugg) (Con)
My Lords, these draft regulations establish Transport for the North as the first subnational transport body, making the north the first area in England with statutory influence over strategic transport investment decisions.
For a strong, prosperous and balanced UK economy, we need a northern powerhouse, and getting transport right is central to that idea. The aim is to improve transport to, from and within the north, boosting economic growth and rebalancing the economy. That is why we have set up Transport for the North, so the region can exercise real power and make its voice heard on how we can best invest in transport. Having such a body allows areas to combine their strengths and plan transport to grow their economy.
Establishing Transport for the North will formalise local input into strategic transport investment, allowing it to give advice on proposals that could boost growth and development to the north and improve the lives of millions of transport users. Creating Transport for the North permanently by statute will ensure that its impact and influence, and the transformational change that can result, will be felt for years to come.
Lord Shipley (LD)
My Lords, I strongly welcome the regulations. I am glad that the Government are bringing them forward, and I echo the words of the Minister when she said that some excellent work had been done by Transport for the North since its inception.
I shall raise two issues. The first relates to the constituent authorities and the definition of them. There is a list of them on the second page of the regulations. What happens if the structures change? There could be different structures of combined authorities, for example. How easy might it be to change the regulations to reflect any structural changes to those constituent authorities? I am thinking in particular of the North East Combined Authority and North of Tyne, but also of the discussions going on in Yorkshire.
The Minister is absolutely right that the main function of Transport for the North is to prepare a transport strategy for its area. It is hugely welcome that there will be one; as the Minister said, it will be by the north for the north. However, I would like to ask the Minister about money. Does she accept that the north of England has not had its fair share of investment in recent years? Given that, does she accept that one of the key roles for Transport for the North will be to define and prioritise the resources needed across the north of England? In that event, do the Government accept that there would be little point in Transport for the North doing a lot of work and raising expectations if the Government do not meet the financial consequences of that work?
Lord Liddle (Lab)
My Lords, I declare an interest as a member of Cumbria County Council and, more particularly, as a railwayman’s son from Carlisle. I, too, welcome the establishment of Transport for the North. I think it is excellent that we will now have a planning and co-ordinating body that will bring some coherence and, we hope, a transport strategy for the north.
I follow up what the noble Lord, Lord Shipley, said about resources. In repeating the statement, the noble Baroness referred to a sum of £260 million for which Transport for the North would be responsible. What caught my eye in the recent Budget Statement was paragraph 4.53 on infrastructure delivery, which talks about the Infrastructure and Projects Authority setting out a 10-year projection of public and private investment in infrastructure in Britain of around £600 billion.
The interesting question is how much of this £600 billion will come under the purview of Transport for the North. I very much look forward to the noble Baroness being able to tell me in her reply. Mr Hammond promised some worthwhile things in the Budget. For instance, in the transforming cities fund, there was £243 million for Greater Manchester and £134 million for the Liverpool City Region. There was a £300 million fund for ensuring the links between HS2 and other infrastructure in both the north and the Midlands, but £300 million is not very much. Of course, there is the new rolling stock for the Metro—one of the finest achievements of my friend the noble Lord, Lord Rodgers, when he was Transport Secretary in the Callaghan Government.
We need more information. My county of Cumbria has vast unmet infrastructure needs. I have a letter here that I could read out about Cumbria’s requirements for road investment. I am conscious of the requirement for rail investment. The west coast main line has been modernised, but the coastal railway, which goes through some of the most beautiful country in England, up to Sellafield and then on to Carlisle, is back in the 19th century in its infrastructure. Yet we are talking about a new nuclear power station being built in west Cumbria and how we try to relieve traffic congestion in the Lake District. These questions need to be addressed, and they will all cost money.
I say just three things on money. First, in my view, London and the south-east should make a bigger contribution. They constitute one of the richest parts of Europe, and I would like the Mayor of London given power to raise more money through property taxation in London for infrastructure investment. Secondly, as long as you stick to the traditional cost-benefit analyses of how transport schemes are assessed, you will always end up with London and south-east projects at the top of the list. That is because there is not a broad enough conception of public value in how transport projects are assessed.
Thirdly, I do not want the Secretary of State for Transport telling us that he has no money in his budget, because that has been exposed as a total fallacy by his decision on the east coast franchise in the last few weeks. He has basically allowed Virgin and Stagecoach to run away with hundreds of millions of pounds that they owed on their franchise payments—possibly as high as £1.5 billion, I am told. He has allowed them to run away with that, because he was not prepared to go along to the House of Commons and admit that their franchise had failed. That is money that could have been spent on transport projects in the north of England; it has not been spent—and what is the explanation?
Lord Berkeley (Lab)
My Lords, I welcome the fact that so many local authorities have got together and persuaded the Government to form this new organisation. As the Minister said, in geographical terms it is probably the 10th-largest area of its kind in Europe. It goes from Newcastle down to Lincolnshire, right across to Cheshire and Liverpool and up to Cumbria; it is an enormous area, and it is a real success that they have managed to do this.
The Minister said that it would be useful for the Department for Transport—I hope that I have got this right—to give advice. From Regulation 5, “General Functions”, it seems to me that Transport for the North will be giving advice to the Secretary of State. It says that among its general functions is,
“to prepare a transport strategy”—
yes. Then it refers to providing advice to the Secretary of State about how he should exercise his transport functions. Thirdly, it has the function,
“to co-ordinate the carrying out of transport functions”.
Fourthly, it says that it must tell the Secretary of State if it thinks that TfN can do it better. To me, that is very much the Secretary of State retaining control. Perhaps the Minister could explain where the devolution is in all this. It is nice having lots of advice, and everything, but the devolution does not seem to be there; it is still going to be the Secretary of State who has the control.
Other noble Lords have mentioned money. The £250 million that the Minister mentioned is really pretty derisory, compared with Crossrail 2, which I believe will cost £30 billion and HS2, which I think will cost £100 billion, which, of course, connects to the north. But I suspect that many people in that enormous area, as other noble Lords have said, would like to be better connected within the area rather than getting to London 10 minutes quicker. So there is a real mismatch between what London is getting and what the north needs to get. I hope that the Minister can put me right on both those issues. Is it real devolution? Can Transport for the North really make decisions and have the money to spend it as it wants?
Last week, in a local newspaper in Bolton, Lancashire, a comment was made that the Secretary of State had refused the Mayor of Manchester—and this may also be the case regarding other big stations in the north—control of the station so that they can do it up and make it more attractive, getting more passengers and more retail. Why does London have to control the colour of the paint, or what is done locally in these stations, if the local people want to do it and can make some money? We really have to let go of London having control of everything and let this new organisation have real powers. If it fails, the Government know what to do, but I think that it will be a great success.
Lord Beith (LD)
My Lords, I welcome the authority that is being given to Transport for the North by these regulations and, indeed, welcome the work that Transport for the North has done so far, even without the status that the regulations give it. It is my hope that the strategic planning that it does will lead to some of its advice being taken by the department and some correction of a very serious imbalance to which other noble Lords have referred in levels of transport infrastructure investment in the north as compared with the south-east of England. That area has recognisable problems that require some fairly expensive solutions—but not at the expense of ensuring that we have the kind of transport system that encourages prosperity, business and innovation in the north of England.
When I say the north of England, I think particularly of the north of the north, not simply of the Hull-Manchester-Leeds-Liverpool corridor, important though that also is. As I have done previously, I want to encourage Transport for the North—given the powers that it now has—to address some of the issues that are important to us in the far north. That includes, of course, the franchise problems to which the noble Lord, Lord Liddle, referred. I say “problems”, but the reality is that every single commercial operator that has taken on the east coast franchise has been unable to deliver the terms of the contract and has left it—in the most recent case—on terms that are extraordinarily favourable to the contractor. In earlier cases, the terms were not so favourable to the contractor. This is the most important transport link for the north-east of England, as well as Scotland, and that issue will clearly require further attention.
Among the issues that I hope Transport for the North will be able to give the department strong advice on are issues which it has worked on for some time but which we want to see come to fruition. These include the extension of the trans-Pennine route through to Edinburgh, up the east coast main line; the reopening of services such as the Ashington rail link; and the development of commuter services into Newcastle, such as the one from Chathill, which is a small, Cinderella service. Newcastle has its own requirements for transporting people into the city centre and problems with excessive use of cars for that purpose. There is a lot of work to be done and I am glad that Transport for the North has been given the authority to get on with it.
Lord Beecham (Lab)
My Lords, I declare an interest as a resident of Newcastle and a member of the local authority. I also have the misfortune of being a regular traveller on Virgin Trains East Coast. I had the pleasure of sitting in a train outside Spalding for four hours recently while the train ahead of us had broken down. The relief train that was sent to deal with the problem also broke down. That is only one of the more dramatic examples of Virgin’s failure. As my noble friend Lord Liddle and the noble Lord, Lord Beith, have referred to, Virgin is now withdrawing, five to six years ahead of the date by which the contract should have ended. It is known that it had pledged £3.3 billion. I do not know whether the Minister is in a position to say how much it has benefited—or will benefit—from its decision to withdraw. Looking to the future, I join other noble Lords in welcoming the new organisation. Will it have a role in deciding—along with others, of course, because the train service runs from Scotland down to London—who will obtain the next franchise and on what terms? That is really important.
I mentioned Scotland. The north does not only look south; it also looks north. We need better road connections. A certain amount was done shortly before the general election, which was some time ago. That no doubt assisted on a political level, but it has not yet provided the improvements required. I trust that TfN will have the opportunity to press the Government on that.
Another aspect of the relationship with Scotland, to which I have referred from time to time in your Lordships’ House, is the question that still hangs over the future of air passenger duty. It is thought that, given the opportunity, Scotland may well exercise its right to abandon that duty. That would have a very adverse effect, certainly on Newcastle Airport and, I suspect, on other airports across the northern region. I have yet to get an indication from the Government of what their attitude would be if Scotland exercised its apparent right to abandon the duty. I would hope that, in the interests of the whole of the north, they would be able to follow that decision and apply it to the north of England. It may be that the Government would wish to see the whole thing gone, nationally. One way or the other, it would be extremely disadvantageous to the north if Scotland was able to do away with APD and the north was stuck with it. I am sure that TfN will have views about that, and I hope the Minister and her colleagues will take note of them, should the situation arise.
Lord Rosser (Lab)
I thank the Minister for her explanation of the purpose and content of these regulations. I note that the Chamber is fairly full, but I am not sure it is because noble Lords have come to listen to either myself or, I am afraid, the Minister; I suspect that they are here for the next item.
Transport for the North was established in 2014 as a partnership of northern authorities and local enterprise partnerships to formalise co-operation on transport issues in the north, working with Highways England, Network Rail, HS2 Ltd and the Department for Transport. TfN will, under these regulations, become the first subnational transport body in England. Transport for the North’s responsibility is to set out the requirements of the transport network through a strategic transport plan for the north, and it has a remit to focus on movement between cities and key economic centres to support a more productive and integrated northern economy. Indeed, the Northern Powerhouse Independent Economic Review found that, if the north receives the right level of investment to improve connectivity across the region, it will create over 850,000 jobs and add almost £100 billion gross value added to the economy by 2050. Transport for the North also has a role to play in supporting local and national government to ensure that local investment in public transport and national transport infrastructure projects form a coherent investment programme.
We support putting Transport for the North on a statutory footing from April next year, but we doubt whether what is now being put forward is adequate in addressing underinvestment and the significant disparities in transport spending between the north and the south. Following the debacle over the cancellation or postponement of rail electrification on the trans-Pennine route, the Secretary of State asserted that the future of transport in the north was in the hands of the north because he would give it the powers necessary to address its own transport needs. What the Government are now proposing for Transport for the North would not appear to deliver what they said would be delivered.
All the regions of the north combined receive less in transport investment than London, despite the north having twice the population. If the Government will not address poor transport infrastructure in the region, they should at least give the regions of the north the power to do so themselves. However, the regulations we are discussing today would appear to give the north neither the necessary investment nor the necessary power in this area. It would appear that, instead of receiving “client status”, Transport for the North will instead be a “statutory influencer”. Although the Secretary of State will have to have regard to the views and recommendations of Transport for the North and its statutory transport strategy, it will, as I understand it, be a matter for him to decide what improvements to the transport infrastructure will get the go-ahead, and when, since Transport for the North has no decision-making powers in that regard and neither will it have either its own, or access to, financial resources to be able to finance and deliver significant infrastructure schemes.
There is a real danger that Transport for the North will spend a lot of time, enthusiasm and energy drawing up a strong economic case for significant transport infrastructure improvements, with the support and backing of local authorities, business and community organisations and representatives across the region, and then find that the Secretary of State just kicks them into the long grass, perhaps because this Secretary of State, the most politically partisan we have had for a long time, is reluctant to give money or additional decision-making powers to areas that do not share his political outlook—as opposed to effectively giving money to failing east coast main line franchise operators.
Perhaps that is why he has not delivered on his earlier statements that the future of transport in the north was in the north’s hands and that he would give it the powers necessary to address its own transport needs. If Transport for the North does not get the support of the Secretary of State for implementing and overseeing the delivery of its transport recommendations, it will lead to frustration all round rather than progress, since people have had enough of talking shops and want to see imaginative and well-thought-through plans see the light of day.
Could the Minister say what amount of money is available for implementing and delivering Transport for the North’s strategic transport plan—and whether, if TfN had already been in existence as a statutory body and had included the electrification of the trans-Pennine route in its strategic plan, the Secretary of State could nevertheless have disregarded the plan and not agreed to electrification of the route? Hence our view, if I am correct, that Transport for the North does not have any great power; the power remains firmly in the grip of the Secretary of State.
Could the Minister also say what it means in reality for the Secretary of State to “have regard to” TfN’s statutory transport strategy when developing national transport strategies and plans? How does the Secretary of State prove that he has had regard to that strategy—and, alternatively, how does anyone prove that he has not? Would it be open to Transport for the North to take legal proceedings against the Secretary of State if it considered that he had not had regard to its transport strategy—and, if so, will TfN have the statutory power and the financial resources to initiate such legal proceedings?
As I understand it, Transport for the North will also have a role in the co-ordination of regional transport activities, such as, for example, smart ticketing and co-management of the TransPennine Express and northern rail franchises through the acquisition of Rail North Ltd. What exactly will that co-management involve as far as Transport for the North is concerned, what exactly will co-ordination of regional transport activities involve, and what statutory powers is Transport for the North being given in respect of each role?
What will be Transport for the North’s budget for its administration over each of the first three years from 1 April 2018, how many staff will it employ, how much will it receive in grants—the Minister mentioned £260 million—and from what sources and what purposes over that same three-year period? In how many years’ time do the Government anticipate reviewing the role of Transport for the North as a statutory body, including the effectiveness with which it is able to carry out its role under the powers that it is being given through this instrument, and whether there is a need to either reduce or increase the powers and the role that Transport for the North is being given under these regulations?
I believe that the Minister, when she introduced the regulations, referred to Transport for the North achieving “transformational change”. What goals are the Government seeking to achieve over the next 10 years that will represent the transformational change referred to by the Minister?
On the resources made available to Transport for the North, I repeat that I think the Minister mentioned £260 million. To most of us that sounds like an awful lot of money, but can the Minister say how that compares with the cost of Crossrail for London, for example, so that we can see how significant a part of the cost of Crossrail that £260 million represents?
We hope that Transport for the North will be able to exert a positive influence on transport in the north and that it does not become a largely toothless, penniless, powerless talking shop, drawing up persuasive and compelling strategic plans which are then largely ignored by the Secretary of State.
Baroness Sugg
My Lords, I thank all noble Lords for their contributions and for their broad support for this measure. I will do my best to answer as many of the points raised as I can but, if I do not manage to answer them all, I will write to noble Lords.
The noble Lord, Lord Shipley, asked how the change to constituent authorities will work. It would require a further affirmative statutory instrument once it had been proposed and approved by the existing members of Transport for the North.
There was some discussion about the powers for Transport for the North. These powers have been agreed after extensive engagement with TfN and the northern leaders over the last 12 months. Both the Government and TfN agree that the role outlined in this statutory instrument allows TfN to build its capability and capacity over time, and we think that it strikes the right balance between national and regional priorities. Of course, Transport for the North can seek approval from the Secretary of State for additional functions and take on more responsibility to improve transport planning or make provision to enhance economic development in the area.
The noble Lords, Lord Shipley, Lord Liddle and Lord Berkeley, raised the question of regional disparity. This Government are reversing decades of underinvestment in the north, with the biggest investment for a generation. Including all projects, the Government are spending more per head on transport in the north-west than they are in the south-east. This is backed up by the recent publication of the National Infrastructure and Construction Pipeline by the Infrastructure and Projects Authority, which shows that per head spending in the north is expected to be £10 higher than in the south. Indeed, just today we have published our rebalancing toolkit, which is designed to help authors of strategic cases assess how a programme fits with the objective of spreading growth across the country.
On funding, raised by probably every noble Lord, the initial funding settlement of £260 million reflects TfN’s initial role. There are also the resources needed to deliver the programme set out in the Northern Transport Strategy. I am afraid that I am not able to give a specific figure as requested by the noble Lord, Lord Liddle. TfN is aiming to publish its draft strategic transport plan in the new year, and a 12-week consultation will follow. It should be finalised in the summer of 2018 and, from there, we will look forward to working with TfN, as it becomes a statutory body, on how best to move that forward. We are already spending £13 billion on transport in the north and, as I said, we must wait to see what TfN’s strategy comes up with.
On the question of who makes the decisions, TfN will, through its strategic transport plan, make decisions on the transport priorities for the north. It will provide the evidence to make the case but Ministers here, who are ultimately accountable to Parliament, will make the funding decision, so that will sit with the Secretary of State.
The noble Lord, Lord Beecham, asked about future franchises. TfN will be a statutory consultee on all future franchises.
The noble Lord, Lord Liddle, mentioned Cumbria. I understand that the LEP there is developing a strategic outline business case and we look forward to considering it. We are working with the LEP and the county council to help them develop that business case.
The noble Lord, Lord Berkeley, asked about Manchester rail stations. The Secretary of State has recently written to the Mayor of Greater Manchester to propose a further discussion on how we best answer that.
We see the establishment of Transport for the North as a significant step for the north and for the country. It will work with the region’s transport authorities and elected mayors to build a long-term vision for transport across the north of England. As the voice of the north on transport, TfN will have unprecedented influence over government funding and decision-making.
This Government are clearly demonstrating that, in setting up Transport for the North and backing the election of metro mayors, we are giving the north greater autonomy and control, and a powerful voice to articulate the case for new transport projects.
Lord Beecham
Perhaps I could remind the noble Baroness that I raised the question of air passenger duty. Could she make some comment on that?
Baroness Sugg
My apologies for missing that. We are aware of the potential issue of the different rates of APD in Scotland and the north of England and indeed in the rest of the UK. In the Budget last week, that change was not made, but we keep a close eye on it.
Lord Rosser
The Minister is confirming that Transport for the North is about “articulating the case”, to use her words, and that decisions on how much will be spent and where will continue to rest in Whitehall with the Secretary of State. Transport for the North is purely about articulating the case, and I use the Minister’s own words.
Baroness Sugg
As I hope I made clear, Transport for the North will articulate the strategic decisions, setting out how it wants to develop transport for the north, but the ultimate decisions on funding will remain with the Secretary of State.
European Council
(7 years 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 in another place by my right honourable friend the Prime Minister. The Statement is as follows:
“With permission, Mr Speaker, I would like to make a Statement on last week’s European Council. Before turning to the progress on our negotiations to leave the EU, let me briefly cover the discussions on Russia, Jerusalem, migration and education. In each case the UK made a substantive contribution, both as a current member of the EU and in the spirit of the new, deep and special partnership we want to build with our European neighbours.
Russia’s illegal annexation of Crimea was the first time since the Second World War that one sovereign nation has forcibly taken territory from another in Europe. Since then, human rights have worsened: Russia has fomented conflict in the Donbass and the peace process in Ukraine has stalled. As I said at the Lord Mayor’s Banquet, the UK will do what is necessary to protect ourselves and work with our allies to do likewise, both now and after we have left the EU. We were at the forefront of the original call for EU sanctions, and at this Council we agreed to extend those sanctions for a further six months.
On Jerusalem, I made it clear that we disagree with the United States’ decision to move its embassy and recognise Jerusalem as the Israeli capital before a final status agreement. Like our EU partners, we will not be following suit. But it is vital that we continue to work with the United States to encourage it to bring forward proposals that will re-energise the peace process. This must be based around support for a two-state solution and an acknowledgement that the final status of Jerusalem must be subject to negotiations between the Israelis and Palestinians.
On migration, when we leave the European Union we will be taking back control of our borders and laws, so we will be free to decide our own approach independently of the EU. But as part of the new partnership we want to build, I made it clear at this Council that we will continue to play our full part in working with the EU on this shared challenge. We will retain our maritime presence in the Mediterranean for as long as necessary; we will work with Libyan law enforcement to enhance its capability to tackle people-smuggling networks; and we will continue to address the root causes of the problem by investing for the long term in education, jobs and services, both in countries of origin and transit.
When it comes to education, our world-leading universities remain a highly attractive destination for students from across the EU, while UK students also benefit from studying overseas. UK and EU universities will still want to work together after we leave the EU and to co-operate with other universities from around the world. We will discuss how to achieve this in the long term as part of the negotiations on our future deep and special partnership. In the meantime, I was pleased to confirm at this Council that UK students will be able to continue to participate in the Erasmus student exchange programme for at least another three years, until the end of this budget period.
Turning to Brexit, the European Council formally agreed on Friday that sufficient progress has been made to move on to the second stage of the negotiations. This is an important step on the road to delivering the smooth and orderly Brexit that people voted for in June last year. I want to thank Jean-Claude Juncker for his personal efforts, and Donald Tusk and my fellow leaders for the constructive way they have approached this process. With Friday’s Council we have now achieved my first priority of a reciprocal agreement on citizens’ rights. EU citizens living in the UK will have their rights enshrined in UK law and enforced by British courts, and UK citizens living in the EU will also have their rights protected. We needed both, and that is what we have got, providing vital reassurance to all these citizens and their families in the run-up to Christmas.
On the financial settlement, I set out the principles for the House last week and the negotiations have brought this settlement down by a substantial amount. Based on reasonable assumptions the settlement is estimated to stand at between £35 billion and £39 billion in current terms. This is the equivalent of around four years of our current budget contribution, around two of which we expect will be covered by the implementation period. It is far removed from some of the figures that have been bandied around.
On Northern Ireland, as I set out in detail for the House last week, we have committed to maintain the common travel area with Ireland; to uphold the Belfast agreement in full; and to avoid a hard border between Northern Ireland and Ireland while upholding the constitutional and economic integrity of the whole United Kingdom, and we will work closer than ever with all Northern Irish parties and the Irish Government as we now enter the second phase of the negotiations.
The guidelines published by President Tusk on Friday point to the shared desire of the EU and the UK to make rapid progress on an implementation period, with formal talks beginning very soon. This will help give certainty to employers and families that we are going to deliver a smooth Brexit. As I proposed in Florence, during this strictly time-limited implementation period, which we will now begin to negotiate, we would not be in the single market or the customs union, as we will have left the European Union. But we would propose that our access to one another’s markets would continue as now, while we prepare and implement the new processes and new systems that will underpin our future partnership.
During this period, we intend to register new arrivals from the EU as preparation for our future immigration system, and we will prepare for our future independent trade policy by negotiating and where possible signing trade deals with third countries, which could come into force after the conclusion of the implementation period. Finally, the Council also confirmed on Friday that discussions will now begin on trade and the future security partnership. I set out the framework for our approach to these discussions in my speeches at Lancaster House and in Florence. We will now work with our European partners with ambition and creativity to develop the details of a partnership that I firmly believe will be in the best interests of both the UK and the EU.
Since my Lancaster House speech in January we have triggered Article 50 and begun and closed negotiations on the first phase. We have done what many said could not be done—demonstrating what can be achieved with commitment and perseverance on both sides—and I will not be derailed from delivering the democratic will of the British people. We are well on our way to delivering a smooth and orderly Brexit. That is good news for those who voted to leave, who were worried the negotiations were so complicated it was never going to happen, and it is good news for those who voted remain, who were worried that we might leave without being able to reach an agreement.
We will now move on with building a bold new economic relationship, which, together with the new trade deals we strike across the world, can support generations of new jobs for our people, open up new markets for our exporters and drive new growth for our economy. We will build a new security relationship that promotes our values in the world and keeps our families safe from threats that increasingly do not recognise geographical boundaries. And we will bring our country together—stronger, fairer, and once again back in control of our borders, our money and our laws.
Finally, let me say this. We are dealing with questions of great significance to our country’s future, so it is natural that there are many strongly held views on all sides of this Chamber, and it is right and proper that we should debate them, and do so with all the passion and conviction that makes our democracy what it is. But there can never be a place for the threats of violence and intimidation against some Members that we have seen in recent days. Our politics must be better than that. On that note, I commend this Statement to the House”.
Baroness Smith of Basildon (Lab)
My Lords, I thank the noble Baroness for repeating the Statement. The past couple of weeks have been very eventful for the Government. The Prime Minister has travelled to Brussels three times. On the first occasion, she returned empty-handed because of her partners in the DUP. The second was a last-minute dash across the channel for breakfast with Barnier to save the deal that allowed for progress to phase 2. Now, on the third occasion, she returns home early as the UK once again has to sit out the second day of a major EU summit.
When the Prime Minister returned last week to make her Statement to Parliament, for one, brief, shining moment, her Cabinet was united. Some on the Tory Benches even found themselves echoing the warm words of EU figures such as Donald Tusk and Jean-Claude Juncker. We all paid tribute, quite rightly, to the Prime Minister’s tenacity in securing a sufficient-progress decision, first from the Commission and then from the European Council.
Unfortunately, the Cabinet unity was short lived and gave way to a weekend of unsanctioned briefings and policy proposals. Yet again, the Foreign Secretary used a newspaper interview to engage in an open conversation with the Prime Minister, with a warning that she should not seek to maintain full regulatory alignment with the EU to avoid the UK becoming what he described as “a vassal state”. The Environment Secretary suggested that the Tories should abandon their manifesto commitment to keep EU-derived employment and workers’ rights and scrap the vital protections contained in the working time directive. Such briefings from Cabinet members are not only unhelpful and undermine the Prime Minister and her Government, but could damage the UK’s wider interests.
Despite the positive news that EU leaders gave formal approval for the launch of phase 2 talks, the summit served as a reminder that, while we focus on our withdrawal from the EU, the EU is focusing on its own challenges and shaping its own future. Important discussions took place on co-ordinated efforts to stem illegal migration; the need to increase the resilience of the economic and monetary union; education and culture; and climate change. While Theresa May confirmed the UK’s intention to remain a part of Erasmus+ until 2020, the EU27 took decisions on the longer-term future of that programme and many others. The conclusions also feature important commitments to the implementation of the Paris agreement, the continuation of sanctions against Russia, and restating the agreed position on Jerusalem and a two-state solution. To give the Prime Minister credit, she has spoken out on these issues, but will the Leader tell the House whether President Trump has returned the Prime Minister’s call from last week? If he has, what discussions took place regarding Israel?
It is quite an irony that while Michael Gove prepared to launch his broadside on EU-derived workers’ rights, EU members committed to implementing the European pillar of social rights, accelerating important social initiatives already in progress at national and EU levels, and taking renewed action to tackle the gender pay gap. I suspect that the Prime Minister might have a particular interest in the last area, given last week’s revelations of a significant gender pay gap among special advisers at No. 10.
Returning to the Brexit negotiations, it is clear that the second phase will be challenging and needs good will and trust on all sides. In that respect, I repeat my comment from last week, to which I have already alluded: the Cabinet must stop freelancing and the Prime Minister must insist that her Ministers back her. David Davis’s mixed and contradictory messages last week were unhelpful. I hope that at the next Cabinet meeting, which I think is tomorrow, the Prime Minister will be able to ensure that all Cabinet members are prepared to accept the principle of collective responsibility and accountability, even during the upcoming Christmas Recess.
Tomorrow, the Cabinet discusses our future relationship with the EU. Perhaps because of deep divisions, it has taken 18 months for that discussion to take place. The clock is ticking down. It is clear that a transitional period will be possible only if there is high-level agreement on a future relationship that can be struck in the EU’s original timescale, but with phase 2 talks beginning shortly it is essential that these discussions are productive and that the Government can set out their end goal, engage with the public to explain it, urgently communicate it to the EU and remain committed to securing that outcome.
Assuming that consensus is achieved at tomorrow’s Cabinet meeting—that might be a big “if”—will the Minister confirm when the UK expects to communicate its detailed wish list to Parliament and to Michel Barnier’s team? The noble Baroness will understand why I raise this key point again: businesses are making decisions now about their future regarding location and employment issues. Will she confirm the terms that the UK is seeking for the transition period? In the light of the comments made from the EU side that it would not extend transitional arrangements to Gibraltar, will she confirm that the Government will challenge that position?
The noble Baroness referred to Northern Ireland in the Statement. What we have heard on Northern Ireland so far has been nothing beyond the aspirational. Will she tell us what practical considerations have been made and what decisions are being taken to ensure there is not a hard border, given the Government’s commitment to saying it cannot remain in the single market and the customs union? Some of us are struggling to understand how that can be achieved.
The Prime Minister’s very welcome commitment on Erasmus+ was in the context of only the current Budget. When can universities and students expect certainty on their ability to participate in the programme post-2020?
Last week, the noble Baroness disappointingly confirmed that the joint report does not cover onward movement of UK citizens living elsewhere in the EU but said that this would be revisited in phase 2 of the negotiations, yet today’s Statement refers to UK citizens’ rights being “protected”. Can she reflect on that? “Reciprocal agreement” implies equal status between citizens of the EU and citizens of the UK. However, a Commission memo published on 12 December suggests that UK citizens will have to rely on limited rights under the Blue Card directive or the ICT/students and researchers directives to settle in another member state. I would be grateful if the noble Baroness could comment on this and give a definitive answer on whether the Government expect to maintain and secure full onward movement rights for UK citizens in the EU. If not, the Statement is possibly not being entirely accurate in saying that UK citizens’ rights will be fully protected.
The Prime Minister said in her Statement that until the UK withdraws from the EU, it continues to play a full role in meetings. Can the noble Baroness therefore say whether the Fisheries Minister, George Eustice, last week left the Agriculture and Fisheries Council early to attend votes in the Commons? If so, has there been any detrimental impact on the UK fishing fleet or has it lost out on access to any EU quotas as a result? Or did it really not make any difference?
Lord Newby (LD)
My Lords, it is the time for end-of-term reports, and this Statement represents that of the Government in respect of Brexit. Like the assiduous student that she was, the Prime Minister has carefully presented her course work. She has one agreement to show for almost nine months of negotiations since the triggering of Article 50. It is in three parts. The Government have agreed to honour their financial commitments—good, but this was merely bowing to the inevitable. They have agreed to allow EU migrants to stay in the UK—good, but this principle was never seriously in contention. They have kicked the Northern Ireland problem down the road—bad, but given the fundamental incompatibility contained in the Government’s position, this is an inevitable delay until or unless the Government work out what they want their trading relationship with the EU to be.
In terms of legislation, we are to have at least eight Brexit Bills and 1,000 statutory instruments before March 2019, and in reality many of these will be needed well before then. Yet not a single piece of primary legislation, far less a single statutory instrument, has been enacted and no Brexit-related Bill has even completed its passage through a single House. It is extremely difficult to see how the Government plan to get all this legislation through in a timely manner, but given the importance of the subject matter, can the Leader of the House give us an assurance that the Government will produce their proposals in time for both Houses to deal with them properly and within the normal conventions on timetabling?
As far as the future trading relationship is concerned, and indeed on a host of other issues, including the Government’s attitude to ongoing migration to and from the EU, it is pointless pressing the Leader on the Government’s attitude because they literally have no policy. Can she, however, confirm that last week’s agreement means that Northern Ireland citizens who retain their EU citizenship will have more rights than other UK citizens? If, as I believe, this is so, it will be deeply offensive to many people. Given that the noble Lord, Lord Callanan, said to your Lordships’ House last Monday that,
“we are not ruling out”—[Official Report, 11/12/17; col. 1368.]
UK nationals retaining EU citizenship, will the Government now positively propose to the EU that UK citizens will be able to retain their EU citizenship so that the majority of us are not reduced to second-class status in comparison with our Northern Ireland compatriots? Given that when the Government do eventually adopt a policy on our future trading relationship with the EU this will be of fundamental importance to the Brexit negotiations, and indeed the country’s position going forward, will the Leader of the House give an assurance that both Houses of Parliament will be able to have a full debate and vote on the Government’s proposals before they are transmitted to the EU? Would not anything less be inconsistent with Parliament taking back control?
In order that people at large might have a clearer understanding of the consequences of Brexit for the economy, will the Leader now seek to persuade the Prime Minister and the Brexit Secretary to publish the infamous sectoral reports? They contain nothing which is commercially sensitive or could jeopardise our negotiating position and there is no reason why everyone should not be able to see them. The current arrangements for parliamentarians to see them are disproportionately restrictive and should in any event be relaxed, but the documents should simply become publicly available. The only conclusion one can draw from the Government’s current approach is that they do not want people to see how complicated Brexit will be in practice or to understand the depth and beneficial nature of our current economic relationships with the EU.
Finally, will the noble Baroness confirm the estimate in today’s Financial Times that Brexit is already costing, not benefiting, the UK some £340 million a week, as a result of lower growth which has flowed from the referendum result? It is very tempting at this stage of the term to give the Government an overall mark for their term’s work, but I fear that that would be embarrassing. I simply pose the question asked by many a frustrated and disappointed supervisor: “Don’t you think it would be better if you took another course?”.
Baroness Evans of Bowes Park
My Lords, I am grateful to the noble Baroness and the noble Lord for their comments, but I am somewhat disappointed that they do not seem to have fully welcomed the fact that we have made sufficient progress and that we can now move to talk about the future. They have been saying that this is what they want for months, yet now we achieve it, unfortunately it seems that they are not as keen as perhaps they said they were originally.
To answer the noble Baroness’s question, we will start talking to the EU 27 about the shape of the future relationship and the details of the implementation period straightaway and the EU will be producing guidelines in March to further aid those discussions. The noble Baroness also asked about Gibraltar. I can confirm that the UK Government are committed to engage with the Crown dependencies and overseas territories, including Gibraltar, of course, as we prepare to exit the EU, to ensure that their interests and priorities are taken into account. We will never enter into arrangements under which the people of Gibraltar would pass under the sovereignty of any other state against their wishes. We had the fifth meeting of the UK-Gibraltar ministerial forum on 11 December with DExEU and Treasury Ministers taking part alongside the Chief Minister, Deputy Chief Minister, Financial Secretary and Attorney-General of Gibraltar, so I can assure her that we have Gibraltar’s interests at the centre of our thoughts and will continue to do so.
The noble Baroness asked about Erasmus. As she rightly acknowledged, the Prime Minister announced our intention to continue to participate in the Erasmus programme for at least another three years, until the end of the current budget period. Anything further than that is for the future negotiations, but that commitment shows how much we value the Erasmus programme and understand its importance. In relation to onward movement, I fear that I can say no more than I said last week: this was an issue we were hoping to resolve, it has not yet been resolved but we have been very clear that we want to come back to it at the next stage of the negotiations. On her question about the Fisheries Minister, he certainly managed to balance his responsibilities in representing the UK in the recent discussions with taking his role as a parliamentarian extremely seriously.
The noble Lord, Lord Newby, asked about citizens’ rights. As we have said all along, we wanted a reciprocal agreement on citizens’ rights and that is what we have agreed. We now want to make sure that we turn the agreement into the legal agreement we will see in the withdrawal and implementation Bill. He asked about the sectoral reports. Everyone can see them, they are available for anyone to see and I certainly encourage all noble Lords to do so.
Lord Spicer (Con)
Was there any agreement, either in the margins of the meeting or in the meeting itself, as to what would happen if the full terms of Article 50 were applied in the event of there being no agreement in the discussions?
Baroness Evans of Bowes Park
The discussions in relation to us leaving the EU were very constructive. We have now agreed to move on to phase 2 and to start to talk about our future relationship, which is extremely welcome.
Lord Hain (Lab)
My Lords, given that the Northern Ireland question was responsible for rescuing the Prime Minister in the first stage of negotiations when she agreed a regulatory alignment on standards and the adjudication of those standards, not just physical controls on the Irish border, within the whole of the UK—that is, the customs union and the single market have to be aligned in order to keep the border open—and now that has been accepted for the transitional talks, what is the point of leaving the single market and the customs union? Does she think that the EU is magically going to give us a better deal by being exactly aligned with the customs union and the single market outside it?
Baroness Evans of Bowes Park
We have always said that the details of how we maintain an open border will be settled in phase 2 of the negotiations, when we agree our future relationship, and that is what we will do. We have also been very clear that alignment is about pursuing the same objectives, but achieving this could be done through different means. It does not require regulatory harmonisation.
The Lord Bishop of Leeds
My Lords, the Leader seems disappointed that the Statement has not been welcomed as it might have been. I do welcome it but I do not think it is as it has been portrayed; that is, the progress that has been made thus far is simply the opening gambit and the real hard work is going to come in the next phase. It seems to me that so far not a great deal has been achieved, except that we can go on to talk about the next phase. I will make a quick observation and then put a question.
I have some knowledge of Russia. It seems that Russia does not need to defeat the West because it gets the West to defeat itself; the Russian policy seems to be to destabilise, and Brexit and the way it is being conducted actually feed that agenda. We do not talk about that enough. If you look at the rise of the far right, such as what has gone on in Austria, the very strong links with Russia are there. This is not simply about Ukraine.
I would be much happier if I heard the word “might” rather than “will”. We talk about how we “will” get the best deal. By definition, we will get the best deal because it will be the only one that we come up with so it will be the best, but that is not the same as saying that it will be the best deal that we could have got or the best for this nation. Would it not be better for the Government to get away from thinking that if you make assertions, that creates reality, and to be more honest with the British people by saying we “might” get, rather than we “will”, when it might not be in our power to achieve the “will”?
Baroness Evans of Bowes Park
I am afraid I do not agree with the right reverend Prelate that progress has not been made. We have made a lot of progress in phase 1, not least in giving clarity to UK citizens living abroad and EU citizens here about their status. We have discussed a financial settlement. We have discussed the very important issue of Northern Ireland and have all agreed that we do not want a hard border and have thought about how we might achieve that. In terms of where we go next, I think we are in a good position. The EU Council conclusions state:
“The European Council reconfirms its desire to establish a close partnership between the Union and the United Kingdom … The European Council reconfirms its readiness to establish partnerships in areas unrelated to trade, in particular the fight against terrorism and international crime, as well as security, defence and foreign policy”.
These things are the basis for a good deal.
Baroness Smith of Newnham (LD)
My Lords, I am sure we welcome the good news brought by the noble Baroness from the Prime Minister, but I think many in your Lordships’ House share the confusion about how we are to get to the Panglossian outcome in Ireland without remaining part of the single market. Is the noble Baroness able to explain that, and how having the Government,
“work closer than ever with all Northern Irish parties”,
fits with the Prime Minister’s confidence and supply measures with the DUP? Has she asked Arlene Foster?
Baroness Evans of Bowes Park
My Lords, I am afraid I can say only what I have said already today and several times last week. Everyone has pledged that there will be no hard border between Northern Ireland and Ireland. We have always said that details of how to maintain an open border will be settled in phase 2 of the negotiations. If we do not achieve that outcome, which we believe we will, we will look to negotiate specific solutions for the Northern Ireland border.
Lord Maude of Horsham (Con)
My Lords, does my noble friend agree that it is unhelpful for negotiators on the EU side to say, as I understand Michel Barnier is reported to have said, that no bespoke agreement can be reached with the UK? Every single trade agreement that the EU has reached with third countries has been a bespoke agreement, and it is manifestly absurd to argue that ours cannot be one. This will be about trade but also about co-operation on security and intelligence. Does my noble friend agree that effective collaboration, particularly on intelligence, depends at least as much on trust in relationships as it does on the legal framework, and that evidence of serious good will in wanting this to be genuinely a deep and special relationship will be of huge importance in ensuring that security and intelligence collaboration can be as effective in future as it certainly is now?
Baroness Evans of Bowes Park
My noble friend speaks with great experience, and I could not say it better than he did.
Lord Wigley (PC)
My Lords, if the Minister is saying, as I believe she is, that the UK will have left the European Union on 31 March 2019 and the single market and the customs union on the same date, but that over the transitional period virtually identical rules to those of the single market and the customs union will persist, on what basis cannot those rules persist indefinitely?
Baroness Evans of Bowes Park
As we have said, we are looking for a time-limited implementation period to ensure that businesses and individuals have to make only one set of changes. We want a swift agreement on the implementation period. Our objective is for access to each other’s markets to continue on current terms, based on the existing structures of EU rules and regulations but for a time-limited period.
Lord Cormack (Con)
My Lords, last week my noble friend told the House that the Cabinet was united. It really is not helpful when articles and interviews are given by members of the Cabinet, particularly those intimately involved with these negotiations, which in effect undermine the Prime Minister’s excellent work, which we should all be applauding. If the Prime Minister cannot bring herself to give the sack to some of them, can she at least put gags in their crackers?
Baroness Evans of Bowes Park
I can only repeat what I said last week: the Cabinet is united and we are looking forward to a very constructive discussion tomorrow.
Lord Taylor of Holbeach (Con)
My Lords, I suggest that we hear from the Labour Party and it may then be the turn of the noble Lord, Lord Pearson, and the Lib Dems.
Lord Liddle
My Lords, to try to keep her party united the Prime Minister makes a lot in her Statement of preparing,
“for our future independent trade policy by negotiating and where possible signing trade deals with third countries”,
in the implementation period. Does the Leader of the House accept that, once you have gone for signing trade deals with third countries, you require a hard border, because in order to enforce rules of origin and ensure that as a result of trade deals which bring in agricultural produce from other parts of the world that do not meet EU standards, you have to have a border that enforces those standards? Does she therefore accept that that statement is incompatible with her assurance that there will be no hard border in Ireland?
Baroness Evans of Bowes Park
No, I am afraid I do not, because we have all pledged that there will be no hard border between Northern Ireland and Ireland.
Lord Taylor of Holbeach
My Lords, I am sorry, but I did give the noble Lord, Lord Pearson, the next go and the Lib Dems after that. We will then hear from the Conservative Benches.
Lord Pearson of Rannoch
My Lords, the Statement says that the Government will propose that our free trade with the EU should continue as now. Do the Government fear that the Eurocrats will be arrogant enough to refuse this offer which, as I have mentioned before, would be much more in EU exporters’ collective interest than it would be in ours because, if we are all forced back to the WTO, they will pay us some £13 billion in extra tariffs and our exporters will pay them about £5 billion? Can the Government assure your Lordships that they will hold firm on this offer, enlisting, if necessary, the support of EU exporters? Going further, why should our free trade together not continue indefinitely? Would that not also be quite helpful with the Irish border problem?
Baroness Evans of Bowes Park
I am afraid I do not agree with the noble Lord. The fact that we have got to where we are shows that there is willingness on both sides to work together to make sure that we have a good outcome for both the EU and the UK. I look forward and expect that we will continue the phase 2 negotiations, including around the details of the implementation period, in the constructive manner we have seen so far.
Lord Wallace of Saltaire (LD)
My Lords, the Statement starts and ends with references to the foreign and security relationship we hope to build with the European Union after we leave. The Council conclusions of the 28 member Governments, of which we remain, for the moment, one, talk about a new initiative in closer security co-operation among Europeans, which will presumably exclude the United Kingdom. Given that some members of the Conservative Party may be deeply unhappy at any special relationship with the European Union on foreign policy and security after we leave, would it not be a good idea for the Government to begin to set out publicly, for their own public as well as for those with whom they are negotiating, what sort of foreign policy and security relationship we wish to have? I also draw attention to the last sentence, which has some fine words on violent language and threats of violence. Given that the Daily Telegraph and the Daily Mail have led in using violent language against people who have been “traitorous” to the Conservative Party, as they put it, is the Prime Minister planning to call in the editors of those two newspapers by any chance?
Baroness Evans of Bowes Park
I think the Prime Minister is quite clear in the Statement about the fact that we do not agree with or tolerate such language. In relation to defence, the noble Lord may have been referring to the launch of PESCO, which is an important initiative to encourage collaboration across the European defence industry and has the potential to drive up defence investment across Europe. Although we do not plan to join the PESCO framework, we want to keep open the option to participate at a project level, including after we have left the EU, so we were pleased with the Council conclusions that allow that. In terms of our future relationship, the noble Lord will be aware that we have published a future partnership paper on Foreign Policy, Defence and Development and indicated, for instance, our interest in future partnerships, including a capability collaboration through the European Defence Agency and the Commission’s European defence fund.
Lord Taylor of Holbeach
My Lords, I made it clear that the Conservative Benches were going to come first and then the Cross Benches.
Lord Lamont of Lerwick
Has my noble friend noticed the statement of the Italian Prime Minister, who believes that the outcome of the talks ought to be not a CETA-type agreement, not an off-shelf agreement, but one specifically designed for and tailored to Britain’s needs? Is that not extremely encouraging? Are not some of the comments we have heard from the Opposition completely inappropriate when we know that the shadow Chancellor wants to be outside the customs union, the shadow Home Secretary wants to be inside the internal market and the noble Lord, Lord Adonis, says that the whole point of their tactics is to reverse Brexit completely?
Baroness Evans of Bowes Park
On my noble friend’s first point, which picks up on the point that my noble friend made earlier, we are indeed looking to negotiate a bespoke trade agreement. All these agreements are in fact bespoke to the countries involved in them. I also agree with the comments he made at the end of his remarks.
Lord Hannay of Chiswick
My Lords, the Minister might perhaps help us parse two very short words which relate to the time-limited stand-still period. The words are “as now”. Can she confirm that they cover trade in goods and services, including agricultural and fish products, the jurisdiction of the European Court of Justice and all other aspects of the single market?
Baroness Evans of Bowes Park
As I have said, our objective is for access to each other’s markets to continue on current terms, based on the existing structure of EU rules and regulations. The framework will mean that we will start off under the CJEU and will be under it for part of the period. But the Prime Minister has always said that if we can agree provisions that will be part of the future relationship, such as a dispute resolution mechanism, we will aim to bring them forward at an earlier stage.
Lord Forsyth of Drumlean (Con)
My Lords, I understand that quantum mechanics says that it is possible for an electron to be in two places at the same time. Does this explain the behaviour of the Benches opposite? In the other place, an amendment to allow us to remain in the single market and the customs union proposed by Ian Murray, who used to be the shadow spokesman on Scottish affairs, was whipped against by the Labour Party and defeated by 311 votes to 76. What are we to make of the Leader of the Opposition attacking the Government for being divided when they do not know which part of their anatomy differs from the other?
Baroness Evans of Bowes Park
What is most important is that we are now moving into phase 2 of the negotiations, with a united Government looking for the best deal that we will achieve for the UK and the EU.
Lord Bridges of Headley (Con)
My Lords, to pick up on the point that my noble friend has just made about phase 2, last week Monsieur Barnier said that the treaty that is likely to emerge from the end of this process,
“will be accompanied by a political declaration … which will describe the framework for our future relationship. A political declaration. But it cannot be anything else. In technical, legal terms it simply is not possible to do anything else”.
Does my noble friend agree with what Monsieur Barnier says?
Baroness Evans of Bowes Park
What I can do is read to my noble friend from the EU Council conclusions, which say:
“While an agreement on a future relationship can only be finalised and concluded once the United Kingdom has become a third country, the Union will be ready to engage in preliminary and preparatory discussions with the aim of identifying an overall understanding of the framework for the future relationship … Such an understanding should be elaborated in a political declaration accompanying and referred to in the Withdrawal Agreement”.
Lord Judd (Lab)
My Lords, meanwhile in the world as a whole, with all the challenges of climate change and the new political pressures that are at work, a gigantic migration problem is building up, which will make the challenges which we face at the moment seem small by comparison. In the midst of all our tactical preoccupations, what work is being done with our European allies to formulate a strategic policy towards how this issue of migration in the world is to be handled? How are we going to ensure that this is done effectively when we are deliberately moving to an arm’s-length relationship with those who share the burden in Europe?
Baroness Evans of Bowes Park
We certainly are working closely with our European partners and are committed to playing our full part in tackling the shared challenges posed by the global migration crisis. As the Statement said, we are committed to maintaining a maritime presence in the Mediterranean. The Royal Navy has intercepted 172 smuggling boats and saved more than 12,000 lives since Operation Sophia began. We are continuing the deployment of the Border Force cutter to the central Mediterranean to support the search and rescue activities under Operation Triton. To date, cutters have rescued more than 13,000 migrants across the central Mediterranean and Aegean. We are taking our responsibilities extremely seriously and are working with the EU in terms of looking at where these migrants are coming from and trying to help stabilise states. We take this extremely seriously and will continue to work with the EU, the UN and international partners to make sure that we work together to tackle this problem, because together is the only way we will achieve it.
Lord Wallace of Tankerness (LD)
My Lords, in her Statement on 23 October, the Prime Minister referred to,
“a time-limited implementation period based on current terms”.—[Official Report, Commons, 23/10/17; col. 25.]
Of course, today she has said that if we Brexit in March 2019, we would not be members of the European Union after that. To pick up on the question asked by the noble Baroness, Lady Smith of Basildon, if we fast forward two years from now to the annual Fisheries Council to determine total allowable catches, will there be a British Minister at the table to defend British fishing interests? How does the noble Baroness see this working?
Baroness Evans of Bowes Park
As the Prime Minister says, it will depend on the next phase of negotiations, but currently we expect the implementation period to be two years.
Tackling Financial Exclusion (Financial Exclusion Report)
Baroness Tyler of Enfield
That this House takes note of the Report from the Select Committee on Financial Exclusion Tackling Financial Exclusion: A country that works for everyone? (Session 2016-17, HL Paper 132).
Baroness Tyler of Enfield (LD)
My Lords, it is a pleasure and a privilege to lead this debate, as it was to chair the Lords Select Committee on Financial Exclusion, a committee proposed initially by my noble friend Lord Kirkwood. The committee published its report just before Easter with a raft of recommendations calling on the Government, the Financial Conduct Authority and the banks to give much greater priority to tackling financial exclusion and ensuring that vulnerable customers were getting a fairer deal. It has felt like a long wait for a government response to the report and for this debate, but I hope it has given all concerned a chance to think seriously about what needs to be done.
I place on record my thanks to my fellow committee members for all their hard work. I consider myself very fortunate to have worked with such a highly committed, engaged, constructive and knowledgeable group of Peers from all Benches. Our discussions were marked by a strong sense of social justice and shared endeavour. We were hugely assisted by all those who provided written and oral evidence—we had 101 submissions of written evidence and 52 witnesses giving oral evidence—and by the very high-quality advice that we received from Professor Karen Rowlingson of the University of Birmingham, who served as a specialist adviser to the committee.
We benefited greatly from two excellent visits, one to Coventry and one to Toynbee Hall. On both occasions we met individuals with first-hand experience of financial exclusion and a range of agencies that provide help and support in this field. I particularly thank the staff of Toynbee Hall, Coventry City Council and Coventry Citizens Advice, who made this possible. Of course none of this could have happened without the truly outstanding support that we receive from the committee secretariat. I want to mention by name our committee clerk, Matt Smith, our policy analyst, Nathan Lechler, and our committee assistant, James Thomas. We in this House are fortunate indeed to have such talented and committed staff who work so hard.
I am proud of the report that we produced. I pay particular tribute to those who produced the easy-read version, which I gather is now considered a model of its type. I was also very pleased by the reception that the report received from both the sector and the media. The extensive media coverage was entirely positive and there was no criticism of the report or any of its recommendations. That suggests that we tapped into a wellspring of support, and I place on record my thanks to Owen Williams, the head of press and media, for his support here.
So what exactly is financial exclusion and why does it matter? Simply put, it is when people, particularly the poorest, cannot get access to fairly priced basic financial services that most people—certainly in this Chamber—take for granted, and are forced to rely on extortionately priced and often substandard financial products. The committee felt that it was deeply ironic that, while the UK is considered a world leader in financial services, some 1.7 million people do not have a bank account, some 8 million people are experiencing problem debt and 40% of the working-age population has less than £100 in savings—that is, no buffer to help deal with any unexpected emergencies.
Uppermost in the committee’s thoughts was the unpalatable fact that the poor pay more, which is often called the poverty premium. Currently the poor pay more for a range of services, from heating their homes to accessing credit, contributing to a vicious circle that can drive people ever deeper into debt. The situation is made worse by the growing number of bank closures, with 53% of UK bank branches closing between 1989 and 2016, a far steeper decline than in many parts of Europe, and the growing number of people who say they are having real difficulty managing their personal finances daily as the cost of living rises while wages stagnate.
So the problem was clear to see. I shall outline briefly some of the report’s recommendations in four key areas and then comment on the Government’s response. I know other committee members will pick up on the other critical areas that I do not have time to cover, particularly financial education, welfare reform, debt advice and financial technology.
The first area I shall focus on is leadership from government and proactive regulation. The evidence that the Select Committee received made it abundantly clear that the lack of a strong lead from government and a coherent strategy to tackle financial exclusion had been at the heart of the problem. Witnesses, including from the Financial Inclusion Commission, consistently lamented the winding up of the Financial Inclusion Taskforce in 2011 as leading to a lack of central government leadership, co-ordination and momentum. Thus, the committee recommended that the Government should appoint a clearly designated Minister for financial inclusion, who should publish a government strategy addressing financial exclusion and make an annual progress report to Parliament, including reporting on high street bank closures and the take-up of basic bank accounts.
We felt that this emphasis needed to be matched by the Financial Conduct Authority, which, in recent years, has introduced a much-needed and successful cap on payday lending. This is why we recommended that the Government should expand the remit of the FCA to include a statutory duty to promote financial inclusion. We also recommended that the FCA be obliged to establish new rules requiring banks and other financial services providers to have a duty of care towards their customers. Taken together, we felt that these measures could transform the delivery of financial services for vulnerable customers.
The second area is financial exclusion and vulnerable groups. It became clear to us that some groups, particularly the elderly, those living with a disability and those suffering from mental health problems, were particularly ill served by the current system. We heard that one-third of people over the age of 80 had either never used a cash machine or preferred to avoid using one and that 93% of those over 80 did not use internet banking. For these people, the ever-increasing rate of closure of physical bank branches is a major cause for concern.
We recognised the two-way relationship between financial exclusion and mental health, and received some compelling evidence on what could be done about it. We recommended that the Government, the FCA and financial services sector should work together to develop and introduce a wider range of control options for those customers experiencing mental health problems—for example, allowing potentially vulnerable consumers voluntarily to opt in to features such as 24-hour delays before processing large transactions, bank accounts with partial third-party control or nudge-type notifications of changes in spending patterns.
It is more than 20 years since the Disability Discrimination Act was passed, introducing the concept of reasonable adjustment into UK law. Banks have had a long time to get it right when it comes to making reasonable adjustments to serve disabled customers. Sadly, we heard far too many examples of failure on the part of banks to tailor their services effectively and appropriately. These included repeatedly contacting deaf customers by telephone and sending written PIN numbers to blind customers instead of using Braille.
As a committee, we considered that to be totally unacceptable, and recommended that the Government, the FCA and the British Banking Association carry out a review of reasonable adjustment practices for disabled customers. I must say that I found the Government’s response particularly disappointing in this regard. I ask the Minister—indeed, I plead with him—to think again.
Thirdly, on access to financial services, in recent years, the number of unbanked people has started to increase again. Too often, we heard that banks were not being proactive in offering basic bank accounts to those customers who were suited to them, or that these accounts were not advertised or promoted properly. Some banks working hard in this area clearly felt that other banks were not pulling their weight. Thus, we recommended that the Government require banks to promote basic bank accounts effectively and take steps to ensure that the burden of providing such accounts, which are clearly loss-making to the banks, is shared more equally.
Barely a week seems to pass without further news of bank branches being closed, and now, also, of ATM closures. This trend is of real concern for those people and groups who rely on physical access to banks or prefer the reassurance of face-to-face communication and dealing directly with bank staff to online banking. The elderly and some of those living with disabilities are at high risk here: we were told that 42% of disabled people are not online, while 37% of retired people are not regular internet users.
Indeed, many of the letters I received immediately after the report was published were from older people or people in rural communities who felt simply abandoned by their bank and were asking why more collaborative measures could not be taken to ensure that there was at least one physical banking presence—perhaps located at a shop, a post office or a community centre—in each town. This would of course involve banks working together to ensure that there was at least one physical banking presence, perhaps located in a shop, post office or community centre, in each town. This would of course involve banks working together, but surely this should not be beyond the wit of man—or, indeed, woman. We were also struck by the sheer scale of the Post Office network which, at 11,600 branches, has more outlets than all the high street banks combined. What is more, the Post Office can offer banking services to 99% of UK current account customers. That is not well known, and we believe that the Government, banks and post offices need to do more to raise public awareness of these services. I was very pleased to have a very constructive meeting with the chief executive of the Post Office in the summer.
Fourthly, an area of particular concern to the committee was the high-cost credit market. In 2015, the FCA introduced new regulations to tackle some of the most egregious practices by placing a cap on both daily interest rates and total interest charges and fees for payday lenders, which were a marked success. But the committee felt strongly that these new rules were too limited in scope and should equally apply to other forms of high-cost credit. In particular, the committee called for urgent action to introduce new controls on rent-to-own products and unauthorised bank overdraft fees. In both instances, the committee received evidence of quite eye-wateringly high interest rates being charged to vulnerable people, forcing them further into financial difficulty. In some cases, it was nothing short of extortionate.
I am pleased that, since the report was published, the FCA, through its own review of high-cost credit, as well as maintaining the payday cap at its current level, is now looking at fundamental reform of unauthorised overdrafts and has the rent-to-own sector very clearly in its sights. I strongly commend the action taken by the FCA on 1 November to order BrightHouse, Britain’s biggest rent-to-own retailer, to repay £14.8 million to nearly 250,000 of its customers. It was extraordinary that there was no mention of this strong action, of which I thoroughly approve, in the Government’s response, which was published a week later. I also commend the stronger focus that the FCA has placed recently on consumer vulnerability and its occasional paper on the ageing population. I was extremely grateful for the very constructive meeting that I had with the chief executive in November.
I now wish to turn to the government response more generally. After a long wait, I cannot pretend that I was anything other than rather disappointed by the tone of the Government’s response. To me, it lacked a sense of urgency and ambition. It contained a longish list of things that the Government were doing anyway and failed to engage directly with a significant number of the issues raised and recommendations in the report. I have done a quick tally and, of the report’s 22 recommendations, four have been implemented, four partially implemented, and 14 not implemented. Perhaps I should be satisfied by that but, given the cross-party consensus achieved in the committee and favourable reception that the report received externally for being reasonable, insightful but largely uncontroversial, I had hoped that the Government would have taken the recommendations a bit more seriously.
I welcome, of course, the creation of a new DWP Minister with financial inclusion in the title, but I was slightly perplexed by how that Minister could take on the stronger leadership and co-ordination role that the Select Committee argued for, particularly when the government response makes it clear that the Treasury Select Committee will take the lead on co-ordination of government-wide policy in this area. Perhaps the Minister will be able to clarify on that point. That said, I look forward to meeting one or both of them, if they can spare the time to see me.
Secondly, I very much welcome the new financial inclusion policy forum, which will,
“enable ministers to take a strategic, cross-government approach on action to improve financial inclusion”.
Could the Minister please say when the body will first meet, how often it will meet, what its membership will be, how the voice of financially excluded people will be heard and whether its agenda and minutes will be published? Most crucially of all, will the policy forum be responsible for producing a cross-government strategy document and an annual report to Parliament, as we recommended?
Finally, I was disappointed that the two recommendations relating specifically to the remit and regulatory powers of the FCA were not greeted more enthusiastically. With the Government’s recent very welcome decision during the passage of the Financial Guidance and Claims Bill to include vulnerability within the stated objectives of the new single financial guidance body, would they consider rethinking whether it would not now make sense to include similar words specifically within the remit of the FCA to bring the two in line? That would be a most welcome step, as would introducing a duty of care, which would make a real difference to the support that vulnerable consumers receive from their banks, particularly, for example, those with cancer.
In conclusion, there is much to do to build a financial services system that works fairly for everyone and helps to tackle rather than exacerbate inequalities. On many occasions, this Government have said that they want a country and system that works for all, not just the well off. So do I, and despite the government response I still hope that the Government share our view that the current level of financial exclusion is unacceptable and our sense of urgency to do something about it. The victims of the current system are often the most vulnerable—the elderly, the poor and those living with a disability. At this time of good will, let us demonstrate in this debate and by the actions that we take that we truly care. I beg to move.
Lord Patten (Con)
I pick up the point made by the noble Baroness about this time of goodwill. At this time of the year—Christmas, Hanukkah, Winter Veil or whatever one wants to call it—a lot of people try to help those who are excluded in society from all sorts of activities. So I congratulate the committee on the clarity of the in-depth analysis that it has carried out.
I do not know how many noble Lords were in the Chamber earlier when the noble Lord, Lord McFall, as Senior Deputy Speaker, talked about the need for much greater understanding of the work of the Select Committees. A lot of people stood up and said that that was absolutely right, and there needed to be more missioning—going out and telling people about the excellent work that the Select Committees do. I say “hear, hear” to that, and there are some satisfied nods around the Chamber from committee members. But I sometimes wonder whether a bit of missioning within your Lordships’ House might not also be a good idea from the Select Committee. On the speakers list there are 10 speakers who are members of the committee, who will doubtless tell us all what an excellent report they have contributed to—and only four as-it-were immigrant Back-Bench people who are not on the committee. So there is a lot to be said for that, just as there is a lot to be said for the vision of my right honourable friend the Prime Minister for a shared society, which I strongly support.
Having said all that, may I get in my retaliation first? It is always much easier to define than to solve—and, with respect, to find practical tools for change. I say that as someone who works in the financial world, in the City of London, as declared. Whenever there is a problem, whether it is financial exclusion or anything else, in your Lordships’ House two ideas always pop up—let us have a Minister for it, to stop it or extend it or change it, and, secondly, let us put better education about it in the national curriculum. Those are absolutely standard suggestions from most Select Committees about their proposals.
On the first, only last week there was a call for a new Minister for Loneliness in a report by a commission following the tragic death of the late Jo Cox, to deal with that sometimes devastating problem for too many people. And so on, up the headwaters of recent political times, to calls in the past under both parties to have Ministers for Children’s Play or whatever. I do not think that having a Minister designated to do stuff necessarily always sorts stuff out. I well remember the noble Lord, Lord Giddens, making a plea in your Lordships’ House for greater attention to happiness. I think that he may have called for a Minister for Happiness —and perhaps indeed he was the Minister for Happiness, or at least the tsar in charge of happiness. I cannot remember. But I do not think that it is an easy solution.
On the second point that always pops up—the need for better education—of course financial education is a good thing and it would be daft not to have it. But I think that there would be a collective groan in the staffrooms of our schools, which already have a difficult enough task in dealing with a crowded curriculum, if there was another ad hoc, sudden insertion into the work that they have to do. I do not think that jamming stuff into the curriculum solves anything very much.
I congratulate the committee on the depth of its analysis, and also on not calling for large sums of new money to be spent. That is a very important point: many problems can be solved without new budgetary extensions. People such as us, in positions of responsibility, have to recognise that we have a role—whether large or small—in improving financial inclusion. Her Majesty’s Government are, for sure, extremely important in this—but so are local authorities, NGOs, the charitable sector, in which my daughter works, churches and the rest, including local communities. Last Thursday, I was discussing this with someone with whom I work in the City and whose opinions I value. She told me of the problems facing her parents in Worcestershire who have a very long journey to a bank. They are fortunate, however, to have a sub-post office still in their village—but most sub-post offices cannot provide the sort of financial services that the excluded or those on the margins find so difficult to reach.
In our nearest market town, in the West Country, it is not to a sub-post office but to the local Crown post office that we turn. Three years ago there were three small bank branches: Lloyds, HSBC and NatWest. They have all gone, but the local post office has stepped into the breach, providing excellent banking services and foreign exchange facilities to trade in euros and dollars. When people go in to make a transaction it also has the commodity which is vital in all rural areas: the latest gossip.
Not so far away from us there has been a bit of a fight-back. Four banks in Glastonbury shut within a two-year period, but Nationwide was lured to go back. It is an exciting place to be for all sorts of reasons, but perhaps not for banking. The leader of the local campaigners who got Nationwide back—and well done to them—said:
“There are many customers, particularly the elderly and those on low incomes, who do not and often cannot bank online”.
Not every town is so lucky, nor big enough, like the village in Worcestershire where my colleague’s parents live. They cannot get financial help in their local sub-post office.
One Minister might be able to help in this area, particularly one in the Department for Business, Energy, and Industrial Strategy who has in her portfolio both small businesses and post offices. Can more be done with imagination and encouragement by central government to get more internet facilities to provide better banking-like services in these smaller sub-post offices? That would do so much to help with financial inclusion.
However, financial exclusion is not going to be solved by having more bank branches. It was there all those years ago in the golden age when we seemed to have bank branches everywhere. Why is that? Some geographers, cleverly mapping the characteristics, find some correlation with geographical exclusion founded on relative remoteness. People in some rural areas near us are not only without the luxury of a bus a day; they only get a bus chugging into the local town one day a week. If you overlay a map of that sort of isolation onto a map of the areas Ofcom has just identified as having an 80% failure to get 4G services, the correlation is there all over again.
It is particularly important that rural people are not forgotten in the issue of financial inclusion. They are more likely to be isolated and to suffer from financial exclusion. There are a number of ministries, and no end of interministerial and cabinet committees, as well as the Cabinet Office, which are full of talented young civil servants who can help to bring these different strands together. That is a better way forward than having a Minister devoted to the task—because, unless you have a budget and power, you cannot do much.
Lord McKenzie of Luton (Lab)
My Lords, it is a pleasure to follow the noble Lord, Lord Patten, and to participate in this debate. I offer my congratulations to the noble Baroness, Lady Tyler of Enfield, for her skilful chairing of the committee and to the formidable committee staff that she drew around her. They produced the comprehensive report before us today. If my copy of it appears a little dog-eared, it is because it became a useful reference document for our recent deliberations on the Financial Guidance and Claims Bill, now heading for the other place. That Bill responds very much to issues of financial exclusion, financial guidance and capability and advice services, as well as debt advice. It was significantly changed, and improved, on a cross-party basis during its passage through the Lords, so we can claim some authorship of its outturn.
Rather than being a measure which just stitches together three existing advice operations, TPAS, MAS, and Pension Wise—I will refer to it as SFGB—it has objectives to improve the ability of members of the public to make informed financial decisions, and to support the provision of information, guidance and advice. It has a consumer protection function, which includes the obligation of SFGB to pass consumer casework to the FCA where there is a suspicion of unprofessional conduct, harassment or misleading approaches. It also requires the monitoring of cold calling on consumer protection as a prelude to a ban. We know that most financial scams, particularly for pensions, start with a cold call, so this is very important.
Of particular significance in the debt space is the inclusion in the Bill of provisions which should lead to a debt respite scheme. Both the Government and ourselves had proposals on this as manifesto commitments at the last election. The purpose is to help individuals in debt and their creditors devise a realistic plan for the repayment of debt and offer protection from charges and enforcement action in the meantime. Given soaring levels of household debt, this should be introduced as soon as possible. We know that the rise of some types of debt can be strongly associated with changes in government legislation and this is not limited to universal credit. The localisation of the Social Fund, now local welfare assistance, was a matter on which our committee expressed particular concern. In its former guise, this provided a vital safety net, facilitating grants and interest-free loans to people on very low incomes who were living through particular financial pinch points. The development of diverse eligibility criteria, some with residence criteria—a problem for those fleeing domestic violence—has created a postcode lottery. The consequences are predictable: increased use of food banks; increased reliance on unaffordable short-term credit. Our report expressed concern about future funding for this area but beyond that went no further than recommending that government disseminate best practice. On reflection we might have done more.
Council tax support schemes have followed a similar pattern of being localised and having local authority funding cut, so more and more councils have had to restrict their schemes. Hence council tax arrears have moved up the debt league. Evidence suggests varying practice in collection arrangements, made worse by the demise of local debt advice. A select committee report highlighted consistent evidence about the negative impact of reforms to the social security system, especially the introduction of universal credit as a replacement for a bundle of other income-related benefits, together with the tightening of the conditionality and sanctions regime. Hardship and debt were being exacerbated in particular by the payment of universal credit monthly in arrears, by a waiting period for new claimants, by bundling rent support and by making this generally available to tenants.
Noble Lords will doubtless be aware that the Government have announced the abolition of waiting days, increased advances to 100% now repayable over 12 months, and introduced transitional payments for those previously receiving housing benefit. It was a committee recommendation that the seven-day waiting period be scrapped. This is, of course, to be welcomed but it does not solve the problem. Its year one cost of some £300 million should be seen in the context of billions of cuts past and ongoing to the social security system. We called in our report for greater flexibility around universal credit payments and a faster rollout of trusted partner arrangements.
The report also addresses issues arising from the application of sanctions, and evidence as to their effectiveness. We heard harrowing evidence about the contribution they make to financial exclusion, where individuals sanctioned look to all options to survive, including reducing payments for priority expenditure such as rent, gas and council tax. A number of witnesses drew our attention to their impact on vulnerable individuals, including those with mental health problems. Our report has not elicited any government response to justify the effectiveness of sanctions, which will doubtless continue to cause misery and hardship to hundreds of thousands of fellow citizens.
The report records that we have seen no comprehensive research on the cumulative impact of the Welfare Reform Act 2012, and what flowed from it, and recommended that the Government conduct a detailed comprehensive cumulative impact study on how changes to social security policy might have affected financial well-being and inclusion, and how they may have contributed to debt, arrears and growth of high-cost lending. The government response prays in aid the assessments produced at Budget time and the Improving Lives: Helping Workless Families recent publication, but this was part of the Government’s moving away from the use of income data—relative or absolute—and does not really meet the analysis the committee was seeking.
Financial exclusion is, as our report makes clear, multifaceted, but we heard views about its relationship with poverty and the poverty premium, of which we have just heard. That is the additional cost incurred by individuals who have to transact in the most expensive way—high-cost credit, pay-as-you-go mobile phones et cetera. If we look at these matters through the poverty lens, we should be alarmed at what is happening. After declines in poverty—child poverty—over 20 years, we now see it rising and the reasons are very clear: cuts in benefit, tax credit and universal credit, for those both in and out of work, inflation on the rise and employment now falling. There is much still coming down the track: freezing of working-age benefits, the two-child policy and more. As CPAG demonstrates, by 2020 we expect some £27 billion less on social security spending than a decade earlier. That is a difficult backdrop against which to combat financial exclusion and is a challenge to the Minister with his new responsibilities. However, I think this report should remain a significant contribution to that endeavour. The process has produced a wealth of information and experience from those whose daily lives involve operating at the sharp end.
Lord Fellowes (CB)
My Lords, I rise very briefly on two counts. First, as a member, I must thank the noble Baroness, Lady Tyler, for chairing and guiding the Select Committee so excellently. Secondly, I want to underline what I see as three particularly important issues with which the committee grappled.
My first issue is the decline in the number of branch banks available in the United Kingdom. Since 1988, over half the branch banks have closed. For obvious reasons, bank closures have a greater effect in rural areas than elsewhere, but the recently announced axing of a large number of branches across the board will have an immediate and destructive effect on financial exclusion. The banks—here I must declare an interest as an ex-employee of Barclays—seem sometimes so submerged in their own problems that they forget that they are a service industry, and that online banking is not a substitute for the human factor. There is no proper substitute, especially for those with limited technical skills, for the helpful human voice, or, if possible, the human face, with whom to converse, to discuss difficulties and, if necessary, to cry for help.
Secondly, I mention the lack of financial education in schools. While in Scotland, Wales and Northern Ireland, financial exclusion has been in the curriculum for some time, in England there is still no requirement for primary schools to include financial education as part of their teaching. Furthermore, nearly two-thirds of state secondary schools, being non-maintained, are under no obligation at all to teach financial education. These omissions should surely be corrected as soon as possible.
Thirdly, I mention universal credit. Time and again, the committee was struck by the frustrations experienced by potential users of the system. I realise, of course, that recently some adjustments have been made which should improve matters, but the users of this scheme to whom I spoke were frequently frustrated by the difficulty, or even impossibility, of discussing their problems with a human being rather than a computer. Again I say, there is no substitute for human contact in matters financial. I very much hope that these and other suggestions made by the committee will be acted upon without undue delay, and that the many diverse organisations, including the Government, trying to bring about improvement are united and successful in their efforts.
Lord Holmes of Richmond (Con)
My Lords, it was a pleasure to be a member of the Select Committee so excellently chaired by the noble Baroness, Lady Tyler of Enfield. I must also thank all the staff, advisers and clerks who enabled us to pursue such a positive route through the committee’s inquiry. Most of the 22 recommendations are still to be considered and taken on by the Government. What are the Minister’s thoughts on the 14 recommendations still to be covered in the government response?
I shall limit my comments to the three Ds of duty of care, data and digital and technology. It seemed pretty clear throughout our inquiry that duty of care would be an eminently good thing for all financial services and financial institutions to adopt. We received significant evidence on this, not least from Macmillan Cancer Support. Even if people consider a duty of care only for purely selfish reasons—given that one in two of us is likely to face a cancer diagnosis in our lives, there is a 50:50 chance that we will act just in our self-interest—obviously, we should go far beyond that. It makes sense for both customer and service provider to understand how this duty of care should work. I pay tribute to Macmillan Cancer Support for the brief it gave to the committee. I also pay tribute to those who discussed this point on the Financial Guidance and Claims Bill, which has just gone through the House. Macmillan Cancer Support clearly demonstrates how a modern, lean, effective charity should operate, not just in giving sensational care to people at some of the most delicate, painful times in their lives but in understanding the total life experience of people who receive a cancer diagnosis.
I tabled an amendment on duty of care to the Financial Guidance and Claims Bill in Committee and on Report. However, the Government were not minded to accept it. In the light of that, I ask the Minister: if nothing is to be done on this point until after Brexit, particularly from the FCA’s point of view, what do the Government intend to do in the interim to address this fundamental point of duty of care to all customers? This takes financial institutions back to the purpose for which they were established. That purpose was based on a relationship. We need to bring that into how financial services will operate in the future. We have an opportunity to do so through the data now available and what it is now possible to do with data. We should use it not just to enable policymakers and institutions to understand people’s predicament when they find themselves at the sharp end of financial exclusion and assist them, but use it in a predictive and granular way to enable individuals themselves to grip their own data and understand on a minute-by-minute, second-by-second basis, if they wish, how their actions impact on that data. That takes us to the digital opportunity. In this situation, finance technology—fintech—is all predicated on that data. What could that do in terms of the issues of the unbanked?
We know that if people are enabled to get online and have an online bank account, they can save £500 to £700 a year, which is not an insubstantial sum. There are significant products and businesses out there, such as MyCard, dopay and Pockit, to name but three involved in this space. Other noble Lords have already alluded to how the connection between financial and digital exclusion is key to understanding this. It is all well and good to have potential solutions online, but if people are not online, see no reason to be, and have understandable care and concern about going online, no solution will ever come from that, even though huge cost savings are to be made from those online solutions.
Financial literacy is incredibly important. On the point made by my noble friend Lord Patten, he is quite right that there should not be an inexorable dumping of more and more responsibilities on our fantastic teachers. However—I am prepared to get into a discussion—for financial literacy at all levels to go into the curriculum I would be prepared to look at what we could take out in a nightclub-style one-in, one-out approach. Without financial literacy, you can teach a heck of a lot to young people which will never have any positive impact because of the detrimental effects of finding yourself at the wrong end of financial exclusion.
As has already been mentioned, bank branches are gone. We need to consider what more can be done in the community. With the Open Banking initiative, there is the potential to have clusters of fintech businesses based in the community so that people cannot only interact online but can have that physical presence and, on the point made by the noble Lord, Lord Fellowes, they can meet people face-to-face to discuss financial matters. If the right encouragement is given and it is made possible for chatbots to be put in place, people may be able to have conversations with them which may be more comfortable, and it may be possible for more questions to be asked through that means than through more traditional approaches.
Fintech is not the totality of the solution but it contains many of the solutions. What is phenomenally encouraging—we see it through the Tech City initiative—is that so many of the young people who are founding fintech companies are doing so to address so many elements of financial exclusion. They do so not as charity, as CSR or as a “nice to have”, but because it is in their DNA and they can drive fantastic business models of these issues, which, all too often, traditional financial institutions have just been able to not engage with and ignore.
A potential golden thread runs through fintech, where cost can be taken out, customer experience and service can be put in and, crucially, financial inclusion can flow through that route. Probably the most pernicious of all elements in all our work on the committee and beyond is: how can it be that in the fifth-richest economy on the planet, those who all too often have the least are forced to pay the most for their financial services?
I spare a fourth D—a slight detour, which I must take in this discussion. It is impossible to consider these issues without taking some time to talk about gambling and the impact that that currently has on our community and society. Just look at the number of gambling institutions on high streets in lower socio-economic areas compared to the leafy suburbs. I ask the Minister a specific question: when will the Government take clear, definitive action on FOBTs? I know that we have a consultation, but with fixed-odds betting terminals you can lose £100 every 20 seconds—£300 in a minute. Spin number one: there goes the rent; spin number two: there goes your food; spin number three: there goes your hope.
That and more was the purpose of undertaking the Select Committee report on financial exclusion. It was a joy to serve alongside noble Lords and, as I say, to have the excellent chairmanship of the noble Baroness, Lady Tyler of Enfield. To conclude on a specific point, I encourage all fintechs to look at—as they already do—every possible way to get involved, to come up with innovative, cost-effective, empowering, enabling solutions to financial exclusion. Can the Minister ensure that the Government do everything in their power to enable that flourishing fintech sector to continue to boom, not just now but through and beyond Brexit?
Lord Empey (UUP)
My Lords, I join other colleagues in thanking our chair, the noble Baroness, Lady Tyler, for her consistent and enthusiastic chairmanship over many months. It was a pleasure to work with her and other members of the committee. We were also exceptionally well serviced by our clerks and special advisers, who were exceptional before, during and after the publication of our report.
When the noble Baroness referred in her introduction to the Government’s response, she was diplomatic. I am exceptionally disappointed by the Government’s response on a number of issues. I understand entirely and fully accept the point the noble Lord, Lord Patten, made; you cannot have a Minister for everything. However, given the statistics provided to the committee, which show that 40% of the population do not have £100 and 1.7 million do not have a bank account, and all the other statistics, it is not particularly unreasonable to have a person watching. We rural-proof policies and proof policies for a whole range of things, and I cannot see any reason why we do not look at this particular aspect. It is one of the most fundamental things in front of us.
I will refer to a few specific points which I raised with the committee. However, before I go on to that, the comments that have just been made on gambling need to be taken exceptionally seriously. During the committee’s deliberations, we were provided with evidence about advertising for gambling being shown at 2 or 3 am. We know from evidence provided to us that the companies have a clear mathematical process of identifying who is watching and what their vulnerabilities will be. I had an ad hoc conversation with a friend who knew somebody who worked in the industry, who said that they had it down to a fine art. They knew who was watching, at precisely what time, and what buttons they needed to press. It baffles me that we allow these people to have free rein. I am not in favour of a nanny state, but we control things on television and have a watershed, and we know that a lot of people who are watching at these ungodly hours may have mental health issues. All this evidence was provided to us, and it is time that the Government took this seriously.
Recommendation 21 deals with the question of where people’s rent is paid. I believe that, in theory, universal credit is a great thing. However, as we know, the implementation is not going terribly well. We have had some improvements over the last period, since the committee reported, but it is important that, if housing benefit is for rent—to keep a roof over people’s heads—it should be paid directly to the person who owns the property. What is the point? Are we saying, “We’ll make people learn and we’ll teach them to be responsible with their own money”? I get all that, but the reality is that a percentage of people are vulnerable and not responsible, and so we have to go through this whole process of appointing people to chase after them—a whole industry of people going around, banging on doors and pestering people for money. Why are we doing this? What is gained by any of it? The rent should be paid to the person to whom it is due and then it is done. We do not have to have all these bailiffs and heavies.
We also know that many people living on estates suffer from various addictions, which leads to the roof over their heads being taken away. People gather like vultures because they know the day and the hour when the money will be sent to a person and they are on the doorstep to collect it. Why are we doing this? It would be far simpler to pay the rent to the landlord, as we do in Northern Ireland, and then we would not have any of these issues.
Perhaps I may deal with one other thing, which I mention quite often, and that is credit unions. In Northern Ireland we have considerable experience of credit unions. The Government’s response to our recommendation on that is puzzling. We simply said:
“Government funding provided to the sector should take the form of repayable, long-term investment capital rather than grant funding for ongoing expenses”.
The Government’s response is that,
“the government does not intend to provide revenue support to credit unions”.
We do not want them to provide revenue support to credit unions; our recommendation is not to do that. The recommendation is to supply repayable long-term investment capital. It is a kind of Aunt Sally argument to say in response to a proposal that we have made, “We’re not going to do this and it’s against government policy”. We are not asking people to provide revenue support for credit unions—quite the reverse—but we believe that credit unions should be able to offer a greater array of products to people. People’s experience is that credit unions are responsible lenders.
I wish to make an overarching point in conclusion. With London allegedly being the financial capital of the world, I am baffled that we cannot produce products to minimise the poverty premium that people have to pay—and there are clear examples of that. Surely it makes sense for some time and effort to be expended by the brains in the square mile on seeing what can be done to encourage others to make it easier and less expensive for people on those levels of income to live. I am quite sure that if effort were put into this, it would be found that the brains are there to provide the products, without forcing or shaming people into doing so. That is why a duty of care has been referred to. We all have a duty of care to our staff, the NHS has a duty of care to its patients and education providers have a duty of care to their pupils. Why should the financial sector not have a duty of care to its customers?
Grenfell Tower and Building Safety
(7 years ago)
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The Parliamentary Under-Secretary of State, Department for Communities and Local Government and Wales Office (Lord Bourne of Aberystwyth) (Con)
My Lords, with the permission of the House, I would like to repeat the Statement made by the Secretary of State, my right honourable friend Sajid Javid, in the House of Commons earlier today.
“With permission, Mr Speaker, I would like to update the House on the ongoing response to June’s tragic fire at Grenfell Tower and our wider review of building safety.
It is now six months since the disaster. Last week, a number of events were held to mark this sad milestone, including the national memorial service at St Paul’s. I had the privilege of attending the extremely moving service, alongside the Prime Minister, the Minister for Grenfell Victims and of course the right honourable Gentleman opposite, among others.
The scale and impact of this disaster are unprecedented in recent times, and I could not hope to cover all aspects of the response in one Statement, so today I will concentrate on areas where I have new information to share. However, I am very happy to take questions on any aspect of the tragedy and the response to it.
I will start with an issue that I know is particularly important to Members and honourable Members, as it is to me: finding new places to live for those who lost their homes. Responsibility for rehousing lies with the local authority, the Royal Borough of Kensington and Chelsea. However, I have been closely involved with the process to ensure that everyone is rehoused as quickly as possible, and my department has been providing the council with support to help bring that about.
The council has been tasked with finding places to live for 207 households from Grenfell Tower and Grenfell Walk. To date, 144 households—almost 70%—have accepted an offer of temporary or permanent accommodation. According to the latest figures from the council, 102 of those households have now moved in. For those who remain in other accommodation, the council has offered the opportunity to move into private rented accommodation while a permanent home is found. Some have taken up this offer; others have made it clear that they do not want to move twice—something I completely understand.
The council was undoubtedly slow off the mark in starting the rehousing process but, with its own change of leadership, the help of the Independent Recovery Taskforce, and pressure and support from the DCLG, consistent progress is now being made. But I am far from complacent. I have always been very clear that we should move at the pace of the families involved and that nobody should be rushed or pushed into making a decision about where to live. But to have so many families, including some children, still living in hotels and other emergency accommodation six months after the tragedy is simply not good enough.
The situation is undoubtedly complicated but I have been very clear with the council that I expect it to do whatever is necessary to help people into suitable homes as swiftly as possible. I am confident that the council is capable of doing that but, along with the task force, I will continue to monitor the situation and work with the council to ensure that it happens.
The issue of rehousing has an added poignancy with Christmas just around the corner. Whatever your faith, this is a time for family and friends, and that makes it a difficult time for anyone who has suffered a loss or trauma. Nothing anyone can do will make this a normal Christmas for the bereaved and the survivors, but we are doing all we can to offer extra support over the coming weeks.
A range of activities and events is being staged for local children, particularly those still living in hotels. Social spaces have been booked in four of the hotels where families are staying, so there is room for people to spend time together, and NHS outreach workers are visiting residents in the local area to offer specialist mental health support. This builds on the excellent work the NHS has already done on mental well-being. Specialists have screened almost 1,000 adults for signs of post-traumatic stress disorder. Four hundred and twenty-six are currently in treatment for PTSD, while a further 62 have completed their treatment. One hundred and ten children have also received or are receiving specialist help. The dedicated NHS Grenfell helpline remains available 24 hours a day, seven days a week.
Local organisations are also providing health and well-being support on the ground, including culturally sensitive support that reflects the diverse make-up of the borough. Last month’s Budget made available a further £28 million to pay for mental health and emotional support, a community space for those affected and investment in the Lancaster West estate over the next three years.
Of course, it is not only government that has been providing funds; in the aftermath of the tragedy, the British people responded with incredible generosity, donating more than £26 million to various charities. The majority of that money—more than three-quarters of it—has already been paid out to survivors and to the next of kin of those who died. Of the remaining £6 million, around £2 million is being held back for people who are entitled to a payment but have not yet claimed it and for some whose applications are still being processed. Payments for those who have not yet claimed will be looked after by the charities until the individuals are ready to engage. The remaining £4 million will go towards providing long-term support and community projects.
As people are rehoused and take the time to grieve, the distributing charities will work with them, identifying their changing needs and ensuring that money goes where it can best meet the needs of the community. The House can rest assured that every penny that was donated will be spent on the people it was intended for. The generosity of the British public demands no less.
Another issue where the views and wishes of the local community must be paramount is the future of Grenfell Tower itself. The tower is currently being wrapped in white sheeting—a process that will be completed early next year. This is not being done, as some have claimed, to make people forget about what happened; it is being done because many members of the community—people directly affected by the fire—have said that covering the tower will help them to begin the healing process.
I acknowledge the current anxieties about the long-term future of the site among those who have been most affected. I can categorically state that no decision has been taken about the long-term future of the site on which the tower sits. These decisions will not be led by me, the Government, this House or the Royal Borough of Kensington and Chelsea. It is the bereaved, the survivors and the wider community who will lead and be at the heart of the decision-making process. My colleague the Minister for Grenfell Victims is working directly with them to agree a set of written principles that will guide the way forward for the future of the site.
When decisions are taken, we want them to have the broadest possible support from those affected, particularly those who lost loved ones, and not just to follow the views of those with the loudest voices. The principles we are drawing up will help us to make sure that that happens and will include a firm commitment from the council that if the bereaved, survivors and the wider community do not want the site to be redeveloped for housing, the site will not be redeveloped for housing.
As well as dealing with the aftermath of the tragedy, we are determined to do everything possible to prevent such a disaster happening again. A crucial element of that is the public inquiry, which recently held its first procedural hearings under the chairmanship of Sir Martin Moore-Bick. I know that some members of the community are concerned about the inquiry’s remit, structure and personnel. Some have called for Sir Martin to be supported by an extended panel that reflects the diverse population of the tower. The decision on that rests with the Prime Minister. She gave a commitment to consider the composition of the panel once Sir Martin had determined what further expertise he needed, and she is now giving active consideration to the issue. Meanwhile, Sir Martin has said he is actively considering plans for a consultative panel of local people who could talk to and receive information from the inquiry. Such a panel has been established successfully by the inquiry into child sexual abuse as a way of closely involving victims and survivors in the work of the inquiry. Sir Martin has said that any decision on the establishment of such a panel for the Grenfell Tower inquiry will be taken in consultation with tower residents and bereaved families.
Whatever happens next, I can reassure the House that legal representatives of core participants will have access to relevant documents. They will be able to offer opening and closing statements at certain hearings and they will be able to suggest lines of questioning for witnesses. The needs of the community have been at the heart of the inquiry since it was first announced, and that is not going to change.
Learning lessons for the future will be a crucial part of Sir Martin Moore-Bick’s inquiry, but it is not the only piece of work looking at how building safety can be improved. Earlier this year, the Home Secretary and I asked Dame Judith Hackitt to carry out an independent review of building regulations and fire safety. The current system is complex and confusing, a situation that has developed over many years and under successive Governments. Today, Dame Judith has published her interim findings, which show that there is a need for significant reform. I can confirm that we have accepted all of Dame Judith’s recommendations for government. We agree with her call for a change in culture and a more effective system that will encourage people to do the right thing and hold to account those who try to cut corners. Everyone who is part of that system—including government—has an important role to play in delivering this change in culture and mindset. We fully support the direction of travel signalled in Dame Judith’s report.
Achieving cultural change will, inevitably, take time. But while Dame Judith explores these issues further she has also identified a number of areas where we can start making changes today. These include work on restructuring guidance and tightening restrictions on the use of desktop studies. On desktop studies, we will revise the approved documents on fire safety and commission work to produce a new British standard on when and how such assessments should be used. On guidance, we will work quickly with industry experts to complete work on clarifying the approved documents on fire safety. More widely, we will consider how the entire suite of guidance on compliance with building regulations could be restructured and reordered to make it more user-friendly. We will work with experts across the sector to explore how this can be done. Dame Judith recommends that consultation with fire and rescue services be carried out early in the design process and then acted on, and that fire safety information on a building should be handed over at the right moment. We will write to building control bodies to highlight these recommendations.
The Government will play their part in making the system work better and fixing the problems. I urge the construction industry, building control bodies, fire and rescue services, landlords and others to play their part, too. In January, Dame Judith will host a summit on building regulations and fire safety. It will form the springboard for the next phase of her review, and I encourage leaders from across the sector to take part and help design a better system.
While Dame Judith continues her vital work, we are continuing to support wider work to make existing buildings safer. In the past six months we have overseen a comprehensive set of fire safety tests on cladding components and systems. Fire and rescue services have visited and checked fire safety in every residential tower that has been identified as having cladding likely to constitute a fire hazard or which they consider a priority for other reasons. Across the country we have seen swift action taken to improve fire safety systems and to put in place interim measures where risks are identified. We have provided detailed advice to local authorities, housing associations and private landlords on how to ensure that their buildings are safe. DCLG’s expert panel has issued advice to building owners about carrying out the necessary work to address the fire risks of certain cladding systems. There is undoubtedly room for improvement in the way that the building regulations system works and is managed in the future. However, Dame Judith makes clear that her report should not be interpreted as meaning that buildings constructed under the existing system are unsafe. The system needs to be made stronger for the future, but the action taken since June is helping building owners make homes safer today.
Six months ago, 71 people lost their lives and hundreds more lost friends, loved ones, homes and possessions. Six months on, progress is being made. The situation is moving in the right direction but there is still a long, long way to go. As long as that is the case, I will not stop working with and fighting for the people who have suffered more than any of us could bear. They must not be forgotten and they will not be forgotten”.
My Lords, that concludes the Statement.
Lord Kennedy of Southwark (Lab Co-op)
My Lords, I first draw the attention of the House to my register of interests as a councillor in the London Borough of Lewisham and a vice-president of the Local Government Association.
Secondly, I thank the noble Lord, Lord Bourne of Aberystwyth, for repeating the Statement made earlier today by his right honourable friend the Secretary of State for Communities and Local Government.
Thirdly, as I have done on previous occasions, I pay tribute to all those involved on the night in question, from the fire brigade and other emergency services, the public sector staff from both local and national government who have been working with the survivors and the local community, to the voluntary sector and faith communities that are there today and have been there every day since that awful night. I thank them for all they have done and continue to do.
As I do every time I respond to a Statement on Grenfell, I want to point out that the offensive attacks on firefighters by Boris Johnson when he was Mayor of London are unfair and hurtful. I live in hope that one day he will apologise for his ill-thought-out words. He is not a man known for keeping quiet or hiding from the limelight, but strangely he is silent on this issue.
Last Thursday, six months on from the tragedy, I asked a Question expressing my concern that a significant number of people will spend Christmas and New Year in either hotels or temporary accommodation. Despite any caveats that people need to be given space to move on in their own time, it is disappointing that so few of the families have moved into permanent accommodation. I agree with the noble Lord’s comment that the council has undoubtedly been slow off the mark in starting the rehousing process. What specific action has the department taken to speed up this process, because at every stage since the tragedy the council has been slow off the mark? Can the noble Lord give me specific examples of the pressure and support from the department, to which he made reference in the Statement?
I have also raised the question of how the leadership of the authority is engaging with the opposition on the council. For example, is the leader of the opposition being properly briefed and invited to meetings? If the noble Lord is unable to answer that today, perhaps he will agree to write to me with details of the specific actions being taken in this respect.
The noble Lord made reference to the sums of money donated by the public and broke down how much has been allocated from these funds and what is being held back to allocate later. Can he update us on where we have got to with the allocation of the funds provided by the Government to the families concerned?
I note the noble Lord’s comments about the wrapping of the tower. There are mixed views on that locally. As he said, it is paramount that whatever happens to the site, it is led by the bereaved, the survivors and the local residents. I welcome his comments in that respect, although the actions and reputation of Kensington and Chelsea Council on community engagement are not as good as they should be. The local community will expect the Government to hold true to their words in that respect, and to take whatever action is necessary to ensure that Kensington and Chelsea Council does so as well.
In respect of the inquiry, I and noble Lords on these Benches give our full support to Sir Martin Moore-Bick. I hope that the Prime Minister will listen carefully and agree to any requests by Sir Martin to be supported by an extended panel. In addition, I welcome the suggestion of a consultative panel of local people. It is important that this inquiry is thorough and answers the questions that need to be answered, and that it has the confidence of the survivors and the local community. Looking back at other inquiries that have dealt with difficult issues, an extended panel can often help in that process. Lessons must be learned and be seen to be learned.
I am pleased that the Government have accepted all of Dame Judith Hackitt’s recommendations in full. That is an important first step, but it is only a first step along a very long road. In accepting these recommendations, will the Minister confirm that the Government accept that this will result in increased costs and that the Government will meet their fair share of these costs and not leave it to local government, business and others to fund any new safety measures or changes brought about by the revision of regulations and procedures?
Many in local government and elsewhere have been disappointed at the attitude shown by the Government since the fire towards the funding of replacement cladding. If the Government are truly signalling a sea-change in respect of their attitude and how we approach building regulation in regard to these matters, significant costs will be involved. Will the Minister update the House on how much they have paid out to local authorities in respect of works needed to make buildings safe since the fire at Grenfell Tower?
In conclusion, what we need to do can be expressed in the concluding sentences of page 10 of Dame Judith’s report summary:
“In summary, this is a call to action for an entire industry and those parts of government that oversee it. True and lasting change will require a universal shift in culture. The industry has shown this is possible in the way the health and safety of construction workers has seen a positive transformation in culture and practice over the last decade. This change needs to start now”.
If the Government are committed to that real change, they will have the full support of myself, these Benches, the whole House and the country. It is time to get on with the job.
Lord Stunell (LD)
My Lords, I remind noble Lords that I was a Minister in the Department for Communities and Local Government with responsibilities for building regulations between 2010 and 2012.
I thank the Minister for repeating the Statement, which is comprehensive and reflects the seriousness of the necessary response to the worst fire disaster in this country for 70 years. From this side, we reiterate our sympathy and support for the families of the victims and the wider local community, who were traumatised by the events that they had in fact predicted, but where no one would listen to their concerns. We have praise for their dignity, too, which was shown very clearly at the service at St Paul’s this weekend.
We also need to recognise, as did both the Minister and the noble Lord, Lord Kennedy, the valuable work done by local churches, mosques and community groups. They have worked tirelessly for the past six months supporting survivors and families, often when the authorities were missing or ineffective. We should extend our thanks to them for the help they have given and continue to give.
So it is all the more disappointing to find that things are, in fact, going at a snail’s pace in north Kensington, with families left stranded in hotels at Christmas. I look forward to the Minister’s response to the questions posed by the noble Lord, Lord Kennedy, in respect of that. We still have the grotesque, burnt hulk of Grenfell Tower dominating the area. A clear majority of residents believe that it should be wrapped and hidden from view. It is disappointing to me, and I am sure very dispiriting to them, that it is still not, even though the Minister himself in a previous Q&A said that it would be completed before the end of the year. He may be able to update us on the cause of the delay and what is being done to accelerate matters.
I strongly welcome the Hackitt review and the fact that the Government are accepting its recommendations. I will pick up on two or three of those recommendations and press the Minister somewhat on what that acceptance really means. One relates to having a nominated responsible person to certify compliance with building regulations on each project. That provision could be done quite simply by regulation as a result of modifications to the Building Act that were introduced in 2004 by my Private Member’s Bill. I look forward to hearing that that will happen very quickly indeed.
I also want to pick out the point that was made about approved documents. The report says that it is not just a question of getting the fire approved documents right, but that various approved documents for different parts of the building process are not well co-ordinated and there needs to be a holistic redrawing of the whole framework. I hope that the Minister will be able to say that that is exactly what he intends to do.
The third and important point that comes out of the Hackitt review is that all of this will impose what the Treasury would describe as burdens on industry. I therefore want to ask the Minister whether the Government are prepared to say that they will suspend the operation of their one-in, three-out rules in respect of this particular disaster and what needs to be done as far as the regulations are concerned.
One recommendation, which is still to be confirmed in the final report, says that a whole set of trades and professions should have a licensing system. The Federation of Master Builders has been pressing for that for a long time and others in the industry see it as essential. But the Treasury, again, will say that it is a burden. It will be perverse indeed if, in complying with one-in, three-out—or one-in, anything-out—in respect of this, there was a diminution or lessening of standards elsewhere to reduce burdens as they are seen in the Treasury. Will the Minister respond to that?
Finally, I am sure that the Minister recognises that, right across the country, residents are living in tower blocks that have had their cladding removed. They face a winter of worry, not just about fire risks and safety precautions, but because they are in flats that are more exposed to rain and are colder, and that are more costly to run because the cladding has been stripped off. When will the Minister’s department tell landlords what they can do that is safe and approved and will restore the standards that they need in those flats? Of course, linked to that, as the noble Lord, Lord Kennedy, said, we need to hear where the money is and when it will be available as well.
I welcome the Statement and the report and look forward to the Minister’s response.
Lord Bourne of Aberystwyth
I thank the noble Lords, Lord Kennedy and Lord Stunell, for their response and their general support for moving things forward. I will try to deal with the detailed points that they raised. First, I join with them in saying, as I have on previous occasions, that we owe a massive debt to members of the public sector, particularly the emergency services. We also owe a massive debt to charities, the faith sector and to the great British public, who have, as has been said, responded with incredible generosity to this dreadful tragedy.
In relation to rehousing, as I made clear in the Statement, we have felt that the local authority was slow off the mark. That said, it would be ungenerous to say that progress has not been made. There is still a massive amount to do: we must be clear about that. We cannot be complacent. But we are in the position now of having more houses than there are families needing to be rehoused, so the issue now is that not every family is happy with the house or property they have been offered. We have always said—and we have had support from other parties and others—that this is the right approach and that we should not be forcing people to move where they are not happy to go. We do not want to do that. There may be many understandable reasons why people will not want to move into a tower block or, possibly, even into third or fourth-floor accommodation. They may not want to be in the area concerned. Some people have changed their minds. There are many factors here. Progress is being made, but there is more to do. I readily accept that.
On the point raised by the noble Lord, Lord Kennedy, on charities, the distribution of charitable funds is a matter for the charities concerned. Obviously, we will provide scrutiny and guardianship to ensure the proper processes are being followed, as we always do. No doubt the final allocation will follow, but that is a matter for the charities, unless they seek help and guidance. That would then be given as a matter of due process.
Both noble Lords referred to the memorial event held here, in addition to the service at St Paul’s, and the views of survivors. Many survivors made the point about the site and how it should be developed. We have made clear—I think the Statement makes it clear again—that that is a matter for the survivors. They are in the driving seat on this. They may well seek advice and guidance from us, but they have a veto on that. The right honourable Member for, I think, Ruislip, who is the Minister for Grenfell survivors, is working with the community on the principles that will be applied, but, as we made clear, they are in the driving seat.
The noble Lord, Lord Kennedy, referred to Sir Martin Moore-Bick and offered his support and that of his party, for which we are very grateful. I think that is the position of the Liberal Democrats as well. Sir Martin is considering whether to have a consultative panel. That is a matter for him. It will no doubt be a matter that the Prime Minister will wish to take into account on whether she has somebody else sitting alongside Sir Martin Moore-Bick. It is a question of balancing those considerations.
The noble Lord then referred to—I think this was a matter on which the noble Lord, Lord Stunell, homed in—the interim report from Dame Judith Hackitt. Again, I thank both noble Lords for their support for this process. We thought it very important that we set this up alongside the inquiry. We have had a very detailed interim report, which we will want to respond to and look at in detail. As I said in the Statement, the Government accept all the recommendations directed to them. We will certainly be carrying those out. Above all, we will be putting safety first. That is something the British public, the people of Grenfell, obviously, the wider community, the Government and all noble Lords would expect us to do. Again, safety first applies in relation to regulation. There is nothing to stop us proceeding as necessary with any regulations and whatever is necessary coming from the interim report and, later, the full report, which we anticipate in the spring.
Both noble Lords raised issues about cladding. The noble Lord, Lord Kennedy, asked about the financial position, as did the noble Lord, Lord Stunell. We are in discussions with 26 local authorities that have sought help. We have asked for further information from 10, from memory; I will confirm these figures, but I think it is 10. We are having detailed discussions with two further—maybe two of 10. I will confirm that in writing to the noble Lord—I will leave a copy in the Library and copy it to other noble Lords who have participated in the debate—making it very clear that we will not let financial means stop what is necessary to move this forward. That is, I think, widely accepted.
Once again, we have received an excellent report from Dame Judith Hackitt. There are many facets to it, not just directed to government, although a lot of it was. We encourage all relevant parties to look at this excellent report, study it and respond in a positive way to it.
Baroness Lister of Burtersett (Lab)
My Lords, there was an emphasis in the Statement on the involvement of Grenfell residents in future decision-making. As the noble Lord, Lord Stunell, pointed out, part of the problem lies in the fact that the residents were not listened to in the past when they raised concerns about problems with the building. I was at the memorial meeting here last week, where I got the sense that many felt they were still not being listened to by local officials. Thinking about lessons for the future, what are the Government going to do to ensure that residents of social housing are listened to?
Lord Bourne of Aberystwyth
I thank the noble Baroness, Lady Lister, for her question and for her attendance at the meeting. It was a very moving meeting indeed. As she said, there were understandably some raw feelings about the way residents had been dealt with. Looking to the future, in the aftermath of the Grenfell tragedy we have established there a victim support unit. Ministers are there on a regular basis—to be fair, so is the royal borough. We have responded very positively by ensuring the NHS is there to look to the health needs, not least the mental health needs, of the people there. On her wider point about ensuring that lessons are learned, they will be learned. We are looking to the future for a Green Paper on the social housing sector. We can expect some of these points on the obvious questions raised by the Grenfell tragedy to be taken up in it and some of the answers we have learned.
Lord Patten (Con)
On lessons learned and building safety, is the policy of Her Majesty’s Government now that all refurbished, repaired or newly built high-rise buildings in the royal borough and elsewhere should always contain properly integrated sprinkling systems?
Lord Bourne of Aberystwyth
My noble friend raises an issue that obviously will be considered by the public inquiry. It is being considered by Dame Judith Hackitt, who has made some point about it in the interim report, although she stops short of recommending that they should be compulsory. The Government will look at this in the light of recommendations made and the wider question of the safety of high-rise buildings following the reports and reviews that are under way.
Lord Lea of Crondall (Lab)
My Lords, I am a little concerned that we have not heard much about the relationship between this and the whole framework of the legal process. Given the “us and them” aspect of feelings in north Kensington, will the Minister give some thought to the fact that it has been reported that 25 legal teams are involved in all this? Do the Government have any locus in how the handling of all these legal processes will be treated by the public? If not, how will the Government be able to comment on them if they have no locus in this matter? We know that some of these inquiries take a lot longer than expected and there are some culpability questions involved, but if a note could be prepared on any of this it might be helpful. We do not want to be wise after the event.
Lord Bourne of Aberystwyth
My Lords, the noble Lord raises an interesting and fair point—that does seem a lot of legal teams. I accept that. Some of them are helping the Grenfell victims, which is something that the Government have ensured—that there is proper legal representation for the Grenfell victims and survivors. Noble Lords would accept that that is important. The inquiry has only just started. It will be far-reaching. It is right that it should be. It obviously has to follow due process. On the Government’s role, I have mentioned that the Prime Minister is looking at the way the inquiry should take proper account of local opinion. We will no doubt discuss that with Sir Martin Moore-Bick in the light of how he responds and what his thinking is on a consultative panel.
Lord Shipley (LD)
My Lords, I remind the House of my registered interests. In the interim report, Dame Judith Hackitt says that,
“I am aware that some building owners and landlords are waiting for direction from this review on what materials should be used to replace cladding that has been identified as inadequate. I would urge them not to wait but to consider what materials have already been identified and tested as safe”.
Given that the Government have accepted all the recommendations of the interim report, is it the case that all such works undertaken by all local housing authorities with high-rise blocks will be deemed by the Government to be essential works and therefore will be funded by them? There is a problem in that the Government have offered to pay for essential works, as I understand it, but not for additional works. As a consequence, a lot of bilateral discussions are going on with local housing authorities. Would it not be better for the Government to define what are essential works and what might be deemed additional works so that there can be a public debate about this? As of now, the interim report of Dame Judith Hackitt has indicated that people should get on with the job of making their buildings safe using materials which have been deemed, after testing, to be safe.
Lord Bourne of Aberystwyth
My Lords, I thank the noble Lord, Lord Shipley, for that question. The Government accept all the recommendations of Dame Judith Hackitt’s interim report that were directed towards the Government; of course, many recommendations are directed elsewhere, and we cannot accept those on behalf of other bodies. Obviously, we urge local authorities to be pre-emptive and respond in relation to the recommendations made to them. We have been very clear that finance should not stand in the way of necessary work, which remains our position. We are open to looking at any reasonable application in relation to that—as I have indicated, we are indeed doing so.
Baroness Young of Old Scone (Lab)
My Lords, I declare an interest as a resident of a Westminster City Council block that suffers from all the deficiencies that Dame Judith Hackitt’s report has outlined so well. In paragraph 1.86, Dame Judith quite rightly focuses on the inadequacy of compartmentation as a fire risk control measure. On many occasions, the multiple responsibilities for adaptations and changes in such blocks result in all sorts of people, including homeowners, undertaking changes which compromise compartmentation. By the time inspections happen, if they happen adequately at all, floor coverings, wall coverings and all manner of other adaptations are hiding a multitude of changes to the integrity of the compartmentation. I was pleased to see in Dame Judith’s report a comment on compartmentation but, so far, there has been no recommendation. Is this a matter on which the Government expect a recommendation in Dame Judith’s final report? I firmly believe that compartmentation—which is a dreadfully difficult word to say at this time of the day—is a policy doomed to failure. It is a fail-unsafe, rather than a fail-safe, policy.
Lord Bourne of Aberystwyth
The noble Baroness makes a perfectly fair point. Obviously, there is a lot even in the interim report—it is not a short report; it has many important recommendations and constitutes important reading not just for the Government but, as I have indicated, for all relevant partners in relation to delivery of housing and those concerned with building regulations and fire safety. Perhaps I may come back to the noble Baroness on the particular point she raised; I have not read the report from end to end—I have to be candid about that—but we are expecting a fuller report in the spring, where no doubt some points that perhaps have not been fully investigated as yet will be covered.
Lord Northbrook (Con)
My Lords, does the Minister believe that there have been different standards of building safety for public and private sector projects, or does he believe that the terrible Grenfell Tower disaster could happen to any high-rise building?
Lord Bourne of Aberystwyth
My Lords, I feel sure that what happened at Grenfell Tower could happen in relation to any building which was similarly clad. That would certainly apply to some buildings not in the public sector that, as we know, have been subject to the same review. The approach of Dame Judith Hackitt is to come forward with a uniform building standard, which I think we would all recognise as necessary. It should be a very tight standard and fire safety should be put front, back and centre of it—that is the prime lesson that we learnt from the review.
Lord Beecham (Lab)
My Lords, in addition to the issue of sprinklers, to which the noble Lord, Lord Patten, referred, another issue to arise from the disaster was the lack of more than one exit from the premises. I have not read Dame Judith’s report and do not know whether she has dealt with it—she may well have done—but it would helpful if the Minister could indicate whether there is any intention to move on that front, so that there is an option for people rather than their having to rely on only one exit being safe.
Might the Government also consider insisting on a supply of small fire extinguishers—I have to confess that I have only recently acquired one myself—for the sort of event that might happen in a kitchen or with an electrical appliance? Again, it may be a matter that Dame Judith has covered; if she has not, perhaps the Minister could consider including that in any review. Some relatively modest expenditure may be involved— they are not very costly items—but it would potentially enhance safety quite considerably.
I notice that the Minister did not quite find time in his reply to deal with a number of the questions raised by my noble friend from the Front Bench. No doubt he will undertake to respond to those in writing subsequently.
Finally, I join others in expressing our deep sympathy—on behalf of the whole House, not only those who are here tonight—for what terrible strain and tragedy have done to that community. We are glad that there is all-party agreement that we have to tackle this issue substantially right across the sector and across the country. I hope that the Government will provide the necessary funding, which would be quite considerable, to deal not only with the capital side but with the beefing-up of building regulation.
Lord Bourne of Aberystwyth
My Lords, I thank the noble Lord, Lord Beecham, for the very sensitive way in which he made that last point in terms of support for the Government and recognising that we should come together in tackling these issues—indeed, it is a problem that has been neglected by Governments of all three parties here and they must share some of the blame. However, that is not the most important thing now; the most important thing is to move forward.
The noble Lord raised some very valid points about fire exits. Of course, there is sometimes an issue about enforcement even in relation to a single exit where it has not been properly monitored or has been blocked; that is another issue that needs to be looked at. He also referred to the supply of fire extinguishers. We know that in the aftermath of Grenfell some local authorities—including Camden, I seem to remember—recognised that they needed to do more on that front. I am sure that that is true across authorities of all political parties. They are very fair points. I do not think that they are dealt with specifically in the interim report, but we will make sure that Dame Judith sees them. I am sure that, being very adept in these matters, she will look at what has been discussed in relation to this Statement today in both Houses.
As the noble Lord alluded to, I will of course deal in a letter with points that I have missed, of which I am sure there are many. I will make sure that the letter goes round. I will also correct any errors that I have made.
Baroness Donaghy (Lab)
Will the Minister further clarify on the points raised by the noble Lord, Lord Shipley, on the potential difficulty of defining necessary cost? I hope that he can assure us that local authorities will not be batting backwards and forwards trying to identify what work they can go ahead with which the Government will support and what work they should not go ahead with unless they have their own necessary funds to do it. I think that there is potential here, particularly as Dame Judith’s report has said how muddled it all is, for local authorities and other private sector organisations and housing associations not to be absolutely sure about what they will get government support for.
Lord Bourne of Aberystwyth
My Lords, I thank the noble Baroness, Lady Donaghy. As we have indicated all along, it is important that any relevant organisation or local authority that is concerned about their funding position should contact the Government. As I say, 24 have done so; we are looking in detail at the position of 10 of those and we have asked for further information from two. That remains the situation. It would be very dangerous for me to say that it will cover this and it will not cover that. It has to be a bit more flexible, because the sort of work that is necessary will vary enormously from block to block and from authority to authority. Of course, there will be an established position of the sorts of area we will look at and the sorts of financial assistance that may be necessary, but I repeat that we are certainly open to looking at those bodies that need assistance and discussing it with them. That is what is happening and I urge local authorities, through Members here, as well as other housing associations and so on, to contact us if they need clarity. We will be very happy to provide that.
Tackling Financial Exclusion (Financial Exclusion Report)
(7 years ago)
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The Lord Bishop of Birmingham
My Lords, as we resume the debate on Tackling Financial Exclusion: A Country that Works for Everyone?, there can be no more poignant reminder of the issues raised in the committee’s report and the seriousness with which we need to take its challenge. As the Bishop of Kensington said in the service just mentioned by the noble Lord, Lord Bourne, we can be too wrapped up in our own interests and prosperity, but we might just now turn outwards towards each other—a society known for listening, compassion and love.
As noble Lords have heard, the Select Committee did a lot of listening and we know that finance affects every person in the land, from the poorest to the richest. Our knowledge and appreciation of the many interventions, whether the basic bank account promotion, the control of payday lending or the encouragement of education in personal and household budgeting, has increased. Our imagination has also been stimulated and sometimes appalled by the testimony of those not included in the ordinary money transactions most of the population take for granted. In her introductory remarks, the noble Baroness, Lady Tyler, mentioned some of the statistics that back that up.
We are on a journey. There have been some achievements, going back as far as the government strategy of 2004, the taskforce of 2005 and the commission that reported in 2015. The present Government’s response to the committee’s findings is also welcome, if, as the Minister will have already realised, some of us think it has been a bit too mild. There is a long way to go towards full financial inclusion, the lack of which, in a mature economy, illustrates starkly the relationship between poverty and power, between the person and the policy, between the micro and the macro, and the breathtaking inequalities in income, housing, health and education already mentioned by several speakers this evening.
I draw noble Lords’ attention to just a few of the many recommendations in this complex subject that have already been referred to in the debate so far, from chapter 7, “Credit and Borrowing” and chapter 8, “Welfare Reform”. The sharp reduction in payday lending by regulatory action made us face up to the ease with which it is possible to fall into unmanageable debt. Other reasons have also been mentioned tonight, including gambling. Other high-cost credit areas, again referred to by the noble Baroness, Lady Tyler, being reviewed by the Financial Conduct Authority, should also be considered for regulation, as in recommendation 16. What is the timetable for the Financial Conduct Authority policy review on further interventions, mentioned in the government response at paragraph 5.41? At the same time, further support for the affordable credit industry should be provided, with, as we have heard, investment capital rather than grant or revenue funding. This, if supported, could be directed especially at credit unions such as the effective but underfunded Advance Credit Union at Erdington in my own diocese. What specific targets would the Government support for this ambition, as in paragraph 5.50? Alongside the well-needed, well-designed support there also need to be light-touch fees and regulatory regimes appropriate for these small and medium-sized financial enterprises.
The fruit of these recommendations, if we needed any incentive, will be seen in the removal or reduction of the poverty premium and, beyond that, the possibility of people beginning to save for the first time in their lives. Chapter 8, “Welfare Reform” deals with how the ordinary ambitions of people trying to participate responsibly in the economy have been hindered by the implementation of the worthy ideals of universal credit. Here, we recommended the abolition of the seven-day waiting period and flexibility in the frequency of payments. I note the Government’s optimism in paragraphs 5.51 to 5.55, but we have to realise that the tragic consequences of the failure of tightly managed household budgets are seen at food banks and places of welcome all over the country. Those applying for universal credit are being given impressive support by the Just Finance Foundation and Just Finance Black Country, by the Good Things Foundation, supported by Lloyds Banking Group, by Christians Against Poverty with its debt centres, four of which are in Birmingham, and by other money advice centres.
These actions and most of the issues raised in the committee’s report are well documented close to the people; for example, in my own area by the Birmingham Financial Inclusion Partnership, which I commend to the Minister. By way of general requests, in addition to the challenge to the Government to attend to the 14 other recommendations that have not so far been tackled, will the Minister recognise and commit to the need for the continuous, top-level leadership from government mentioned by the noble Baroness, Lady Tyler, in focusing on the multiple remedies to reduce financial exclusion? I know various people have been named tonight as being responsible, but this matter is so complex and serious for the welfare and inclusion of the whole population in our successful economy that it needs the very highest level of attention and a report back to this House.
Will the Minister give further support to those local authorities that have well worked out but underresourced strategies for reducing financial exclusion? Thirdly, will he recognise and give vigorous support to the role of the NGO, charity and faith sectors in meeting personal needs, both for practical, life-saving assistance and sustainable money advice? In the minute left to me, I express the hope that in future we may take time to reflect at the macro level on the bigger question of the meaning and uses of money and to examine our own assumptions about the systems we operate. In a city where Winterval, if I may mention this to the noble Lord, Lord Patten, has been abolished in favour of religious traditions from all backgrounds, perhaps we might, at this end of term, look to the vulnerable baby with an unmarried, teenage mother and a compassionate foster father, who had the attention of rich philosophers, poor shepherds, powerful governors, a reluctant innkeeper and even joyful angels; a baby who grew up to teach that crumbs from the table were not enough and that nothing less than a much larger table, at which all could share the feast, would do.
Lord Northbrook (Con)
My Lords, I add my thanks to the noble Baroness, Lady Tyler of Enfield, for her excellent and skilful chairing of our committee. I also thank our clerk, Matthew Smith, and committee assistant, James Thomas, together with our policy analysts, Cathryn Auplish and Nathan Lechler, for their sterling assistance. As the committee’s report covers such a wide area, it is sensible in the time available to restrict my detailed comments to two chapters of the report that, having worked in the City, I found particularly interesting; namely those on access to financial services and financial exclusion, credit and borrowing.
Before that, I want to highlight a few successes where, following our report, the Government have taken action. The first, recommendation 1, has seen the appointment of a Minister for Pensions and Financial Inclusion, Guy Opperman, based in the DWP. Recommendation 2 has been also partly implemented,
“that the Government should set out a clear strategy for improving financial inclusion in the UK”.
I welcome the fact that the Government have committed to setting up a new financial inclusion policy forum. This will be chaired by the new Minister for Financial Inclusion and the Economic Secretary to the Treasury and include other Ministers and representatives of financial service regulators. It will meet twice a year.
Recommendation 8 has also been implemented. This recommended that,
“the Government and regulators should work together to develop an approach to promote further innovations in the provision of online and mobile banking services to older people”.
In response, the Government referred to the institution of the FCA’s weekend events, bringing financial services firms and technology firms together to work on and find innovative solutions to these problems.
Recommendation 9 has also been implemented. This recommended that,
“the Government should work with the financial services industry and the FCA to develop and introduce a wider range of ‘control options’ for those customers who may experience mental health problems”.
This has been moved forward by the FCA, which held a weekend seminar in March, in tandem with the Money and Mental Health Policy Institute, to address ways in which fintech could create tools to help people with fluctuating mental health conditions.
A major recommendation, number 19, has been implemented. As other noble Lords have said, we criticised the seven-day waiting period at the start of a universal credit claim. In the November Budget I was glad to see the Chancellor commit to removing the seven-day waiting period. However, I am disappointed that the Government have not implemented recommendation 20, which asked for,
“greater flexibility in the frequency of Universal Credit payments in England and Wales so that … payments can be made twice-monthly, as will be possible in Scotland and Northern Ireland”.
I was first made conscious of the problems with universal credit implementation, having being unaware of them when the legislation went through this House, when our committee visited Toynbee Hall in the East End of London. We met claimants who made all too clear their distress and suffering caused by the delays in payment, and it was a very moving experience.
Overall, like other noble Lords, I feel disappointed about how few of our recommendations have been accepted by the Government, particularly with regard to financial education at primary school stage, bank account charges and the Post Office, the last two of which I shall come on to.
In the rest of my speech, I will focus first on access to financial services, covered in chapter 6 of our report. A major theme of the evidence we received was that many people are financially excluded because they are unable to access the standard banking system. An alarming figure stands out that there are 1.5 million unbanked adults in the UK. A very helpful solution to this could be the basic bank account. Noble Lords may not be aware that banks are obliged to offer this to customers. It is a simplified form of current account, providing direct debit facilities, a debit card, access to cash machines and over-the-counter banking. It is impossible to go overdrawn on a basic bank account and therefore impossible to receive overdraft charges. Hence—surprise, surprise—banks do not publicise them well as they do not make as much money out of them as normal current accounts.
Opening a basic bank account can prove surprisingly difficult. Citizens Advice York highlighted,
“a number of examples which suggested that branch staff were sometimes misinterpreting rules and eligibility criteria for the accounts”.
I can back this up with an example from Hampshire, where I live, where two Hungarian employees wanted to open bank accounts. Despite the fact that they both had national insurance numbers and a P60 each for their wages with their address on it, they were turned down by my bank, Barclays, in Petersfield because they did not have a utility bill in their name for the house where they live. This was not surprising as they are living with us. Another excuse Barclays used was that they had not been living here for three years and did not have a credit history in the UK. Of course, credit history is irrelevant with a basic bank account as overdrafts are not allowed. Finally, Barclays said that because one of the couple could not speak English—the other is quite fluent—she would not be able to fill in the customer satisfaction survey. At that point they gave up with Barclays, went down the road, and finally got a basic bank account with Santander, but even that took two and a half hours to set up.
All of this does not quite square with Barclays’ evidence to the committee. It said:
“The basic bank account is a key component of financial inclusion … Ensuring that all banking participants are party to that … is important; otherwise you have people going into the branch of a bank that they think would be great for them and they are told, ‘Sorry, you’re not someone we want to bank. Can you go down the road and be supported by someone else?’ That is not a good outcome”.
As can be seen from the example I gave, identification remains a key problem. In the banks’ defence, the tension between the need to prevent money laundering and the needs of the financially excluded was highlighted repeatedly by bank witnesses. More creativity needs to be allowed with regard to identification. In paragraph 214 of our report, we say:
“The Committee welcomes and encourages the use of Universal Credit letters as identity verification for bank accounts. We are encouraged by the announcement from the Economic Secretary to the Treasury that banks are to accept these as standard procedure”.
Therefore, I fully support the committee’s recommendation 12 of an annual report, which,
“should contain updates on the rollout of electronic identification for bank accounts—particularly in regard to the success of bringing previously unbanked people into the banking system. The annual report should also provide an update on the level of acceptance by banks of Universal Credit and other non-standard but legally sufficient identity documentation”.
Another very important section of this chapter sets out a greater role for the Post Office. Our recommendation, which I believe is important, was that,
“the Government work proactively with the Post Office and banks to fund and launch an extensive public information campaign on the banking services that are available through Post Office branches. The Government—as sole shareholder in Post Office Ltd—should also ensure that the Post Office provides adequate training for staff at branches within retail outlets, so that they can carry out banking services for customers with confidence and competence”.
In the chapter on financial exclusion, credit and borrowing, four parts of the sector were considered by our inquiry: unarranged current account overdrafts; high-cost short-term credit, which includes payday loans and short-term high street loans; home credit, which involves providing relatively small short-term loans to consumers on lower-than-average incomes; and, finally, rent to own, where a company sells consumer goods and provides the credit products that enable people to buy them.
First, on unarranged overdrafts, we recommended that,
“regulations to limit and manage the negative impact of unarranged overdraft charges should be introduced. The potential for such regulations should be assessed as part of the ongoing FCA review into high-cost credit”.
The Government’s response—to refer the matter to the FCA—is only partially satisfactory. Action needs to be taken now. A bank charge of £30 a time for going into overdraft is far too high, as for someone on the minimum wage it takes four hours to earn back the money.
The next two parts, we broadly concluded, have been more successfully controlled through recent FCA regulation. It is the final part, the rent-to-buy sector, where further controls are necessary. As other noble Lords have said, the store chain BrightHouse is one of the major culprits in this regard. According to a Guardian article of August 2017, it was charging customers up to £1,560 for a washing machine when exactly the same model could be bought elsewhere for £599. BrightHouse is the dominant player in the sector, together with PerfectHome and the online retailer, Buy As You View. Our recommendation 16 states:
“We recommend that the Government provide all necessary assistance, includinglegislation where needed, to further combat financial exclusion caused or exacerbated by high-cost credit … Regulations should be put in place in other parts of the high-cost credit sector, particularly the rent-to-own sector”.
I am sure this recommendation helped encourage the FCA when in October this year it ordered BrightHouse to repay nearly £15 million to 249,000 customers, stating that it had not behaved as a responsible lender. This is after Buy As You View went into liquidation in September, after repaying nearly £1 million to 59,000 customers who had been unfairly treated. Recent results from PerfectHome show the company making a major loss. Clearly, the sector is not having things its own way so much any more, but regulation is still needed.
Overall, I am pleased that the Government have accepted some of our recommendations—but not enough. Their response to our report, considering it came out in March, has been far too slow. We need to keep pressure up on the FCA in particular to provide further active responses to our report.
Baroness Lister of Burtersett (Lab)
My Lords, as an “immigrant” contributor to the debate I congratulate the committee on its report and its recognition of the link between financial exclusion and poverty. Echoing a number of committee members, I will focus my remarks on issues raised by the chapter on so-called welfare reform, starting with universal credit. In opening the Budget Statement debate, the Minister acknowledged “genuine concerns” about UC’s “operational delivery”—but I am afraid that the problems with UC point to more fundamental design flaws that need to be solved if UC is to work for claimants, many of whom are likely to be among the sizeable minority considered by the FCA to have low financial resilience.
The abolition of the waiting days and introduction of a housing benefit run-on period is of course welcome, but it still leaves a five-week waiting period for the main UC, mitigated only partially by repayable advance payments. The version of the Budget speech circulated to the media stated that reducing the delay at the end of the first-month assessment period,
“would mean compromising the principle of payments … made on the same day of the month … which is very important for claimants in managing their budgets”.
But do we know from claimants themselves whether that is more important than, say, a shorter wait or having a more flexible payment system than the very inflexible one created by monthly payments and assessments, in which a whole month’s entitlement is based on the claimant’s non-financial circumstances on a single day each month? Damien Hinds claimed that,
“monthly is the more sensible pattern”.—[Official Report, Commons, 5/12/17; col. 1001.]
But I am not sure how much sense it makes to claimants or how it is conducive to smooth budgeting.
In her UC debate, my noble friend Lady Hollis of Heigham observed that the aim is,
“to moralise some of the most marginal in society into behaving like middle-class salaried professionals resilient with savings”.—[Official Report, 16/11/17; col. 2129.]
In arguing that monthly payments mirror work, Ministers refuse to acknowledge that this is not the world of work typically experienced by claimants. Nearly three-fifths of those who moved from paid work onto UC had been paid fortnightly or weekly, according to the Resolution Foundation. The foundation criticised “unnecessarily poor policy choices”, flowing in part,
“from misguided attempts at concentrating on altering human behaviour rather than supporting people in need”.
In the past, I think Conservatives might have denounced such misguided attempts as social engineering.
As we have heard, the Northern Irish and Scottish Administrations have listened to the concerns about monthly payments. Also in Scotland, couples may opt for split payments without fuss. The payment of UC into one account could undermine the financial resilience and capability of some women, especially those subjected to domestic violence, even where payment is into a joint account, as research shows that joint accounts provide no guarantee that the money reaches individual partners. It is disappointing that the Government rejected the recommendation of the Joint Committee on Human Rights—I was a member at the time—that the DWP should use UC rollout to test different payment arrangements to protect women’s financial autonomy. It is also disappointing that they appear to have rejected proposals, including for a safe interim payment, submitted by Policy in Practice—run by one of UC’s architects. This would have speeded up the first payment and enabled fortnightly payments without the potential difficulties raised by Ministers. Even if the majority of claimants prove to be comfortable with monthly payments, as the Minister argued in a recent debate on debt, what about the minority who are not?
The Government’s response to the committee lays great emphasis on alternative payment arrangements, but these are at the discretion of the UC agent or work coach. I do not find very convincing the argument that this is more effective than giving claimants the right to more frequent payments because it strengthens the relationship with work coaches. As it is, those who struggle will be labelled poor budgeters even if they were previously very efficient budgeters. They will be offered help with budgeting, requiring a whole new edifice of support.
This brings me to universal support, which was mentioned in the committee’s report. In its evidence to the Work and Pensions Committee, Citizens Advice listed a catalogue of problems. They included: variable delivery because of a lack of published minimum standards, often resulting in over-restrictive scope; ineffective referral mechanisms; and a lack of co-ordination. An updated framework was promised for autumn 2014 but has still not appeared. A local authority source advised me of fears that DWP is drawing conclusions about the level of support needs based largely on the experience of UC Live, which has involved the claimant cohort least likely to have such needs. In the debt debate, I asked the Minister to ask DWP to provide us with a report on how universal support was working—but answer came there none. May I now repeat the request, noting that similar questions in the UC debate also went unanswered?
Not only does universal support appear inadequate to the task but, as predicted in your Lordships’ House, the replacement of the Social Fund by discretionary local welfare assistance schemes, without any ring-fenced funding, has meant that in many areas it is no longer an alternative source of support because many authorities have closed or significantly cut back their schemes. According to the Centre for Responsible Credit, this is leaving some people facing destitution for lengthy periods of time.
While acknowledging examples of good practice, the committee rightly expressed concern about the funding outlook. Shelter and the Longleigh Foundation point out that since specific central funding for the schemes was ended last year, councils,
“have to find the necessary funding from within their existing, and shrinking, budgets”.
They warn that,
“there is absolutely no other emergency fund that is flexible enough to help people in financial crisis and prevent, or relieve, homelessness”.
Yet when I and others voiced such concerns in Oral Questions last Monday, there was an absolute refusal to acknowledge the seriousness of what was happening and to respond to requests for an evaluation of the impact of the changes. How can a Government who extol the importance of responsibility be so irresponsible as to wash their hands of all responsibility for the outcome of this reform?
Finally, the Government’s response to the committee’s call for,
“a detailed, comprehensive cumulative impact study”,
of how social security changes,
“might have adversely affected financial wellbeing and inclusion”,
is woefully inadequate. If the Women’s Budget Group and the Equality and Human Rights Commission can carry out such analyses, why cannot the Government, who have the ultimate responsibility for the impact of their legislation on the well-being of their citizens?
Perhaps the answer lies in the sobering picture painted by these independent studies, which show the negative impacts analysed by gender, disability and ethnicity as well as income. This was summed up by the EHRC, which said:
“Poorest hit hardest by tax, social security and public spending reforms”.
With a cumulative total of £27 billion or more in social security cuts due to have taken effect by the end of the decade, I fear that the outlook is an endless bleak midwinter, marked by more financial exclusion, hardship and debt.
Viscount Brookeborough (CB)
My Lords, I add my thanks to the noble Baroness, Lady Tyler, for her excellent leadership of our committee, and to the staff who supported her.
We sometimes think that financial exclusion is important but that it is a subject like many others. It is not. It is really important, as important as the security of our population or their health and education. Why? Because it concerns every individual in the country —not that they are all excluded but because of their financial capability.
Perhaps it is easier to define financial capability, which is what we are trying to get. The MFO, the Microfinance Opportunities, defined it thus:
“Financial capability is the combination of attitude, knowledge, skills, and self-efficacy needed to make and exercise money management decisions that best fit the circumstances of one’s life, within an enabling environment”.
Not everybody needs to know how to invest in the City of London; we all have our own worlds that we need to know more about.
The Government have made some minor advances and were in a constructive mood during debate on the Financial Guidance and Claims Bill. I am sorry that they were perhaps not so constructive in their response to us, which has not been very positive. They sometimes seem to support our view but do not quite go the whole way into implementing recommendations.
I turn to financial education or, better put, the teaching of financial capability. The MFO defines it as:
“Financial education equips people with knowledge and skills, and strengthens their attitudes and belief in themselves to make and exercise informed, confident and timely money management decisions”,
in their own lives. So it is a lot more than just facts and figures; it is about people’s social belief and their belief in themselves that they can do things.
When we look at the statistics, one or two of which we have heard, we see that one in six struggle to read a simple bank statement, 17 million cannot manage their own budget and only 26% of postgraduates are happy that they can manage their own money. To put it another way, that means that 74% of our most highly educated people in this country do not believe that they are capable of managing their own budget or that they have had the training to do so. It is not surprising that we have a problem.
The FCA’s Financial Lives Survey 2017 backs up everything we say. It is all there. In the past few days, the Education Policy Institute has indicated that in mathematics,
“England has one of the largest gaps between the highest and lowest performing”,
out of all developed nations. I am very glad to say that England does not include Northern Ireland because we come out higher than that.
If you look at the Daily Mail—which I do because it is in the Library, although some may say you should not—its headline today is “Middle Class Pension Crisis”. Three paragraphs down it says:
“The Department for Work and Pensions says”—
so it is not me and it is not even the Daily Mail—
“12 million people are not saving enough – despite more than half of them earning at least £34,500 a year”.
So we are not talking just about those on the minimum wage; we are talking about graduates, well-educated people who have gone into jobs, and there they are.
At the bottom of all this must be financial education, or lack of it. It has to be. We recommended more financial education in school. The noble Lord, Lord Patten, who sat next to me, said that he was not sure that schools could actually do all that. However, it is not me who is saying it; it is the Government who, in response to our questions, are going to justify what they are doing. They will, we can be sure, be quite good at batting it away.
However, the Government had every chance in the Financial Guidance and Claims Bill to put in schools. In relation to the single financial guidance body, Clause 3(9) sets out:
“The strategic function is to develop and co-ordinate a national strategy to improve … the provision of financial education to children and young people”.
There was an amendment to put schools into that. First, I must ask the Minister why they did not allow schools to go into that. Secondly, as they did not allow schools to go into it, where does he believe that financial education is going to take place? Is it going to take place over the weekend when people are going to cinemas? Is it going to take place after hours when they are doing other things? Who is going to do this financial education that they talk about, and where? Therefore, why did they not allow schools to go into it?
On one or two of the recommendations and on recommendation 6, which is all about education, the Government tell us that there is a new mathematics curriculum. As I have just said, the institute of whatever it was definitely does not believe that has had much result and, after all, mathematics must be at the very bottom of financial capability—if you cannot add two and two, you are not going to able to do any of the rest.
The Minister may go to paragraph 5.13 of the Government’s response and say:
“In 2014, for the first time, financial literacy was made statutory”.
We have heard that only 35% of schools come under this curriculum guidance. The response then goes on to justify the Government’s position:
“A number of schools also include the teaching of financial education in their Personal, Social, Health and Economic Education … provision”.
In my speech during the debate on this during the passage of the Bill, I said:
“Financial education lies within PSHE subjects but they are not statutory … Time devoted to PSHE has been reduced by 32% since 2011 because it is non-statutory”.
When people were asked why there was so little time for it, the answer was:
“We only have 20 minutes, and if we don’t do something on sexual exploitation or online safety”,—[Official Report, 24/10/17; col. 914.]
so they cannot do it.
The next thing that the Minister will probably say is that Ofsted really covers all this and is pretty good at it. The Government’s response states:
“Inspectors also look for evidence that, where relevant, English, mathematics and other skills necessary for pupils to function as economically active members of British society”.
However, this is what I said about Ofsted:
“Adrian Lyons said that Ofsted produces a state-of-the-nation education report. Our chairman, the noble Baroness, Lady Tyler, asked … ‘how much was there on financial education in the last one?’ … Mr Lyons’s answer was: …‘I do not know the answer to that, but I would be surprised if there was any, to be honest’”.—[Official Report, 24/10/17; col. 914.]
Ofsted says that it finds it difficult to mark things unless it has marks and there are investigations into it, but it only has to give extra marks if this subject is covered.
I seriously believe that the Government are not coping with this in education. The figures and statistics are outrageous for a country as developed as ours. Quite frankly, the reasons given in the response to our recommendations are simply very inadequate and wishy-washy, and they wander around without getting to the point.
Lord Shinkwin (Con)
My Lords, it was a pleasure to serve under the chairmanship of the noble Baroness, Lady Tyler of Enfield, and I too pay tribute to the excellent leadership she gave the committee—which also received, as we have already heard, superb support from the committee clerk, his team and the committee’s advisers.
I want to focus my remarks on two specific recommendations of the report. First, recommendation 5 calls for the introduction of a requirement for the Financial Conduct Authority—the FCA—to make rules setting out a reasonable duty of care for financial services providers to exercise towards their customers. As my noble friend Lord Holmes of Richmond, who made an excellent speech, and other noble Lords have already mentioned, the Select Committee believes that such a duty will promote responsible behaviour on the part of business and support sound financial decision-making by customers.
In their response to the committee’s report, the Government highlighted that the FCA has committed to publishing a discussion paper on the introduction of a duty of care and suggested that this was a sufficient next step. The problem, as has already been said, is that the discussion paper—which would only, in the FCA’s own words, “start a dialogue”—is not due to be published until after the UK’s withdrawal from the EU. I therefore wonder whether my noble friend the Minister can explain why we need to wait until after Brexit given that the Financial Guidance and Claims Bill, now in the other place, offers a timely opportunity to make the necessary amendments to the Financial Services and Markets Act 2000. Moreover, will he say what he thinks “after Brexit” actually means? Is that March 2019 or March 2021, after the two-year transition period? Most importantly, quite apart from the fact that a duty of care amendment would secure better outcomes for consumers in general, what is his view of the justification for the unnecessary and, some would say, unacceptable delay to customers affected by cancer accessing better support at their time of greatest need?
I should declare an interest of sorts. I was privileged to work at Macmillan Cancer Support 15 or so years ago. Never did I imagine that I would have the privilege of speaking in support of that amazing charity as a Member of your Lordships’ House, but I am proud to do so today, and to support the one in two people who, by 2020, as we have already heard, will get that illness in their lifetime. Alongside the physical and emotional impacts, cancer brings with it a real risk of financial hardship: four out of five people with cancer are, on average, £570 a month worse off as a result of their diagnosis.
As providers of mortgages and other financial products, banks have an unrivalled ability to support people affected by this financial impact; yet notwithstanding some progress, there is still a lack of consistency across the sector, and people still do not know what to expect from their bank. Macmillan research found that only one in nine people with cancer had even told their bank about their diagnosis, and of those who did tell their bank, almost one-quarter were dissatisfied with the support they received. If banks and building societies had a legal duty of care towards their customers, it would give people with cancer confidence to disclose their diagnosis, knowing that they could trust their bank to act in their best interests. For banks, this would mean being ready to respond to their customers’ needs and designing the vital products and services that would help people manage their finances while ill.
Macmillan is very concerned that unless the Government legislate for the duty of care now, the issue will be delayed indefinitely. Sadly, as so many of us know all too well, cancer takes no account of such delays. When cancer strikes, the need is now. The Government and the FCA need to recognise that and act now, not in some far-off future.
I turn briefly to recommendation 10 and the duty to make reasonable adjustments—which too often, incredibly, is still not being met. As we have already heard, the committee called for a review, to be published within 18 months of the report’s publication, of reasonable adjustment practices for disabled people, to identify areas of good and bad practice so that improvements can be made. That needs to be followed, the committee said, by a timetable with clear target dates for the delivery of improvements, along with their monitoring and implementation within the lifetime of this Parliament.
Here is an opportunity for the Government to champion the disabled consumer and disability equality in general. Yet, sadly, they seem to decline to lead or to set the pace. I have to ask what message this sends to disabled people. The FCA does not appear that bothered either. A word search of its consumer approach document, published only last month, generated one reference to disability, and none to reasonable adjustments. So although the practical problems which disabled consumers like me face are highlighted in the committee’s report, the full extent of the cultural problem we still encounter is actually highlighted by its omission from the FCA document itself. Ultimately, this comes down to enforcement. Put simply, enforceability and disability are inextricably linked: the duty’s enforceability is essential to enabling a person with a disability to access services which a non-disabled person takes for granted. Yet our power to enforce has gradually been eroded. This needs to be reversed.
Cumulative impact assessments are apparently all the rage, and in conclusion I have one of my own, although it is unfortunately not that positive. I fear that the cumulative impact of the Government’s passivity on disability equality is storing up problems which as well as being unnecessary, are completely avoidable—if only they would take a lead and put disability equality back on their agenda. In order for a commitment to building a country that works for everyone to be credible, it must include everyone, whether they are affected by cancer or by disability. I hope very much that Ministers will use the coming recess to reflect on how this can be done in a strategic and concerted way across government, as a matter of urgency.
Baroness Altmann (Con)
My Lords, as another of the immigrants identified by my noble friend Lord Patten, I commend the report of the Select Committee on Financial Exclusion under the sterling chairmanship of the noble Baroness, Lady Tyler.
I am pleased that the Government have decided to accept some of the excellent recommendations—they have appointed a new Minister for Financial Inclusion, and I congratulate them on measures included in the Financial Guidance and Claims Bill. I echo the words of the noble Lord, Lord McKenzie, who explained the importance of the amendments added by this House, and I also say what a pleasure it was to work with the DWP Ministers and noble Lords on all sides of the House to improve protection for vulnerable or highly indebted citizens. I look forward to further possible additions in the other place, such as on cold calling and perhaps a duty of care. With the worrying rise in household indebtedness, it is more important than ever to help the public understand financial management and also to improve the financial resilience of the population. Debt worries can have negative implications for workplace performance and productivity, and financial worries can damage or exacerbate existing issues with mental health.
It is estimated that 17.5 million working hours a year are lost as workers take time off due to financial stress. As we head towards a period where interest rates are likely to rise from current exceptionally low levels, and where the economy may be unsettled by Brexit uncertainties, action is urgent. I hope we will see a consumer-focused approach to improving this financial resilience. In this connection, I also hope that we will see more initiatives that use workplace payroll to help people merge their debts and reduce the interest rate payable, as well as allowing them a more secure repayment programme. I declare an interest as an adviser to a social enterprise helping workers in many large organisations to reduce their debt interest costs and manage them more efficiently.
I certainly agree that it is welcome that banks should promote basic bank accounts, but I remain concerned about the important issues highlighted by my noble friend Lord Northbrook and about continuing bank branch closures. The loss of local branches particularly disadvantages those who are disabled or elderly, if they cannot manage telephone or online banking. I am pleased they will be able to use post offices, but we need to monitor this situation carefully to ensure that vulnerable individuals are not excluded as banks continue to pursue cost-cutting agendas.
On the topic of older people, too often their needs are overlooked by mainstream financial services providers. I welcome the Financial Conduct Authority’s work on vulnerable consumers and developing a strategy for the ageing population. However, I hope this strategy will urgently include helping people to prepare for later-life care. There is no prefunding or financial planning for future long-term care needs at national, local or individual level, and no incentives to help families to save for care costs. Financial exclusion in later life will be badly affected by the failure to prepare for potential care needs. The inadequacies of the current social care system are well documented.
There are many aspects to this debate and the excellent Select Committee report, many of which have been thoroughly covered by other noble Lords, so I have chosen to highlight some that are relevant specifically to financial exclusion in connection with pensions. As auto-enrolment extends pension coverage to millions more workers across the country, it is vital to improve the understanding of and engagement with workplace pensions and other financial matters. I hope the Government will consider making workplace financial education a key component of the auto-enrolment programme so that all workers are better equipped to look after their finances. I realise the new financial guidance body may have some input here. However, I believe we may be missing an opportunity to improve financial education and inclusion while millions of workers are being nudged into pension saving. The opportunity is there for the taking.
In connection with auto-enrolment, there is an important issue that I must once again raise in your Lordships’ House, and hope that other noble Lords may join me in pressing for urgent action. This relates to the lowest-paid workers who are being automatically enrolled in, or opting to join, workplace schemes. Most workers do not understand pensions; indeed, many of the smallest employers setting up pension schemes for their staff also know little about the subject. This has resulted in a major injustice that has so far been all but ignored by the Government, regulators and the pensions industry. Low earners, mostly women, are losing money because of a particular type of pensions administration arrangement called net pay. All workers earning over £11,500 who are basic rate taxpayers pay £8 of their earnings and automatically receive £10 into their pension, as the scheme adds the extra £2 for them. This is the 25% bonus that results from basic rate tax relief. However, any worker earning below £11,500 in a net-pay scheme cannot get the £2 that they are entitled to under pensions law; they have to pay a full £10 for every £10 going into their pension. If their employer uses a scheme with a different administration system called relief at source, these low earners only have to pay £8 to get the £10 in their pension. In other words, with these net-pay schemes the lowest earners are forced to pay 25% more for their pensions—a classic example of financial exclusion where the poor pay more.
I have asked numerous Written Parliamentary Questions and raised this issue in several debates in this House, yet Ministers seem unwilling to address this injustice. Employers often know nothing about the issue; the workers themselves probably have no idea and, even if they did, there is nothing they could do about it as the employer chooses their scheme; and the pension providers do not normally warn the employer or the worker that their scheme is not suitable for those earning less than £11,500. Providers are not obliged to pay the low earners—mostly female—this extra money, although a couple have decided to do so. The Treasury has refused to allow schemes to reclaim the money on behalf of the low earners. Even the new master trust assurance framework, supposedly the regulator’s endorsement of a high-quality master trust, can operate a net-pay system and take on low-paid workers without having to compensate them for this lost money. This would not happen if people understood pensions or if providers were required to explain things clearly. However, the current regulatory oversight is compounding problems for low earners, failing to protect them and thus leaving them financially excluded. This is a classic example of how the complexity of our system and a lack of consumer focus is causing financial exclusion, and will mean that the lowest earners have less disposable income for their general spending. The duty of care highlighted by my noble friends Lord Holmes and Lord Shinkwin extends to the Government and the regulators, not just providers.
The noble Viscount, Lord Brookeborough, eloquently explained the importance of financial education in schools, but there is an equally important issue that is often overlooked. The FCA has a duty to ensure that people understand financial products, and the new financial guidance body will also have a remit to include this. However, we must not assume that just giving people information and disclosure will improve financial inclusion. Indeed, I argue that the current financial services industry approach is almost guaranteed to exclude most consumers even if they understand finance because the reams of paperwork that they receive, full of jargon and impenetrable terms, written in language that may as well be Latin or Ancient Greek, is impossible for almost all ordinary people to understand. Even my friends with PhDs in scientific subjects are utterly baffled by pensions literature.
The regulatory approach designed to protect consumers is not working well enough. Just assuming that sending people disclosure and information about products and the choices they have will improve consumer outcomes is sadly misguided. Some of the problems stem from a lack of financial education in schools, and I am delighted that the Government intend to tackle this. However, most people in this country are beyond school age now and they need to know how to plan their finances. Whether in connection with managing debt, avoiding high-cost credit or making long-term investment decisions, the Government and the regulators must act now.
Improving financial inclusion will require urgent action across many areas. Helping vulnerable individuals, those with illnesses such as cancer and the wider population is an urgent task. I hope our new Minister for Financial Inclusion can make meaningful and timely improvements, perhaps even in the Financial Guidance and Claims Bill as it goes through the other place, as many other noble Lords have requested.
Lord Kirkwood of Kirkhope (LD)
My Lords, it is a pleasure to follow the noble Baroness, Lady Altmann. She is an expert on pensions and she is right to draw attention to its important role in dealing with financial exclusion. Her speeches always repay careful rereading.
I declare an interest in that I am a continuing member of the Financial Inclusion Commission, which has been in operation for the past few years in this important area of social policy. I too acknowledge the skill and wisdom of my noble friend Lady Tyler and the way in which she steered the committee’s work. It was an excellent experience; it was the highlight of my week while it lasted, and I felt quite bereft once it had stopped. Whatever committee she chairs next, I shall certainly be applying to join.
The committee raised the profile of the issue that we are debating. There have been some expressions of disappointment at the Government’s response and, if I am honest, I shared that feeling when I read it, although it was quite long. However, I was not surprised because this is quite difficult territory.
We have to look to the future about how we are going to take the issue forward. I am going to spend a few minutes on the mechanics of what we are facing. It is true that the Government can say they have not been doing nothing and there has been some progress. I was encouraged when we had the election; reading between the lines of the Conservative manifesto, I believe if the Prime Minister had been left to her own devices we might have had more social justice. It is no accident that “A Country that Works for Everyone?” is the subtitle of our report; we were trying to work with the grain of government policy. The Prime Minister might have had more opportunity with a new incoming ministerial team. I think everyone understands that a lot of this business is eclipsed by our withdrawing from Europe but we must not ignore the domestic agenda, and in particular it would be a mistake to ignore this part of that agenda. I would argue that, as someone may have said earlier, a lot of the discontent that drives the emotional Brexit response is rooted in some of the problems that this report addresses.
I think that it was the noble Lord, Lord Patten, who said that we were getting high marks for not spending money. I would have liked to spend quite a bit of money, but we were very constrained. We were making reasonable suggestions that did not incur huge bills and were rooted in the evidence that we heard—the evidence is very powerful. I concur with colleagues on the committee who said that we were very well served by the staff and our advisers, but the stars for me were those who gave us and sent us evidence. The body of evidence left is, sadly, a year out of date now—as colleagues know, the dogs bark and the caravans move on rather quickly—but is more up to date than a lot of the assured ONS official statistics and is a goldmine for researchers, policymakers and, indeed, legislators who want to take the question forward.
I do not know whether the Minister has time to do this, but I would like to understand what the mechanics of some of these new elements will signify and how they work together. We have a new ministerial team, but there is a contradiction in attention. Guy Opperman is an excellent Member of Parliament for Hexham. He does very good work and is familiar with this territory, but he is looking after pensions as well which, as the noble Baroness, Lady Altmann, just explained, is a full-time job in its own right. How does he relate to Stephen Barclay? I do not know him nearly as well; he is Economic Secretary, but has about 17 responsibilities, most of them related to Brexit.
How do those of us on the committee who want to take a continuing interest in the subject focus our representations to ensure that we are on the right side of that dual responsibility offered to those two politicians? How does the policy forum fit into that? If it is merely a six-monthly meeting of stakeholders around a big oak table where they say what they think is wrong with the world, go home and come back in six months’ time, how useful will that be? If it is not that, what is the policy forum to be?
I think it was the noble Viscount, Lord Brookeborough, who mentioned what was done by the Financial Inclusion Task Force in 2005. It had a very small Treasury-based unit with three members of staff. Sir Brian Pomeroy was an experienced hand and a wise man. It made a real impact for next to nothing—this was not public expenditure resourcing that you would notice; it was a sensible amount of money. It made a big impact in increasing the number of basic bank accounts issued.
I am trying to work out how this new arrangement with a split responsibility at its ministerial head will work. There is the policy forum, the single financial guidance body, which is welcome, as are breathing spaces for debt, and the Financial Conduct Authority, which I think is beginning to play a responsible role and getting a much better feel for the issue. The noble Viscount, Lord Brookeborough, also mentioned the financial life survey by the FCA, Understanding the Financial Lives of UK Adults. It is an excellent survey and a valuable document, and it will, to its credit, make the data widely available. The survey is not about people who are just about managing, it is about people who are finding it just about impossible to stay financially afloat at every stage in life. So the FCA’s work will contribute, but there are gaps.
I point to two random examples that have come in front of me in the past few weeks. The Post Office current account has no online payment capability. That is a mandated feature of ordinary basic bank accounts, but it is not included in Post Office accounts. I am disappointed that we are not making more of the Post Office. It could be carrying a lot of the weight—the noble Lord, Lord Patten, made this important point—but it is not being given the chance to do that, or it is shying away from the responsibility. Either way, this is exactly the kind of gap that could be identified and dealt with if this new machinery were put in place and acting effectively.
Finally, the Financial Inclusion Commission produced a publication looking at improving access to household insurance, which stated that nearly 16 million adults who have some need for contents insurance have no insurance protection against fire, flood or burglary. Of that 16 million, 10.5 million are renters and two-thirds of those renters are potentially vulnerable. So there is another gap. I am getting a long look from the noble Baroness, Lady Goldie, who is the Whip, so I will stop now.
At the beginning of today’s sitting, the noble Lord, Lord McFall, the Senior Deputy Speaker, said that he was interested in taking committee reports forward. I hope that we can keep the community of interest that our colleagues on this ad hoc committee established during our sittings, maintain a constructive interest and monitor the future work done in government on this important public sector policy.
Lord Tunnicliffe (Lab)
My Lords, I, too, thank the noble Baroness, Lady Tyler, and her committee for this excellent report, and add my thanks to those members of staff who supported it. It was a timely decision of the House to set up the committee. It is doubtful whether the Financial Guidance and Claims Bill would have got to the stage it has, preparing the way as it does for a new DWP Minister for financial inclusion, without the evidence and arguments presented in the report. A job well done—or was it?
Many noble Lords have commented on the length of time that it has taken the Government to respond to the report. It was clear that the work of the House on the Financial Guidance and Claims Bill would have been materially improved if the government response have been made available earlier in the Bill’s proceedings. Nevertheless, it is gratifying to learn that, of the 22 recommendations of the committee, four have already been implemented, with a further five partially implemented.
However, in my time today, I shall concentrate on the recommendations which the Government’s response indicates that they will not implement. Recommendations 3 and 12 concern annual reports on key indicators of financial inclusion. I wonder whether the Government have got this right. Why be so defensive about something which they are, at least in part, sorting out and making progress on? This is despite the fact that we have a new ministerial portfolio in an area that is of demonstrable interest to the wider public.
Recommendations 4 and 5 concern placing a duty of care on the FCA and financial inclusion being a key FCA objective. The question of duty of care has been debated time and again, and I would have thought that the Government would have made a better fist of it than they have in their current response. The FCA should have a duty of care to its consumers at the heart of its mission. It is simply not possible to achieve a good deal for consumers and protect those affected by financial exclusion by relying on a fair markets approach. In the case of payday lending, the FCA could operate only to reduce the number of companies making excessive profits and to cap the charges. What was required was a consumer detriment approach, which would have been to ban the usurious—very high —rates of interest that those companies were charging.
Recommendation 6 states that financial education should be added to the primary school curriculum. The case made in the report for a rethink about how we educate our children in the financial workings of our world is powerful and convincing, but it has been turned down flat. Frankly, there could be no better way of introducing children to mathematics, and particularly numeracy, than money. Can the Minister explain what discussions and negotiations have been carried out on this recommendation and fill out for us the reasons why DfE colleagues were unconvinced? It was good of the noble Viscount, Lord Brookeborough, to speak on this point, and I thought that his description of the Government’s response as “wishy-washy” was very much to the point.
Recommendation 10 concerns reasonable adjustment practices for disabled customers. The FCA’s Our Future Approach to Consumers document from November 2017 contains a good deal of discussion on the issue of vulnerability. However, the document makes very little reference to the particular problems experienced by disabled people. The Minister will be aware of the changes that have been put into the Financial Guidance and Claims Bill on the issue of services to vulnerable people. Does he think that the response to this recommendation meets the high standards that should apply?
Recommendation 11 concerns promoting basic bank accounts appropriately and effectively. Can the Minister explain why the Government are willing the ends of this policy but not the means? Is this not a simple regulatory issue? If not, what is the real problem? The noble Lord, Lord Northbrook, spoke on this matter and illustrated that Barclays—surprise, surprise—had miserably failed yet again in its duties. I was delighted to hear the noble Lord commending more regulation and controls. He joins my club on that matter.
Recommendation 14 concerns ensuring that non-digital access to social security benefits and other services remains possible. The response does not engage with issues such as universal credit phone lines not being free and the strong discouragement against applying for benefits offline.
Recommendation 21 is that tenants in receipt of universal credit should be allowed to decide for themselves whether their housing costs should be paid to them or direct to their landlord. The response notes that it is to be made quicker for registered social landlords to apply for a managed payment. However, there is no movement on the issue of empowering claimants. Indeed, the Government make it clear that they do not see managed payments to landlords as a permanent solution for any claimant if possible.
Recommendation 22 concerns a detailed, comprehensive cumulative impact study of how changes in social security policy resulting from the Welfare Reform Act 2012 might have adversely affected financial well-being and inclusion. The Government decline to begin any single comprehensive study of the impact of all welfare reform measures on financial well-being. My noble friend Lord McKenzie and others have made very strong representations in this debate about the lack of positive responses to their well-evidenced and well-argued concerns about the universal credit programme. Some movement was achieved in the Budget but it is clearly not enough. We look forward to the Minister’s response to these disappointing responses to the recommendations of the committee.
Finally, recommendations 17 and 18 concern widening credit union products and deepening financial support for them. The Government have said that they do not intend to provide revenue support to credit unions. They go on to say that they will consider grant funding only in relation to specific outcomes. Credit unions are one of the few places where financially stretched consumers can get access to credit without having to go to payday lenders or worse. In Ireland, virtually every village or town has a number of credit unions, which provide the bulk of necessary unsecured lending on a sustainable basis. Why are we not able to get this movement onto a sustainable basis and get it to grow to its potential? Why is no direct engagement with the arguments put forward in the report?
To paraphrase the curate, the Government’s response is good in parts. But let us go back to the basics—a point made by the noble Baroness, Lady Tyler, right at the beginning of this debate. This is about the poor and about how the poor are made to pay more. In his speech the noble Lord, Lord Patten, made the point —perhaps the only point I agreed with—that the recommendations in this report would cost very little money. Why cannot the Government, who have done so much to make the poor poorer, do more, as this report recommends, to help the poor, the old, the unconnected and the disabled to pay less? Please, Government, will you do more to help the poor to pay less?
The Minister of State, Department for International Development (Lord Bates) (Con)
My Lords, I join other noble Lords in paying tribute to the noble Baroness, Lady Tyler, for how she introduced the debate and join in the wide praise that she received from across the House for how she conducted the committee. The remark of the noble Lord, Lord Kirkwood, that it was a highlight of the week and that it was sad when it ended stands in stark contrast to my recollection of sitting on some committees in your Lordships’ House. I, too, look forward to the next one the noble Baroness will chair.
I say at the outset that we take this report extremely seriously. It was well researched, there was some incredibly important evidence in it, and it was well presented. That was a very important element. It has been a very important part of the Government’s strategy.
The noble Lord, Lord Tunnicliffe, was notable in using the curate’s egg argument about our response. Before I turn to some of the areas that he focused on, in which we have not done very well, for recollection, refreshment and the record let me just say what we have done. We have announced the financial inclusion policy forum; I shall come to more details on that later. We have the Minister for Financial Inclusion, Guy Opperman, who has been recognised for the work he has done. We announced changes in the Budget to universal credit totalling some £1.5 billion. We have introduced the Financial Guidance and Claims Bill, which my noble friend Lord Young took through this House with characteristic skill. He managed to ensure that, in the best traditions, it left in better shape than it arrived. It also left with the commitment to breathing space for debt, introduced at Third Reading. The Financial Conduct Authority has produced its Financial Lives Survey; financial inclusion is a key part of our digital strategy; and the FCA has taken robust action on rent-to-own schemes. We have introduced the rent recognition challenge, encouraging fintech firms to address the issue of credit histories for those who rent properties, as opposed to those who have mortgages. These are in addition to basic bank accounts and payday lending caps, which I will come to later. It is a vast agenda to cover in the short time available to me.
The breadth of the challenges of financial inclusion and financial capability is significant. The noble Baroness, Lady Tyler, spoke about the elderly; my noble friend Lord Patten spoke about geographic exclusion. The noble Lord, Lord McKenzie, spoke about debt; the noble Lord, Lord Fellowes, spoke about rural bank networks. My noble friend Lord Holmes spoke about digital inclusion; the noble Lord, Lord Empey, spoke about gambling and addiction. The right reverend Prelate the Bishop of Birmingham spoke about the role of faith communities in responding to it. My noble friend Lord Northbrook spoke about mental health; the noble Baroness, Lady Lister, spoke about domestic violence and universal credit. The noble Viscount, Lord Brookeborough, spoke about the difference between capability and inclusion and the importance of education; my noble friend Lord Shinkwin spoke about cancer support. My noble friend Lady Altmann spoke about pensions and the noble Lord, Lord Kirkwood, mentioned insurance. The noble Lord, Lord Tunnicliffe, referred to general vulnerability. I will try to make as much progress as I can on that agenda in the time available and seek to address the specific points raised by noble Lords.
In their response to financial inclusion, Her Majesty’s Government use the World Bank’s definition, which is,
“financial inclusion means that individuals, regardless of their background or income, have access to useful and affordable financial services”.
To the contrary, financial exclusion means that individuals lack that access. When we consider this definition, it follows that the Government’s policy regarding financial inclusion must be focused on ensuring that there is an appropriate supply of useful and affordable financial services and products. The Government therefore work closely with the industry regulator, the Financial Conduct Authority, to ensure that appropriate action is taken when the market fails to supply such services and products.
Government policy on financial capability is distinct from the inclusivity agenda, as the noble Viscount, Lord Brookeborough, mentioned, and is focused on ensuring that appropriate information, guidance and advice is available so that members of the public are empowered to make decisions appropriate for them. This is a role that the new single financial guidance body is designed to address and I am pleased that the Financial Guidance and Claims Bill, which will put that new body in place, has progressed through this place and into the House of Commons.
The Government have aimed to boost inclusion and ensure the widest possible access to fee-free basic bank accounts. The nine largest personal current account providers are now legally required to offer these to customers who are unbanked or ineligible for a bank’s standard current account. The noble Lord, Lord Holmes, mentioned the importance of online savings. The Treasury publishes data on basic bank accounts annually to show how the market is developing. Last year’s data showed that there are now over 4 million fee-free basic bank accounts.
Another extremely important pillar of financial inclusion is addressing affordable credit. The Government have been active in ensuring that a functioning consumer credit market and a well-run regulatory regime are maintained by transferring supervision of the consumer credit market to the Financial Conduct Authority and legislating to require it to introduce a cap on the cost of payday loans, a fact recognised by the right reverend Prelate the Bishop of Birmingham and the noble Baroness, Lady Tyler, in her introduction. It is worth pausing to remember that that cap has had an immediate effect. There were 4.2 million payday loans approved in the first six months of 2014. In the first six months of 2015, after the cap was introduced, that had reduced to 1.18 million. That means that 760,000 borrowers have been able to save some £150 million per year, money that has gone back into the pockets of the poorest in our society. A feedback statement published by the FCA in July has found the cap to be successful and it will consult on further interventions in spring 2018.
Finally, the Government are encouraging innovations in financial technology to promote financial inclusion. A recent example is Fintech for All, a nationwide competition launched in September 2017. Two winners were announced at an awards ceremony held on 15 November. The noble Lord, Lord Empey, is right about the incredible wealth of expertise that we have in the City of London, just a few miles from this place. That expertise in fintech is also found in other major financial centres around the UK, such as Edinburgh, Leeds, Newcastle, Manchester and Birmingham. The noble Baroness, Lady Tyler, referred to the technology involved in bank accounts and particularly whether, rather than reducing vulnerability, it might lead to further vulnerability and potential exclusion for the elderly, those in rural communities where broadband and internet access is not as great, and people with disabilities. We need to keep a focus on that area.
The noble Viscount, Lord Brookeborough, predicted all the answers which I might give on education. My heart sank as he ran through them all, because it was exactly what was in my speech—so I hesitate to reiterate it. However, I put on the record that the new national curriculum in England, taught from September 2014, made financial literacy statutory for the first time for 11 to16 year-olds. However, to improve financial education we need to look to other organisations beyond what is provided in the school curriculum. A wide group of organisations can have a role to play. Various community organisations and families have a responsibility in this area as well. The right reverend Prelate also referred to the excellent work of organisations such as Christians Against Poverty, with which I have had some contact, and the role that they play in education. If it is all about inclusion, it stands to reason that none of us is free from the responsibility to engage with this matter and ensure that people get the education they need. That is why the Government have ensured that financial education for children and young people remains a focus of the new single financial guidance body, with the aim of bringing together funders and providers of initiatives across the UK to maximize impact.
The Select Committee has made a number of recommendations on access to welfare, including the abolition of the seven-day waiting period at the start of universal credit. The noble Baroness, Lady Lister, and the noble Lords, Lord McKenzie and Lord Empey, all welcomed this as far as it went—I accept that—and acknowledged that it was a step in the direction for which they have diligently argued for some time. The comprehensive, wide-ranging package, worth £1.5 billion, will ensure that claimants of the benefit get more money sooner, while retaining the principle of which the noble Lord, Lord Empey, spoke in favour.
The noble Baroness, Lady Tyler, spoke about the importance of leadership. As regards our response to the committee’s proposal on the Financial Inclusion Policy Forum, this initiative was designed to drive better co-ordination and engagement across government and with the sector to address the problem of financial exclusion. The forum’s objective is to bring together Ministers in government departments with a remit to promote financial inclusion, regulators, especially the FCA, and key stakeholders working in their own capacity to address financial exclusion. It will be jointly chaired by the Economic Secretary and the Minister for Pensions and Financial Inclusion and support government leadership and collaboration with the sector, report on initiatives by both government and regulators, and monitor progress. I take the point made by the noble Lord, Lord Kirkwood, who wondered how that choreography might work. Across government there is a general feeling that interministerial groups work particularly well in getting not just Ministers but officials together to make sure that they work in a constructive way going forward. My noble friend Lord Patten said that it was not just central government that was key to this; he mentioned the importance of local government as actors in this regard.
We were pleased with the unanimous support that the financial forum initiative received. I would like to mention in particular the support of the independent Financial Inclusion Commission, which stated that the forum is,
“a further indication that the government is taking the issue of financial exclusion seriously”,
and that it has,
“a vital role to play in making this a country that works for everyone”.
That struck a chord with not only the noble Lord, Lord Kirkwood, but, I guess, in Downing Street as well. We welcome this endorsement and look forward to the forum being set up in the first quarter of 2018. Further details about its membership and the date of its first meeting will be published soon.
I turn to some of the specific questions raised in the time I have available. The noble Baroness, Lady Tyler, and my noble friends Lord Holmes and Lord Shinkwin asked about the adjustment practices for disabled consumers. The FCA’s handbook requires firms to identify particularly vulnerable customers and to deal with them appropriately. In addition, like all service providers, banks and building societies are bound under the Equality Act 2010 to make reasonable adjustments, where necessary, to the way in which they deliver their services.
The noble Baroness, Lady Tyler, asked when the forum would meet, and whether the minutes would be published. The forum will meet every six months. It will bring together regulators and Ministers in government departments with a remit to discuss and promote financial inclusion. More details on the membership of the forum will follow early in the new year. The agenda will be published and we will make decisions on what happens with the minutes and make announcements on that in due course.
The noble Lord, Lord Empey, asked about Recommendation 21, which was about payment of housing benefit direct to landlords. We have listened to the concerns and will look to make it easier to set up and manage payments to landlords under universal credit. New guidance will be issued to staff to ensure that claimants in the private rented sector who have managed payments to landlords for their legacy housing benefit are offered this option when they join universal credit.
My noble friends Lord Shinkwin and Lord Holmes referred to the duty of care, as did my noble friend Lady Altmann. The Government recognise that there are very different views on the merits of introducing a duty of care for financial service providers and, as with any policy, we want to ensure that these are carefully considered and taken into account. The Government believe that the Financial Conduct Authority, as the UK’s independent conduct regulator for the financial services industry, is best placed to evaluate the merits of a duty of care for financial service providers. In this context we welcome the Financial Conduct Authority’s commitment to publish a discussion paper on the subject.
On access to banking, which was raised by my noble friends Lord Fellowes and Lord Patten, decisions on opening and closing branches and agencies are taken by the management team of each bank on a commercial basis and government does not interfere in these decisions. However, earlier this year the UK’s bank and building societies and the Post Office reached a new agreement which means that 99% of personal customers and 95% of business customers can do their day-to-day banking in post offices—be they sub-post offices or Crown post offices. At the Budget, the Economic Secretary to the Treasury also wrote to the Post Office and, through UK Finance, the banking industry, to ask them to raise wider awareness of these Post Office banking services.
The noble Lord, Lord Empey, referred to credit unions. I note his suggestion that the Government be supportive of increasing the level of long-term investment capital into credit unions. As set out in the Government’s response, long-term investment capital is important for all businesses, including credit unions, to help them to maximise their potential. However, as credit unions are in principle self-capitalising institutions, the Government do not intend to lend directly to credit unions. The Government welcome private sector involvement in this area: for example, Lloyds Banking Group has a scheme that offers funding to help credit unions to improve their capital position.
The right reverend Prelate the Bishop of Birmingham wanted us to recognise the important contribution that charitable organisations make in tackling exclusion, and I am happy to do that. I can give one example, of LifeSavers, which works with local credit unions to help savings clubs in schools. The initiative, developed by the most reverend Primate the Archbishop of Canterbury and Young Enterprise to start savings discussions in primary schools—which I am sure the noble Viscount, Lord Brookeborough, will welcome—introduces the benefits of savings at a very early age. The Government have contributed £600,000 to this initiative.
As regards the timetable for the Financial Conduct Authority’s publication of its recommendations under the high-cost credit review, the FCA published a feedback statement in July 2017 which showed that the cap on payday loans has been successful. Consumers now pay less. In respect of the high-cost credit market, it identified specific concerns in rent to own, home-collected credit and catalogue credit, and identified issues in arranged and unarranged overdrafts. Having investigated the issues, the FCA will consult on any necessary intervention in spring 2018.
I am conscious that I am out of time and that there are many other issues. With the permission of your Lordships, I will review the official record of the debate and, if I have failed to respond on any matters, I shall write accordingly. However, I hope that the noble Baroness, Lady Tyler, might recognise that, while we have not gone all the way to the destination which she and her committee set out, we have taken some important first steps along that road to financial inclusion for everyone.
Baroness Tyler of Enfield
My Lords, I am very grateful to the Minister for his response and I will briefly pick up a couple of points. First, I thank everyone who has spoken in this excellent debate—both those who served on the committee and those who did not. As befits the subject matter, the debate has been wide ranging and extremely well informed. I am very grateful to those who raised issues that we did not address in the report. I was going to summarise a few of the issues raised but the noble Lord, Lord Bates, did it so well that I do not need to do so.
I feel somewhat more reassured by the Minister’s response than I was by the formal written response. Perhaps it is a matter of tone, but the Minister managed, as ever, to convey an appropriate sense of urgency and seriousness regarding the report—something that, frankly, seemed lacking in the written response. He said one thing that I shall hang on to. I think I am right that he said that the Government are taking the report seriously and that it will be an important part of their thinking in preparing their own strategy. I am pleased about that. I very much look forward to seeing the strategy when it is published, as I hope it will be. I hope that it will give the Government another opportunity to go around the block and to look again at the 14 other recommendations that they have not been able to accept so far. I hope that there will be an annual report to Parliament after the strategy is published and that that will give us in this Chamber another opportunity to look at this very important issue.
I intend to follow up assiduously in this area. Meeting Ministers, whether in this Chamber or in the other place, will always be very welcome. I look forward to further debates on this vital issue, which, as the right reverend Prelate the Bishop of Birmingham said, is inextricably linked with the poverty and breath-taking inequalities that currently blight the lives of many of our fellow citizens.
Brexit: Trade in Non-financial Services (EUC Report)
(7 years ago)
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Lord Whitty
That this House takes note of the Report from the European Union Committee Brexit: trade in non-financial services (18th Report, Session 2016-17, HL Paper 135).
Lord Whitty (Lab)
My Lords, I commend to your Lordships this report by Sub-Committee G. I thank the members of the sub-committee—many of them have put their names down to speak today—for their important contributions, and I also thank the staff of the committee and our specialist adviser, Dr Ingo Borchert.
I want to make three preliminary points. The first concerns the elapsing of time. The inquiry was conducted between October 2016 and January 2017, over a year ago, and our report was published on 22 March, which was still before the Government triggered Article 50. Much water has therefore passed under the bridge since publication. Regrettably, much of that water is almost as murky today as it was then in terms of the kind of free trade agreement that the Government are really after and how services fit in with that approach. The negotiations have had their ups and downs, and the Government have produced a number of future partnership papers on the UK’s relationship with the EU, but regrettably, up until today, no response to our report has been forthcoming from the Government.
It was delayed at first by the general election and subsequently by the Government’s insistence that they cannot provide us with a response until all their position papers have been published. I had a gracious response from the noble Lord’s predecessor but that was some months ago. I take this opportunity to express my disappointment at this and to emphasise the Government’s responsibility to engage with such reports and the findings of Select Committees. Therefore, I look forward to the Minister giving his detailed response later this evening.
My second preliminary point concerns the vital importance of these key services. As we know, the UK is very much a service-driven economy, and in these services the EU is an important trading partner. We export in aggregate to the EU and worldwide more than does the financial services sector and two-thirds the amount of the goods sector, and we have a surplus in most of the areas covered by the report. We emphasise the complexity of trade in services, which admittedly is largely unaffected by tariffs but can be substantially restricted by non-tariff barriers.
Our report tries to examine what a bold and ambitious free trade agreement between the UK and the EU would look like and what it would need to include to represent a good deal for these non-financial services. We also look at the implications of trading in services under WTO rules—the so-called no-deal scenario.
My third preliminary point was the inadequacy of the statistics on these services. I was quite keen to spell this out but, interesting though it is, in view of the lateness of the hour I will instead refer noble Lords to chapter 2 of the report, which addresses that complexity.
As I said, trade in services does not generally attract tariffs, but trade is very much restricted by various forms of non-tariff barriers, some cultural but, in the main, resulting from divergent regulatory systems. Within the EU, the single market in services has not developed nearly as completely as the single market in goods. Nevertheless, significant progress has been made in developing common regulatory frameworks and structures and often specific consumer protection provisions for the various sectors, such as those in aviation, transport and travel, audio-visual and broadcasting, and telecommunications. In many of these areas the frameworks are overseen by EU agencies, such as the European Air Safety Agency. In most of these agencies, of which there are 34 in total, the EU has historically been a very influential member as well as a major beneficiary.
There are also some general provisions in EU regulations and directives that facilitate trade in services, such as the mutual recognition of qualifications, various intellectual property provisions, provisions on the free flow of data, and general data protection and consumer protection. There are also programmes that facilitate university students’ teaching and research. In many of these sectors, there is the free movement of often highly skilled labour.
It has to be said that at the point we received written and oral evidence, almost all representatives of the services we covered were relatively satisfied with the present or prospective EU situation affecting their sectors and the degree of influence and reflection of their interests they felt they had in these European institutions. Most were keen for the EU single market to move rapidly in the services sector and were encouraging the Commission and member states to move faster. They were particularly keen on developing a real single digital market.
At that time, most sectors were also confident that a separate bespoke sectoral agreement might need to be made in their areas to preserve the benefits of the single market. They saw a mutual UK-EU benefit in continuing the existing relationships. I will come back to the issue of separate sectoral agreements. Of course, this could have been agreed if we had moved towards the option of rejoining EFTA and the EEA, but that had already been ruled out by the Government; hence we did not consider it in detail but focused on a comprehensive free trade agreement.
I will make a few specific comments on some of the main exporting sectors, beginning with the professional business services, such as legal, accountancy, medical, engineering, business consultancy services and so on. These represent the UK’s largest services exports, generating a £30 billion global surplus and a £6 billion EU surplus. To support this sector, a free trade agreement would need to include provisions on the mutual recognition of professional qualifications and regulatory structures. It will also be important for UK businesses to retain the right to establish themselves in the EU, and of course vice versa, and to move staff easily across borders to service European clients and contracts at short notice. For these sectors, a no-deal scenario would result in increased, and in some cases absolute, barriers to trade with the EU. That would be particularly so for regulated businesses such as legal and accounting firms. In such a scenario we conclude that businesses would be likely to have to relocate or move substantial resources to the EU, incorporating separately, which would impact the UK’s trade balance, tax revenues and employment.
Digital services represent an important and growing sector of UK trade, which created jobs at almost three times the rate of the rest of the UK economy in the first half of this decade. To maintain the UK’s leading position in this field, a lot of our witnesses highlighted data transfers and access to skills as their most pressing concerns. Some adequacy decision from the Commission on the UK’s data protection standard would be needed to maintain the flow of data between the EU and the UK under a free trade agreement and it would be important to ensure that future changes in domestic law do not jeopardise regulatory equivalence in this field. On the other hand, a no-deal scenario would represent a regulatory cliff-edge for UK digital businesses and many may choose to relocate or redirect part of their activities to the EU.
The UK is also a world leader in creative services from music to fashion and design, representing a global hub in which companies from different parts of the creative sector cluster in the UK. To sustain that status, a comprehensive free trade agreement would be needed to ensure protection of intellectual property rights, market access and the mutual recognition of broadcasting licences, for example. Again, the contrast between a free trade agreement and a no-deal option was stark. Alternative conventions and treaties do not account for technological developments such as on-demand services, and so are not really viable options for trade. Audio-visual media services are also excluded from the EU’s schedule of commitments at the WTO, meaning that EU member states would be free to impose discriminatory provisions on the UK in the event of there being no deal.
We also considered aviation services. Witnesses told us that the strength of the UK’s aviation sector and shared interests with the EU offer important leverage for the Government to negotiate a good deal for UK air services after Brexit, either through continued membership of ECAA and EASA, the safety agency, or a bilateral air services agreement with the EU. Our report recommends that the Government should urgently clarify which of those two options they will seek. As air services are excluded from the WTO provisions and the validity of pre-existing bilateral agreements is frankly uncertain, there is no viable fallback position under a no-deal scenario for aviation. We also emphasised the importance of clarifying the UK’s position with regard to EU-third country aviation agreements and of securing transitional arrangements if the UK has in the event to negotiate new bilateral agreements with these markets.
Last month, we held a follow-up session with witnesses from the aviation sector. They were still confident that the UK and the EU would be able to strike a deal on air services due to the sector’s fundamental importance to both parties and restated the view that this should be negotiated and agreed separately from any wider UK-EU free trade agreement. Incidentally, we intend to hold similar follow-up sessions with other service sectors.
Chapter 8 of our report looked at the UK trade in travel services and tourism, highlighting the importance of UK tourism to some EU member states as well as its social importance to families and businesses in the UK. Incidentally, tourism is the one sector in our analysis where we are in substantial trade deficit with the EU, largely because of the balance of tourist journeys. UK visitors unaccountably prefer the Med compared with EU tourists to British climes for most of the year. Again, our own tourism industry is doing reasonably well. As we have seen from the tourists around here, we are still dependent on EU tourists freely coming to London and other parts of Britain to spend their money and appreciate our culture, business and economy.
Throughout our inquiry, our witnesses told us that the UK is a global leader in these services and that the Government had already engaged extensively with the sectors to inform their position in negotiations with the EU. We applaud that on behalf of the Government. However, it has not been clear, either then or since, quite how the Government would respond to the points raised with them by the sectors. We start from a position of harmonisation, which ought to help us provide the foundation for an ambitious partnership for future UK-EU trade services. However, it is clear that to protect our service sectors the UK’s future partnership will need not only to be ambitious, but to deliver the most competitive services free trade agreement the EU has ever agreed. Reduced EU market access or failure to secure a free trade agreement at all would risk significant changes to the sectors, which would face increased regulatory complexity and some businesses would need to restructure or relocate their operations.
The Government also need to recognise the alarm raised by many of these businesses at the abandonment of the free movement of people. A relatively high number of EU nationals work in all these sectors, from the brightest and best in tech and professional sectors to the mobile labour in some areas of tourism. Put delicately, this dimension needs to be taken on board as the Government move away from freedom of movement to new forms of migration controls. Our report also calls on the Government to prioritise agreement of transitional trade arrangements to avoid a regulatory cliff edge and to reduce uncertainty. I hope that such an agreement on transition is now in sight.
It seems that the Government’s negotiations now face a dilemma, which was clearly spelled out in the news bulletins this very morning. All these sectors want to continue and to develop the kind of regulatory trading structures they currently have access to, with minimal change to trading arrangements, standards, the regulatory framework, and technical and regulatory agencies. They want bespoke chapters or separate deals in any free trade agreement to achieve that. But while David Davis may advocate Canada plus-plus- plus, neither CETA—the Canadian agreement—nor the South Korean and Japanese deals, which are very extensive deals with the EU, cover anything like bespoke provisions on which we can build. Of course, Michel Barnier says that we cannot cherry pick or have bespoke deals. There is not only no template; we do not have a mutuality of approach.
In preparation for this debate, I flicked through the 450 pages, excluding annexes, of the Canada agreement. While there are some particular provisions on services, such as telecommunications, and some general issues, such as intellectual property, are covered, there is very little on services and it is very thin. However, as I have said and as I have no doubt the Minister will emphasise, we start from near regulatory equivalence with industries that largely want to keep it that way.
I am about to conclude. Most of the points we made in the report, almost a year ago, remain valid. Real trade talks are about to begin in earnest. The Government need to take on board those points from us and from these dynamic sectors, as well as those from more obvious and traditional voices approaching the Government from the City, the manufacturing sectors and areas such as agriculture. It is vital that these key growth service sectors, replete with innovation and creativity, are not sacrificed in the inevitable trade-offs with other issues that will arise once the complex trade negotiations begin. I hope this morning’s Cabinet Brexit committee will at last have addressed some of these issues and be clearer on the outline free trade agreement that we are trying to achieve. I look forward to whatever the Minister may be able to tell us about those developments and his comments on the report. I beg to move.
Lord Green of Hurstpierpoint (Con)
My Lords, I begin by recording how much I enjoyed serving under the chairmanship of the noble Lord, Lord Whitty, of the sub-committee of the European Union Select Committee which produced this report—some while ago, as he pointed out. I should also disclose an interest in that I am president of the Institute of Export and International Trade and a member of the advisory group on Brexit matters to the CEO of the EEF.
All recognise the significance of services to the British economy: more than 70% of output and more than 40% of exports. The EU is collectively our largest market for services exports, with the US our second largest. There are a number of sectors, but three dominate: financial services, which we are not focused on this evening; professional business services; and tourism, those three accounting for two-thirds of all our services exports. The statistics probably underestimate the importance of services exports because many engineering manufacturing exports include a lot of services revenue. Furthermore, the trend everywhere is in favour of services. Services rise as a percentage of economic output almost everywhere, and there is as much opportunity to gain value through trade in services as there is in goods; that is, the arguments about comparative advantage that date back to Smith and Ricardo apply just as much in services as in goods sectors. What is more, the digital revolution will steadily increase the proportion of services output which is tradeable. There is, therefore, a lot to go for.
Sometimes, we tell ourselves that the UK has a special comparative advantage in services. It is true in that we are the second or third largest services exporter globally and have the highest percentage of services as a proportion of exports of almost any of our competitors. However, we should take care about this argument. First, the high percentage of services in our exports is due in part to the weakness of goods exports. Secondly, it is also distorted by the great importance of financial services, whose net exports account for 3% of GNP alone. Thirdly, the gap with Germany is in any case closing or almost closed. Fourthly, Asia will, over time, grow its services exports. In short, this is not just a matter of getting open markets and then we are up, up and away; no, we will have to work at it hard. Nevertheless, the future is good and probably better than for goods exports. Therefore, this is an important strategic theme for us as we chart our new course.
I want to make three brief points and then pose a couple of questions to my noble friend the Minister. The first concerns trade with the EU. As the noble Lord, Lord Whitty, has mentioned, we start with regulatory alignment, more or less, on day one. There are any number of commentators who would like to see us deviate from this as soon as we reasonably can. We hear phrases like, “We don’t want to move from being a member state to a vassal state” or, earlier, “This is our big opportunity to complete the Thatcher revolution”. It was a standard complaint of many sectors of British industry that we were shackled by bureaucracy that came from Brussels, gold-plated then by the UK Government and punctiliously enforced by a bureaucracy here which caused unnecessary cost to consumers and, in any case, created an unfair competitive advantage to other EU members who were not playing by the same rules. However, the dream that we can get away from regulatory alignment to any significant extent is, I am afraid, just a dream. It is not based on reality either as an accurate description of the past or as a vision of the future. It is not surprising that we now see industry after industry arguing for the importance of maintaining regulatory alignment in sector after sector with the EU. Why? Because the market there is critical and the regulations there are not going to change at the request and behest of the British. We will certainly have less influence—not none maybe, but certainly less than in the past.
Secondly, the Government’s ambition for a bespoke deal—Canada-plus-plus-plus, as it is often described—is broadly the right one. It is often noted by sceptical remainers that the Canadian deal has little in the way of services. It does not cover aviation; it does not cover broadcasting; it tackles overt discrimination against foreign ownership, but it does not tackle domestic regulation; and it has virtually nothing about regulatory convergence of any significance. I cannot say that I have skimmed all 450 pages in the way that the noble Lord, Lord Whitty, has, but it is clear that there is not much about services in the Canadian deal—hence the importance of the plus-plus-plus. Today’s news that both the Institute for Government and the Institute for Public Policy Research have produced ideas on how this might all work is very welcome, and I hope that the Government will take their ideas seriously.
I also recommend that we pay more attention to the EU-Japan deal. That started when I was the Minister for Trade and Investment. I remember how sceptical we all were at the time that much progress would be made, given the difficulty of the Japanese domestic market environment. In fact, it seems to have gone rather rapidly, and substantial progress has been made. There is still some way to go, of course, not least as this is a mixed competence deal which will require unanimity among the member states and will therefore be vulnerable to the Walloon effect. Nevertheless, it has clear potential. It covers business services, financial services, especially insurance, telecommunications, transport, distribution and courier services and it proposes the establishment of a regulatory co-operative committee which will methodically look through the different non-tariff barriers that exist on both sides and propose solutions. I believe that we should watch this carefully, because at the end of the day Japan is more important than Canada and this is the harbinger of future Asian deals, with China, with ASEAN and with India. New deals will be more and more about non-tariff barriers, about regulatory dialogue and about services: this is important to us.
Thirdly, in general we need to be realistic. Britain will largely be a rule taker in these discussions. In the case of the US, for example, TTIP is now stalled at best, and the mandate was a compromise, but we should be under no illusion that the UK alone will find it easier to deal with the US, particularly in areas that are of particular importance to us. Financial services is one obvious area—pharmaceuticals is another —where the US regulatory environment is particularly impenetrable. The truth is that neither the US nor the EU is likely to be up for any substantial regulatory change to meet our needs. We will largely be a rule taker vis-à-vis the world heavyweights: the US, the EU, Japan and, who knows, in times to come China.
That is why developments in the last couple of weeks give me the first inkling of optimism that we are heading down a sensible path. I thought phase 1 was a good deal. I make no comment on the budget settlement, of course, but I think the settlement on citizens’ rights in both directions is both good in itself and helpful to services industries. The Irish settlement, which involves “regulatory alignment” between the north and the south in order to keep the border as invisible as possible, provoked the inevitable backlash and the result is a parallel commitment to, to use the phrase, “the constitutional and economic integrity of the UK”. That is also good. It is clear what both those commitments amount to in terms of continued regulatory alignment between Britain and the EU.
As we move to the second phase, I therefore briefly ask my noble friend two questions. First, can he clarify this point? Assuming we leave the EU legally in March 2019 and that we have agreed a transition period by then, what will the UK’s status be in respect of existing EU-third country agreements at that point? If it is envisaged that the transition agreement will mean that these agreements are still in effect for the UK, does that have to be negotiated not just with the EU but with the third-party country as well?
Finally, we do not talk much about trade with Africa. It is not a substantial growth opportunity of magnitude at the moment, but it offers substantial growth over the coming decades. It is also a big development imperative, important in its own right and in geopolitical terms as well. I welcomed the announcement of the appointment of a trade commissioner for Africa, but I was disappointed that no reference was made in the advertisement or in the brief to development as part of the package. Trade is critical to development; development is critical to trade; and I would have wanted to see a reference to a development responsibility in the role of the trade commissioner for Africa.
Baroness Donaghy (Lab)
My Lords, the report was published in March this year, before the general election and before the first phase of the negotiations. There has been a slight change in government language. The overblown title—the great repeal Bill—is no more, to the relief of most of us. Our report established the case that it will almost certainly take longer than two years to agree a comprehensive free trade agreement, and we urged the Government to prioritise the securing of a transitional trading arrangement with the EU in order to avoid the regulatory cliff edge. At the time, the adoption of a transition period was seen to be politically sensitive, but now we have an implementation period of two years. In addition, the Minister the noble Baroness, Lady Fairhead, has acknowledged:
“Services are an essential element of the economies of the UK and the EU, so we will be seeking an ambitious free trade agreement between the UK and the EU which will be of greater scope and ambition than any preceding agreement, because we realise how important it is”.—[Official Report, 5/12/17; col. 1042.]
It is good news that the Government have accepted this aspect of our report.
In my contribution, I will touch on the importance of accurate data and robust dispute resolution procedures, and ask about the possible impact on higher education. The report points to the unreliability of current statistics, which make it difficult to give an accurate assessment of the value of the services trade. The data in the Office for National Statistics Pink Book capture some of the ways in which services can be traded and, as has been said, probably underestimate the importance of services trade for the UK. The Minister of State for DCMS, Matt Hancock, who gave evidence to the committee, said that problems with the data did,
“not really matter much because we know from hard data … that Britain is really quite good at this digital stuff”.
The committee took the view that the accuracy of the data really did matter to illuminate the flow of talent and the implications for immigration policy, both vital to the UK’s future success in this area.
I was intending to outline the four modes of supply defined by the World Trade Organization, two of which are contained in the Pink Book—modes 3 and 4 are not—but time does not allow. But academics estimate that mode 3 is roughly twice as big as the other modes combined. As our report says:
“The lack of data on trade via mode 4 is also problematic, and is linked to wider concerns about immigration”.
The committee concluded:
“The Government therefore needs more accurate and detailed statistical information on trade in non-financial services than is currently available … Entering negotiations without such data could risk long-term, unintended consequences for the UK economy”.
Will the Minister indicate in what ways the Government are collecting more accurate and detailed statistics?
Many witnesses expressed concern that divergence between EU and UK laws would increase cost and complexity and might even endanger stakeholder confidence. Access to talent and flexible movement of services providers, the free flow of data, mutual recognition of qualifications, and effective enforcement were all cited as fundamental to non-financial services. Whether or not there is regulatory divergence in the future, witnesses were concerned that businesses should have access to dispute resolution mechanisms, either under a free trade agreement or under World Trade Organization rules. As has already been said, the WTO does not even cover some of the areas of service trade. Is the Minister able to outline the key principles that the Government will adopt for future dispute resolution, which will not be prohibitively expensive or complex for business, particularly SMEs? On 5 December, the noble Baroness, Lady Fairhead, outlined the plan for a new independent UK Trade Remedies Authority. Do the Government have an idea of how this Trade Remedies Authority will interact with any future international dispute resolution procedures?
I turn to higher education, where I spent most of my working life. I welcome the fact that the Prime Minister recognised the importance of universities in her Statement today. The report says that trade statistics,
“include students … however short their stay, because they remain formally residents of their country of origin”.
We were told that EU students make up 5.5% of the UK higher education student population, and that at some universities it was 25%. Some courses would not be viable without these students. Non-UK EU students paid fees of £600 million in 2014-15, accounting for as much as 8% of all university income. Spending by the same students in the wider UK economy accounted for £3.7 billion and supported over 34,000 jobs.
Universities UK pointed to the “principle of non-discrimination” for all EU students and wanted those arrangements to continue after the UK leaves the EU. Our report outlines,
“the possible negative effect of increasing fees for EU students on trade in education services”,
after we leave the EU. The Government’s development of a new immigration policy will have to determine the future status of EU students. The University and College Union is also concerned that the further marketisation of universities could lead to education being included in future trade agreements. At present, education is exempt. What assurances can the Minister give to the higher education sector on these matters?
Although political events may have overtaken our report to an extent, the fundamentals of our recommendations for the future remain the same. I thank the noble Lord, Lord Whitty, for steering us through this inquiry so ably and for making an important contribution today. Who knows, we might even get a response from the Government one day.
Lord German (LD)
My Lords, I too add my thanks and say how much I have enjoyed serving under the chairmanship of the noble Lord, Lord Whitty, on this report. I thank him for his perseverance in bringing it to your Lordships’ House today. I took the opportunity of going into the Printed Paper Office just before the debate began, on the off chance that I might find the Government’s response to the report before us, but I regret to say that no such response was on the table. It is therefore incumbent on the Minister tonight to give us some very detailed answers to the questions raised by the report. I notice that he is smiling, so I look forward to those responses later.
As the noble Lord, Lord Green, said, we are in the area of Canada-plus-plus-plus. I do not think there is any definition of how many pluses you can have, although I wonder how many pluses on the end would make up the equivalent of the single market. That is the direction in which I sense the sector, and this report, drives us. At the moment, we know virtually nothing of the Government’s position and what they want to see for the country. We have no overall comprehensive impact assessment; we therefore have no knowledge of the potential impact on jobs, the economy or society as a whole. This report provides some of the evidence that we need to make that judgment.
WTO rules are not altogether helpful to the service industries, which tells me that in the upcoming negotiations the UK will, as a minimum, require a comprehensive free trade agreement. Even then, it will not be as good a deal as the one we currently have inside the EU. I believe that services will be the trickiest part of the negotiations. Some 80% of the UK economy is service-based, yet less than one-third of all the free trade agreements signed by the EU with third countries have a services component, and generally those components are not adequate and suitable for the UK’s needs.
We need a transition period, as pointed out in the earlier Brexit and trade report from our committee. That will be essential to complete this work. Service sector exports in both financial and non-financial businesses have been growing and the three key non-financial sectors—business services, digital, and creative—provide a positive trade balance for the UK. All three are growing, and in all three our exports outstrip our imports.
However, the uncertainty created by the Government’s inability to express their desired outcome position is particularly acute for the services sectors because it is here that reputational risk—the reputation of the UK as a provider—places a disproportionate burden on this valuable part of our economy more than any other. It is the UK’s outward-facing, bold, and innovative qualities as a nation which spur the growth of these sectors. Continuing uncertainty taints that image.
This report lays out clearly the challenges that face the Government in ensuring that this very significant part of our economy continues to flourish. Mutual recognition of qualifications, rights of establishment, the free flow of data and intellectual property protection are just a few of the crucial issues where detailed agreement will be essential to maintain the UK interest, and in these sectors the free movement of workers and service providers is critical. All would be fine if we remained in the single market. However, in the interim, I would like to outline some of the challenges that the Government face by using one of the key service sectors, and I make no apologies for choosing the music sector. It has lobbied all noble Lords on the committee, but it has also been very vigorous since the referendum in putting its case forward.
The revenues of the recorded music industry were, for example, higher than the combined revenues of the top 50 fastest-growing UK tech companies in 2014. The UK music industry generates £2.5 billion in exports annually. Music tours around Europe are a very important part of that long-term income. The music industry needs the freedom to trade and to break into and develop new markets. I know that noble Lords are familiar with the size of touring music events—it is rather like watching the credits at the end of a film as the names roll on and on. These are people who you may not be familiar with and whose names are unrecognised: riggers, electricians, sound engineers, digital engineers, painters, make-up, wardrobe, stage managers, visual effect teams, merchandisers and many more. The skilled engineers in the teams have accreditation which is recognised throughout the EU, so any change to that regime would affect the ability of UK tour operations companies to work with the speed and agility that permits night-to-night concerts in different major locations across Europe. Any restriction on movement across Europe could also result in temporary customs documents being needed. That would mean detailing every piece of equipment and merchandise, which would lead to delays at borders and increases in costs and time. Non-EU nationals performing or working on a tour would have to provide themselves with temporary work permits, as they do in France now if they come from a third country.
Copyright and intellectual property issues enable creators such as composers, songwriters and lyricists to derive a financial return for their work. Ten per cent of those who work in the UK music industry hold another EU country’s passport. The need to source a skilled workforce is critical to the success of the industry, so frictionless movement of talent is essential.
In passing, I must say how sad I am at the departure of the European Youth Orchestra to Italy from its UK headquarters in London, where it has been since its foundation in 1976. The orchestra has about 120 players every year, aged between 17 and 24. It now appears unlikely that British players will be eligible in future years.
That is just one example from one sector, but it outlines the most difficult of the issues that are before us. These are the issues that I started with—the challenges that the Government must satisfy. The committee’s report points that out. There is a powerful link between trade in services and the cross-border movement of persons. Intellectual property requires protection. Without agreement and safeguards this vital part of our economy will be under threat. This cannot be just about the survival of the services sector; surely it must also be about its ability to flourish.
In the absence of the Government’s document responding to this report, what is their view on the free movement of workers across borders, on protecting intellectual property, on the mutual recognition of qualifications and deviation from those regulations, and on maintaining the free flow of data? Tonight is the Government’s chance to indicate how they will deal with these issues and provide the confidence that we all need to ensure that the UK’s service industries can grow and flourish.
Lord Aberdare (CB)
My Lords, it is a great pleasure to follow four colleagues from the EU Internal Market Sub-Committee, and I share their great appreciation of the able chairmanship of the noble Lord, Lord Whitty. I hope I shall be shorter than I anticipated, since the noble Lord, Lord German, has made a number of the points I planned to make myself.
The inquiry looked at five categories of non-financial services. I will focus on aspects of two: digital and creative services, which are both sectors where the UK has considerable strengths and generates a significant surplus. Both are vital to our continuing success after Brexit. They foster innovation, enhance competitiveness, increase productivity and contribute to well-being and quality of life. They also share other characteristics: they depend on access to the best and brightest talent and skills available and they currently suffer from significant skills shortages.
They rely heavily on talented people from overseas, especially from the EU, and not just at the highest skill levels, such as recognised musical virtuosos, but at more modest levels such as orchestral musicians and even front-of-house staff. I hope that the Minister can confirm that the new immigration system after Brexit will be designed to ensure that the pipelines for such essential talent remain fully open. The doubling of the number of exceptional talent visas announced last month was a welcome start—but only a start. It does not cover, for example, freelancers in the digital and creative sectors.
Digital services depend heavily on the free flow of data, which is increasingly seen as a fifth freedom for the EU. The general data protection regulation comes into force next May to govern the transfer of personal data, among other initiatives to create a Europe-wide data market. The UK needs to ensure continued free flow of data to and from EU states after Brexit, so I welcome the Government’s commitment to putting the necessary infrastructure in place via the Data Protection Bill. Even so, it is my understanding that we will still need to obtain a so-called adequacy decision from the Commission, based on a full review of the UK’s domestic data regime to determine how the UK’s data protection landscape matches the requirements of EU law. What preparations are the Government making for obtaining such a decision and what are their expectations about the process for doing so and how long it will take? What transitional arrangements will be put in place in the meantime so that data flows can continue uninterrupted?
Perhaps the Minister could also comment on two other issues relating to digital services. First, mobile telephone roaming charges were abolished across the EU in June 2017. Can he assure us that there will be no return to roaming charges between the UK and other EU member states after we leave the EU? Secondly, the EU is pursuing an ambitious and wide-ranging strategy to create a digital single market. The UK has been strongly supportive of this and has been seen as one of its greatest likely beneficiaries. But there is some concern in the tech sector that, after we leave the EU, the strategy could be used to erect non-tariff barriers against UK businesses providing digital services in the EU. Can the Minister tell us how the Government will seek to ensure that the proposed UK-EU free trade agreement preserves the benefits of the digital single market for the UK, even after we are no longer involved in its future development? Can he confirm that we will remain in alignment with the EU regulatory framework for digital services during the transition period in order to provide legal and commercial certainty for businesses providing them?
I now move to the creative sector, and specifically to broadcasting and music. The sub-committee had a highly illuminating visit to members of the Commercial Broadcasters Association in Chiswick, including Discovery Networks Europe. From its UK hub, Discovery Networks broadcasts a wide range of channels to 135 different countries across Europe and beyond, in a variety of languages. It brings valuable jobs, investment, income, skills and technology to the UK. Its business model is predicated on the EU country of origin principle, whereby a single licence from the relevant UK regulatory body, Ofcom, enables it to broadcast throughout the EU. It can also access or bring into the UK the skills and expertise that it needs; it is not much good broadcasting to Latvia, say, if you do not have people with an understanding of the Latvian language and culture. Ideally, a future UK-EU trade deal would preserve these features, but at the very least broadcasters need assurance of a transitional arrangement enabling them to continue operating essentially as now for long enough to make necessary changes to their business model—which for some might involve moving part or all of their operations outside the UK. What advice can the Minister offer broadcasters as they plan their businesses for the future?
One of my own passions is music, especially classical music. As we have heard from the noble Lord, Lord German, this is another sector in which the UK is a global leader, and it, too, needs reassurance that its freedom to trade internationally will not be constrained after Brexit. As we heard from the noble Lord, touring is an important feature of the music sector for orchestras; for major UK acts such as Coldplay, Adele, the Rolling Stones and Paul McCartney, all of whom were among the top 10 grossing music tours of 2016; and for individual musicians and small ensembles. I will not repeat many of the comments that the noble Lord made, with which I agree, but will add two more questions for the Minister. First, what assurance can he give that orchestras and other musical organisations will continue to be able to tour in Europe without prohibitive extra costs and bureaucracy? Secondly, when does he anticipate that sufficient information about likely transitional arrangements will be available for music bodies so that they can plan their future touring programmes with confidence, bearing in mind that the planning cycle for orchestras is two to three years ahead, and for opera three to four years?
I have mentioned only a few specific issues within two of the services sectors covered in our report. There are many others, such as visa-free travel, often at very short notice; intellectual property and copyright protection; continuing access to or replacement of EU funding schemes; and ensuring that UK audio-visual productions remain recognised as European works. Our report highlighted that:
“To protect the UK’s status as a global leader of trade in services, the Government will need to secure the most comprehensive FTA that has ever been agreed with the EU”.
So my final question to the Minister is: what can he tell us about the Government’s approach to achieving such a ground-breaking services deal in a way that gives confidence and certainty to UK non-financial services providers so that they and we can capitalise fully on their exceptional strength and potential in international markets both within and beyond the EU?
Baroness Noakes (Con)
My Lords, I, too, am a member of the EU Sub-Committee on the Internal Market, and I pay tribute to the noble Lord, Lord Whitty, for his excellent chairmanship. Brexiteers may well be part of the majority who voted to leave the EU but, as noble Lords are aware, in Parliament, and in particular your Lordships’ House, it is a different matter. It was therefore no surprise to find that I was not in the mainstream of views within EU Sub-Committee B. Put another way, EU Sub-Committee B is well endowed with those whose sympathies are for remain, and I believe that this colours the sub-committee’s findings.
I certainly do not accuse my fellow committee members of bias in the report, but there is a pervasive worldview that Brexit is a negative thing and that keeping things much as they are is a desirable outcome from the Brexit negotiations. This desire to avoid change indeed reflected many of the views of those who gave evidence to us—but, as is customary, many of the people who gave evidence to the sub-committee were taken largely from trade bodies, and they are the very people who have a lot invested in the status quo. It would have been really surprising if those bodies had argued for anything radically different.
I shall refer to the question of statistics relating to trade and services, which has already been referred to. It is true, as the report points out, that there are problems with current statistical data. The report’s conclusion at paragraph 37 is:
“The Government therefore needs more accurate and detailed statistical information … than is currently available … Entering negotiations without such data could risk long-term, unintended consequences for the UK economy”.
In a narrow sense, these are plausible conclusions. Who can doubt that decisions should be made on the basis of the best information? But is it actually necessary? We have managed for a long time to be a successful service economy without perfect data. What long-term unintended consequences for the UK economy could arise if we do not have perfect data? The report finds a negative, but does not explain how or why.
More importantly, this view—that we need to know precisely what has been going on in the service sector in order to avoid unintended policy consequences—ignores one vital element of the UK economy and the service sector in particular: adaptability. Over the centuries, the UK became and remained a great trading nation because of two things: we successfully adapted to changing economic circumstances and we constantly sought new opportunities. In the last 500 or 600 years, the UK has repeatedly reinvented itself in trading terms, moving from an economy based on agriculture through the industrial revolutions and the creation and dismantling of the empire. More recently, we have witnessed the evolution of a service economy and the establishment of our pre-eminence as a centre for financial services.
Innovation and adaptation are hallmarks of the UK as a trading nation. That is why we must not be afraid of the consequences of change, intended or otherwise. We need to go into negotiations with Europe about the future trading relationship between us mindful of the strength of the current shape of the economy but not hidebound by needing to preserve it for all time.
If we look at wider forces at work, one thing we can be sure about is that doing business in the UK, Europe and globally will change. Disruption is pervasive. In particular, the scale, scope and economic impact of technology are accelerating. We have been saying this for some time but it remains true. Artificial intelligence and robotics are already with us and are changing both how we live our lives and how enterprises create value. We are only now starting to glimpse what the future may yet hold for us. Secondly, the world is becoming more interconnected. In the past, trade was built on physical trade routes, but information does not have that constraint. Data and communications advances mean that traditional trading connections have been surpassed by complex global webs.
None of this means that it is not important to seek a comprehensive trade agreement, in particular to cover services. In that, I concur with the central finding of the report. Equally, the avoidance of a cliff edge via an implementation or transition period is sensible—this featured in the early report dealing with the options for trade post Brexit. These are non-controversial findings and are indeed core elements of the Government’s policy. But my gloss on that—and my advice to the Government—is to ensure that they do not focus on setting in concrete the current trading arrangements. Far more important is flexibility to accommodate shifts in trading patterns, particularly those outside the EU. I do not know what those shifts will be but I am sure that they will happen.
I end with a compliment to the Government which is buried in the report. When the sub-committee started to examine Brexit last year, there were many doubts within the sub-committee about the depth of the Government’s engagement with the services sectors. That is no longer the case. At paragraph 289, the report states that the sub-committee recognises,
“the Government’s current high level of engagement across the services sectors”.
It is followed up by something along the lines of “the Government should keep it up” or do some more, but the essential message is a good one: the Government are doing the right thing.
Lord Liddle (Lab)
My Lords, I add my thanks to my noble friend Lord Whitty for ably chairing our deliberations. It was one of the most interesting experiences that I have been involved with on a Select Committee, as I shall explain.
The first thing that struck me was how the sector of non-financial services is absolutely vital to Britain’s future. It is a growing sector with great diversity, but it all trades essentially, for the most part, on our key strengths in the knowledge economy. It provides fulfilling jobs for people, often working in non-hierarchical companies, and it is a crucial part of our future as a strong economy and thriving society. I would say to the noble Baroness, Lady Noakes, that I would not describe the people whom we met in that sector as status quo people; they are the great disruptors and innovators in our economy today. Unlike the innovators and entrepreneurs of a century or more ago, they do not have the competitive advantage secured by the barrel of a gun in an empire. They have to do it on their own—and that is something that we should respect.
Secondly, the experience challenged the conventional wisdom that I had, having always thought of myself as someone who knew something about Europe. The received wisdom in Whitehall was always that the single market was a great success in goods but very deficient in services. Actually, it taught me that the single market was actually very important in services, and the four freedoms of the Treaty of Rome were essential to the success of the sector.
Thirdly, this is the sector where the Government have given the least thought of any to a strategy for securing its future. In trading goods, you can see where the Prime Minister wants to go; it is a model of regulatory convergence, in return for which we get tariff-free trade. I think that she will find it a lot more difficult than she imagines, but that is a plausible model. Also, in financial services, the buzzword is regulatory equivalence. In this sector, it will be much more difficult because it is so varied. Those trade negotiations are not going to be conducted by the nice Michel Barnier, who has been extremely gentlemanly with the British over the past 12 months. They will be conducted by DG Trade. I have worked in the cabinet of the Trade Commissioner and I know what they are like. They are hard men and women, who are tough mercantilists at heart.
The problem with the sector is that our bargaining position is extremely weak. Why is that? Because, if you look at the EU 27’s export of all services to the UK, it amounts to about 0.8% of EU 27 GDP. But when you look at Britain’s exports of services to the rest of Europe, it amounts to a massive 4.7% of GDP. So who is the demandeur? We are the demandeur, and we do not have many cards in our hand. Of that figure, just over one-quarter—about 30%—is financial services, so non-financial services are extremely important.
Those who think that the WTO offers a happy prospect of this sector had better think again. I looked up the paper which went to the European Parliament on this. It states:
“The liberalisation of services under the GATS is subject to a hugely complex set of ‘reservations’, whereby the member states can continue with restrictions on market access for specified services. Since the EU’s own competence in the field of services is incomplete”—
it is not all at EU level—
“this has had the result that at the WTO the ‘reservations’ by the EU and its member states are a hybrid of EU-level reservations and bilateral member state reservations”.
That is why a trade agreement on services will take years to negotiate. You are not just dealing with the Commission, tough as it is, but you also have to deal with blockages in member states and any agreement has to be ratified by the Parliaments in all member states as a result. We are not talking about two years: it will probably be five or seven, so the Government had better grow up.
This sector faces real problems. I think that the only answer is the single market. People say that you cannot have the single market because it involves free movement. I have a huge pile of evidence from our committee’s deliberations which shows that free movement is not a trade-off with the economy; in this sector, free movement is the heart of their business model and competitive advantage. If we say that we are going to stop free movement for political, non-economic reasons we are damaging one of the most successful parts of the British economy. I hope that the Conservative Party will explain to people why that is in the national interest.
The Lord Bishop of Leeds
My Lords, I am no expert on the technical elements of trade in non-financial services, so have listened to speeches with both interest and admiration. Most of the points I wanted to make have already been made, so, given the time constraints, I will make a single point that lies behind the detail of the report—the reason why the frictionless movement of talent matters. I invite the Minister to note what I say, but not necessarily respond to it tonight.
The services under debate all deal with people and, in many cases, with people who do not simply produce things or look for a healthy balance sheet at the expense of everything else. They have to do with creativity, culture and connectivity in its widest sense. The benefits as well as the costs of cultural services are sometimes hard to quantify in cash or purely economic terms. My point here is simply to ensure that the particular—perhaps peculiar—nature of some of these services is recognised. The digital economy is a means to a cultural end: connecting people and services, shaping communication and culture, moulding world views as well as behaviours, both individual and social. Creative industries such as broadcasting go beyond the manufacture of things that can be traded in order to satisfy consumer need or desire: they do something to the pool we swim in as human beings, creating and shaping cultural and societal norms as well as language.
I guess this is what concerns me in every debate about Brexit, and I state it again here simply in order to keep it on the record: the thriving of our economy is crucial to the well-being of our people and our culture, but the economy is not the end; it is the means to an end, which is human flourishing and the common good. If we forget this, we become merely utilitarian and materialist. It might sound arcane to some, but the services addressed in this report have to do with values, languages, the meeting of people, cross-cultural communication, the arts, exposure to the unfamiliar, and access to that which is alien and strange. They are, therefore, important for shaping how we see the world, ourselves and human meaning. Perhaps more than other industries and services, they influence future generations in ways that others do not.
Edmund Burke stressed the importance of intergenerational justice in a way that transcends the immediate challenges of today’s economic demands. In the current edition of the New Statesman, Adrian Pabst notes how Burke’s,
“emphasis on covenantal ties between generations can help us think through the growing economic injustice between young and old today”.
He goes on to write:
“Society is not a contract of individuals. It is a partnership between the living, the dead and those yet to be born ... Human beings are not atomised agents maximising their utility. And they are not anonymous carriers of historical laws”.
The creative services build culture. I hope that the concerns expressed in the report concerning the risks to them will be heeded, or, at the very least—pace the noble Baroness, Lady Noakes—that the potential benefits to these services in a changing and challenging technological environment will be identified more clearly as negotiations continue.
Lord Inglewood (Con)
My Lords, these days it seems almost unbelievable that until a couple of years or so ago, driving forward the European Union’s single market was perhaps the Conservative Party’s flagship European policy, and had been so for a quarter of a century. This important report by the committee of the noble Lord, Lord Whitty, shows why and how it generated wealth and prosperity for this country, which has helped to pay its bills. For 10 years of that time I served on the European Parliament’s Legal Affairs Committee, as my noble friend the Minister knows, where I played a small role in building that market. It was pernickety, painstaking and often frustrating work. The single market in goods was the most obvious, the single market in financial services perhaps the most high profile, and the single market in services may be the most elusive and the one with most potential. Our country benefits from each of them, and because the single market in services has been scandalously long in gestation, as has been pointed out, if we were to leave the single market now without re-engaging on continuing equivalent terms, we shall be snatching defeat from the jaws of victory.
One of the lessons I learned from that time is the realisation that to have frictionless trade, it is essential to eliminate non-tariff barriers which ingenious protectionist Administrations will be looking to impose while paying lip service to free and fair trade. In this regard lies the importance of the role of the European Commission and competition law, and of the European Court of Justice in policing that market in the interests of fair play. In this context I emphasise the importance of the principle of direct applicability of law, which gives the small man as much as the rich corporation the benefits of the market. Enforcement of rights is as important as the existence of the right itself, since justice delayed is justice denied, and there is no real right if it is too costly or difficult to enforce.
To establish a working single market you need agreement on, participation in and confidence in a structure that it seems to me has to have three essential components: an arrangement for making rules; the rules and a way that they can evolve; and enforcement. If you move away from this tripartite structure, you go on a journey which inevitably goes from rule maker to rule taker. The more exceptionalism we demand and seek, the less in control we shall be and the less benefit will result for us.
As has been mentioned, it is sometimes said that we can pick up what we may lose from leaving the single market by trading elsewhere in the world. However, I have never found any hard evidence to support that; rather, I agree with the noble Lord, Lord O’Neill of Gatley, who knows much more about these things than I do, who, in a recent article in the New Statesman, points out that trade with the European Union and trade outside the European Union are complementary and not alternatives. I think that that was the point that my noble friend Lady Noakes was making. In this area certainly, we can clearly do better. As the Government themselves have pointed out, both Germany and France are currently more successful in trading with China than we are.
As politicians, we have to be especially alert to the siren song that businessmen will conduct business at the behest of ministerial utterance. For a number of years I chaired a north of England manufacturing company, and the board took its decisions on the basis of what it considered commercial merit—and if there was some government support or, better still, money, that was a bonus.
In the contemporary world of networks we see how the hub structure works across national boundaries, and in the “not impact statements” made available to parliamentarians, we read that five of the top 15 global legal firms are based in London. Spokes radiate from the hub and subsidiary nodes develop, while if power deserts the hub, they may and do turn into the network’s focus. Similarly, in another area with which I have some familiarity and which has been touched on already, the United Kingdom, and in particular London, is the main European centre for broadcasters, be they English-speaking or not. Already, now that they are looking at uncertainty, some are leaving, principally for Amsterdam, and many others are making plans.
We need to be clear about the oft-quoted proposition that leaving the single market will bring a bonfire of regulations which will turn the United Kingdom into an occidental version of an Asian tiger. Every new Government I can ever remember have promised to slash red tape, but I have never seen it happen. We must remember, first, that a significant number of rules owe their origin to non-EU international agreements. Moreover, the UK Government themselves have often over the years used European Union decision-making to introduce regulation they want to see, as that is a way that is more convenient and discreet. The Prime Minister has ruled out getting rid of a lot of European legislation, so if the present Prime Minister will not do that, I can hardly see the leader of the Opposition taking a radical view and going further. Finally, as has been mentioned, this country seems to like regulation. You only have to look at the gold-plating that has gone on—and let us not forget that Jobsworth is an Englishman.
The more we want to diverge from the single market, the less access we shall be accorded as our counterparties in the negotiations will consider that we will be trying to dump, either socially or economically, our products and services on them. We can speculate as much as we like over what the real options are, but of course it is not simply a matter of what we would like; at least as important is what the other member states would want for themselves. One thing, though, is certain: the more we “take back control” over trade with the European Union, the more we give it away. They are two sides of the same coin.
Lord Davies of Stamford (Lab)
My Lords, I congratulate my noble friend Lord Whitty and his colleagues on an excellent report. I believe, or certainly hope, that it will be a foundational document in the weeks and months to come as the Government prepare their negotiating case and as business decides how best to present its own case to government and to the European Commission.
A message comes out quite clearly from this report, shining out brilliantly from just about every page. It is very simple: it would be an absolute disaster for this country to leave the European Union. That is a fact. I realise that the noble Baroness who spoke earlier on, who announced that she was a Eurosceptic—she has that reputation in this House—was anxious to discount that obvious message of the report. She hit upon the most extraordinary way of doing it, by arguing that the reason why the report reflected this fear about the results of Brexit and concern about the results of Brexit for this industry was that a lot of evidence was taken from trade associations, which always like the status quo and do not like change. The absolute opposite is the case. Trade associations love government-induced change. It gives them enormous importance and a double role: they have to explain to their membership how things work and what the change exactly is, and most of all they have to defend their membership vis-à-vis the Government. That gives them a prominence and an importance, both in their own sector and possibly even more widely outside the sector, which they would not otherwise have—and for once their members are delighted to pay their annual subscription. So the noble Baroness got that one completely the wrong way round.
This is an important sector of industry, not least because it is very labour-intensive; it creates an awful lot of employment. People think that services create employment which is not highly remunerated, which is the case in tourism. However, there are certainly a large number of areas—prominent in this country—in the non-financial services sector that pay their people extremely well by international standards. One thinks of technology, media, accountancy, legal services, and consultancies of different kinds, such as management consultancy, and so forth. These are really big payers, and the economic importance of having these firms in this country is very great. Because of the technology and know-how involved in these firms, they are a considerable national asset that we should be trying to preserve and nurture—whereas I fear we are doing exactly the opposite.
I want to take one example. I believe that the technology consulting services company Accenture currently employs more than 300,000 people. Ten years ago it employed fewer than 30,000. That shows how employment has been created in the sector. Lord knows there are sectors where employment is falling, so it is very important that we have sectors such as this one which generate considerable employment. There are also spin-offs from big, successful companies such as Accenture. A lot of new businesses and small boutiques have grown out of Accenture or have been set up by people who started their career there, so it is a very dynamic and positive process and we do not want to bring that to an end.
The most important thing in the success of these labour-intensive companies is the quality of the manpower and womanpower that they possess—the talents, abilities and experience of their employees. That is absolutely key. To prove that, you have only to look at the balance sheet of a successful consultancy company and compare it with its market value if it is a listed company or if it is the subject of an acquisition when someone is paying the market value for it. Noble Lords will find that almost invariably the market value is a very considerable multiple of the balance sheet net worth of the company. That is not to say that such companies do not have any assets; they do, although they are mostly intangibles such as licences or patents of some kind or, most importantly, capitalised intellectual property such as software. Nevertheless, the value of the company will vastly exceed its net worth, and that good will reflects the value of the people who work there and their accumulated expertise.
Therefore, we are dealing with extremely sophisticated people who generate a great deal of value and want to employ only the brightest and the best. If you try to prevent them from doing that, they will move somewhere else where they can employ the brightest and the best. This illustrates the importance of freedom of movement. The Government’s wish to destroy freedom of movement, the price for which is keeping us out of the single market, is extremely dangerous.
I am delighted that the Prime Minister has apparently negotiated a satisfactory deal for the residents from other EU countries who currently work here, but she has not filled in the details of the regime that will apply to them. Will they have a personal right to live here indefinitely, even if they change their job or have no job and become unemployed? Will they be able to take time off to work elsewhere? Will they be able to undertake contracts that require them to spend a majority of months in a year outside the country on various assignments?
All those questions need to be answered, but an even more important question that needs to be answered is: what will be the regime for potential new recruits to British-based technology or other consultancy companies? It is vital that that is answered because individuals will not come here unless they have a promising regime under which they can live and work. For example, they will not come to work in this country if they would not be allowed to change their job here. This is a sector in which people change their jobs very frequently. If a good opportunity arises in another company, they want to be able to move. They do not want to be in the classic position of someone with a work permit who cannot change their job. They do not want to be unemployed for a while and have to leave the country. If people are unemployed in that sector, it is not usually because they are actually unemployed—that is, they are looking for a job but cannot get one or, for example, they have been fired. It is usually because they have a non-compete clause in their contract and they change their job and are then put on gardening leave for three, six or 12 months. What will the regime be for such EU citizens in this country going forward? It is very important that we get all these details rights.
I must say that I was not at all reassured when I heard the other day from the noble Lord, Lord Callanan—who is summing up this evening—that the Home Office is in the middle of drafting regulations for registration of this kind. I have yet to meet anybody in the Home Office who has any understanding of, let alone experience of, business; nor have I met anybody there with an understanding of economics. So I shall hold my breath until I see the regulations that are currently being drafted. However, it is extremely important that they are drafted in such a way that they do not have provisions for and protections against some obscure potential difficulty, and lots of phrases that lawyers like and so forth. At the end of the day, real risks and obstacles are created for people coming here and for British-based firms recruiting the best people, whom they need to survive in the future.
Baroness Randerson (LD)
My Lords, I start by thanking the noble Lord, Lord Whitty, for his leadership on this committee and by making the point that it is certainly not his fault that I end every Thursday morning feeling depressed and dejected. That is due to the nature of the evidence we get, week after week after week, from those who are practitioners in the different sectors of our economy.
The EU committees have together done what the Government have apparently failed to do, which is to assemble a vast body of evidence on the impact of Brexit. If you look at all the committee reports so far, they make pretty grim reading on the complexity and impact of Brexit on business. The overwhelming view of those who came to speak to us was that they want things to continue as close as possible to what we have already. That, of course, fatally undermines the Tory Brexit vision.
This report has been completed and written for so long that it is now a historical document. All we can do is note the lack of a government response to it so far and conclude, I fear, that that is because the Government have no answers to the difficult questions we asked. I look to the Minister to fill that gap this evening.
We have heard an awful lot about the might of the City of London and the financial impact Brexit will have on it, and rightly so because financial services are very important and a huge driver of our economy. However, in total, the volume of non-financial services trade is almost three times the size of the financial services trade. What worries me above all is that most of the options being pursued by the Government—from a clean-break WTO-terms departure to the bespoke model so beloved by our Prime Minister—is that they leave our service industries high and dry.
Only today, the Institute for Government produced a challenging report in which it emphasises the complexity of departure, especially in relation to the service industries. It makes the point that, even with a transition phase, it will be very difficult indeed to fit the timescale. Our evidence virtually unanimously called for the UK to stay in the single market, but as the Institute for Government says, with the acceptance of the single market comes obligations—for example, oversight by EU institutions, which would be a considerable problem for the Government.
The issue that makes the services sector particularly vulnerable if we do not achieve single market status is not so much the tariffs but the problem of non-tariff barriers, such as needing 27 different licences instead of one or the complexity of which country your qualifications will be accepted in and so on.
It is important to remember that the EU is the most integrated services regime in the world. We have a trading surplus with the EU in high-growth service industries. The service sector includes the fastest-growing sectors of our economy, and we sell 40% of our services to the EU. The problem that the service sector poses for militant Brexiteers is the free movement of people that inevitably and intrinsically goes along with so many service industries.
I want to take a number of the service industries and look at their impact. Tourism is one service sector where we have a deficit in trade, which will probably continue because we are not going to stop wanting to go to warmer places abroad. But that does not mean that tourism in Britain is unimportant. Quite the opposite is true. It is of great benefit in some of the more distant parts of the country. But the significance of our tourism sector is that it is a source of much of our soft power in the world. That is probably a diminishing asset, but we need to cherish the soft power that we have left.
I will take that link and look at other sectors within services and examine the soft power that they yield. My noble friend Lord German has already referred to the cultural influence of the music industry, which is a huge source of soft power. In broadcasting, without appropriate agreements to maintain access to the single market, UK broadcasters would be unable to broadcast services to the EU and that would affect almost 60% of Ofcom-licensed broadcasters.
Digital services are a real cutting-edge technology. To emphasise our leadership in this: the UK has 0.9% of the global population; we produce 3.9% of global GDP; but 11.5% of global, cross-border data flows come from Britain and 75% of UK cross-border data flows are with the EU. That includes a whole range of different sectors. Witnesses told us:
“In this digital age data flows cannot be separated from trade flows”.
The key point is that it does not really matter where companies are based; what matters are the skills available and the right regulatory regime. They will leave the UK if we no longer have the set-up that they need. They need free movement of skilled labour, and they also need to be able to rely on EU talent to offset our own skills shortage.
Soft power is also reflected in the importance of education services, with nearly 125,000 EU students enrolled in UK universities. That is 8% of total university income coming from the fees of EU students. Contrary to what has been said, this is not a sector of people who are stuck in their ways, nor is it a sector of people who assume that things should continue as they are. Our witnesses represented a sector that is disruptive and embracing change. It is at the cutting edge of all of the newest technologies. These people are the brightest and best in this country, and they say that we should stay in the single market.
Lord Wei (Con)
My Lords, I thank the noble Lord, Lord Whitty, for tabling this debate. I, too, am a member of the sub-committee that produced this report. I pay tribute to our chairman and my colleagues for the work that has gone into it. I refer Members to my register of interests.
I welcome this report and the logical way it analyses the largest services sectors to get a more granular understanding of the issues involved. There is always a danger that you miss out details using this approach, both in the emerging but promising sectors and services not yet large enough to feature on our radar as well as in the nuance of day-to-day operations, but the report has identified the major risks and understandably argues for a need for a smooth handover period to avoid a cliff edge into WTO rules.
I am heartened that the report notes that we are the second-largest exporter of services in the world—a fact that cannot be attributed only to our membership of the EU—and by how the question of tariff barriers is less a factor here because, in many cases, service business are not majorly affected by them. As a nation with much of our growth and trading future tied to services, it is important that we take pride in the fact that we are a world leader in this area and have confidence that, whatever the outcome of the current negotiations, we will thrive because customers still want to consume British-produced content, from Harry Potter to Premier League matches, and tap into our expertise, from advanced manufacturing to professional services. In many cases, those delivering these services have established ways to overcome barriers, whether through licensing arrangements or local partnerships abroad, or by receiving third-party investment to help bring their offer into other markets globally.
The danger, of course, lies in non-tariff barriers and whether, in a post-Brexit world, Britain’s service providers could be de facto shut out of markets due to the non-recognition of our standards and the qualifications of the professionals who provide them. This is indeed a risk that needs to be monitored, particularly with the threat of protectionism rising globally. It should be noted, however, that progress in this area has been slow even within the EU, and as such it is not new.
One might argue that, with the prospect of flexibility to negotiate FTAs, we might be able to include non-tariff barriers in the deals we create with other countries, particularly those with little to lose from removing such barriers but much to gain from helping us source talent and services where we have shortages in internal capacity, such as healthcare and education. Indeed, in many industries our best bet may yet be to be first mover and stay cutting edge, rather than to rely too much on even FTAs or current arrangements to protect businesses. I say this because, whether the enforcement of such FTAs were to be under the WTO or arrangements similar to what we have now with the EU, it tends sadly to be only the larger organisations that can make use of the protections in place when abuses occur, and securing rulings can take a long time.
That brings me to my final point, where I agree with my noble friend Lady Noakes and depart from the implicit assumption of the report that “business as usual” is preferable in all circumstances, that there should be no rocking of the boat with a transition period and that we should stay as close as possible to the single market and customs union arrangement we have today. We need to remember what Brexit was about for many who voted for it—a cry from the low paid, the small and those who do not always feel that the centre cares about them, for whom “business as usual” has not worked. For many in this camp, the status quo is worth challenging and the cost of losses incurred during a shift, even the disruption, is worth it if Britain can gain flexibility and sovereignty to forge a different path.
I believe that we will have failed if we achieve just a smooth handover, or even if we negotiate new agreements under the WTO and/or with Europe, if we do not create new opportunities for small and medium-sized businesses and those who feel left behind to play a bigger role. This question was of course beyond the scope of the report, but I believe there is much that can be done in the coming months to look at what can be done, whether around unilaterally lowering tariffs to enable our markets to be exposed to more affordable goods to in turn trigger innovations and greater productivity in related British services, or to explicitly link service market opportunities to outbound goods export opportunities in FTA negotiations. For example, imagine supercharging trade in agricultural products between the UK and China using the recent rail link to Barking and how that could in turn impact our agtech and certification service exports.
Given our trade deficit in goods, it is going to be imperative massively to grow our non-financial services trade with the rest of the world. It will take more than “business as usual” to achieve this. We will need a bold and imaginative global services promotion strategy, linked into our future FTA negotiations, to supercharge our future services export growth. I would be interested to hear my noble friend the Minister’s views on the Government’s approach to services promotion post Brexit. This report highlights opportunities for us to minimise disruption to services during Brexit, but I believe that we can go much further so that, post Brexit, we can secure our lead as the best service-providing nation in the world.
Lord Berkeley (Lab)
My Lords, I, too, welcome this report. It sets out a number of options and consequences for the non-financial services industries and gives a great deal more information than was contained in the 58 sector reports that I went to see last week. The security around that reading room was a bit of a joke. I sent two emails to try to get an appointment and did not get a reply, so I turned up. They said, “Well, I suppose you can come”, but they then confiscated my mobile, so I had to rely on my photographic memory. But, frankly, there is nothing in them apart from a load of statistics, which are quite interesting but say nothing about the consequences of different options for Brexit—hard, soft or whatever.
So perhaps I can help noble Lords with a set of figures which I have received from MDS Transmodal on the value of trade in non-financial services; in fact, just-in-time deliveries, which are the most important ones between the UK and various member states. The total was $282 billion in 2016, which is quite a lot of valuable trade going backwards and forwards. As it is just-in-time, these people do not want cargoes to be held up at the frontiers. The most interesting breakdown of the figures is the $3.6 billion of trade between the Irish Republic and the United Kingdom. A lot of people welcomed the Prime Minister’s fudge last week of saying that the single market will still apply to the Republic of Ireland, that Northern Ireland will be a kind of halfway house with no frontier, and that there will be no frontier across the sea between Northern Ireland and the rest of the UK. Somebody needs to explain—perhaps the Minister can do that tonight—how that will work, because $3.6 billion of trade is not to be sniffed at.
The other member state with which we do the largest amount of trade is the Netherlands, at $4.5 billion, followed by Germany, Spain and France. Some $30 billion of all that is temperature controlled. If there were delays at the frontiers, as I am sure there will be—the head of customs has said that it will take five years to introduce a computerised system which might minimise delay—one must surmise that some companies such as the major motor manufacturers will say, “Well, we’ve had enough of this”. Some parts go three or four times between the UK and other member states. How many jobs would be at risk? If we were to take half the trade as being at risk and divide it by, let us say, £50,000 per year for a job, we would end up with a figure of about 25,000 jobs being at risk in the UK and probably a similar number across other member states. I can see why business sees no good reason for wanting change. Why throw all this away? As chairman of the Rail Freight Group I had a meeting with people around Mr Barnier’s transport team in September, and maybe because he saw the inability of the UK Government to know what they want and to negotiate it, he advised the whole industry very strongly to plan for the cliff edge—it might not happen but it could happen. I think that that is a good piece of advice.
Several noble Lords have talked about the free movement of people. I remind the House that in many other member states there is no free movement of people unless you have the right papers. I have friends in Belgium who have British passports and before they are allowed to stay in Belgium and have a residence permit they have to justify to the local authorities that they have enough money to live on and some suitable accommodation. When I asked what would happen if you cannot persuade the authorities of this, my friend said, “I would be put on the next train out of Belgium”. Quite simple. There is no reason why we could not do the same thing here if we wanted to, but there is this obsession with not having identity cards, which I believe is a wonderful excuse for saying we cannot have free movement of people. We could perfectly well control it by everybody having ID cards and that would sort the problem out.
I come to my last point. My noble friend Lord Whitty, in introducing this excellent report, mentioned the problem with air services if we do not get agreement, because of the inability of UK registered airlines to operate on the continent. A similar thing would apply to the European railway agency, which is just as important for the railway sector. To have the same standards across Europe reduces costs of operation and manufacture dramatically. Of course, it relies on experts to deal with this who know what they are talking about, with professional qualifications that are reciprocally recognised. It is not bureaucracy. Everybody talks about European bureaucracy, but we have bureaucracy here—in fact, the European Commission in many ways is more efficient than our Government, I think. The US and Japan all have their own bureaucracy and it is all to do with, “Do you like what we have or do you not like what we have?”.
We will have a big worry in the future because people in the Commission have told me that they want no cherry picking, that they will fight cherry picking to the bitter end. I do not know what is going to happen with the negotiations, but if there is no cherry picking and we go down the route that we seem to be going on at the moment, I see a cliff edge looming. It is time that the Government listened to industry. Industry gave a lot of evidence to this report a year ago and nothing seems to have happened since then, except that they are getting more and more worried. It is time that the Government put their minds at rest.
Lord Purvis of Tweed (LD)
My Lords, it seems as if we are mid-point in a two-year transition period before the Government respond to this committee’s report. We still await clarity in many respects and there has been unanimity across the House this evening asking for clarification. We have very high expectations of the poor Minister, who has to respond to this debate and provide all the answers. I will do my little bit simply to add to that burden in my few moments.
The fact that the Cabinet, 18 months on from the referendum, is only now discussing the UK’s desires for its future relationship with the EU perhaps explains why the committee of the noble Lord, Lord Whitty, has struggled to get a clear government response—the Government do not have one. They have not had one since the referendum and we do not know when they will have one. The thread throughout the report still holds true and many of the points, issues and questions all raised very clearly in this report all still hold water, even as, as the noble Lord, Lord Whitty, said, the water has been moving quickly over the last year. Like the noble Lord, Lord Liddle, I take the point of the noble Baroness, Lady Noakes. When I read the report for the second time—I read it when it was first published but I had to refresh, because it has been so long since then—it did not strike me that the evidence provided to the committee was that of traditional vested interests wanting the status quo. The noble Lord, Lord Liddle, referred to that. For example, the very clear request from the Broadband Stakeholders Group that Ofcom remain part of the body of European regulators for electronic communications was not a vested interest asking for the status quo; it was asking for UK influence in a decision-making body affecting one of the most critical sectors of the UK economy to continue. That was a very reasonable request, which the whole industry would be behind and which I hope the Government will act upon.
My noble friend Lord German gave clear and tangible examples of how these issues are affecting the music industry and the performing arts. When I was listening to his speech with regard to the uncertainty of the future, I thought of the old electronic rock band, Orchestral Manoeuvres in the Dark. But it is not an amusing situation when, as he pointed out, we have already lost the youth orchestra—we have already lost influence in a key element. This is the reality which is seeping in now.
The Government have made their choice—and it is their choice—that the UK leaves the single market for services, a sector which, as we have heard, affects the economy perhaps more than any other single sector. Therefore, it is right that we scrutinise this. As the noble Lord, Lord Green, said, the UK is more dependent on services, especially non-financial, than perhaps any other country in the world. We export more in absolute terms than any other economy other than the US. We do so, as my noble friend Lady Randerson said, with and as a member of the largest single bloc—the integrated market of the EU—but the Government have chosen that we leave it in its entirety. As the report says, this was not necessarily going to be the position of the Government at the outset of the committee’s inquiry in 2016 but the Government have made it their position. Therefore, it is incumbent on the Government to give a clear explanation of what that position will lead to. I think it is fair to ask.
I have been in this House for four years. As I read the Official Report of the debate on 5 December, with the noble Baroness, Lady Fairhead, in her new role, I noted that she is the fifth Minister covering international trade in my four years here. She brings great experience to her role, of course, and in the circumstances that experience will be necessary, but I am sure that experience tells her, as it does many others, that those hard Brexiteers who continue to suggest that there will be better opportunities for trade in services with the EU after we come out, as a third country, and then ask to rejoin many of the parts of that, are deluding themselves and deceiving the public, and that deception carries on. This report is a calm and clear explanation of the complexities and the realities. Nothing from the Government in the past year has suggested that those realities are being addressed and the complexities tackled.
The EU does not have harmonised trade policy in relation to trade in services with third countries outside the single market, meaning that UK businesses will most likely face differing non-tariff barriers between member states, which will lead to additional cost and inhibit growth. The noble Lord, Lord Wei, says that we have an opportunity but the White Paper did not give any clarity on what the opportunities are, nor how the new approach from the Government will allow us to take advantage of them. Being out is doubly problematic for the UK because in many elements of trade in services, particularly digital services, the UK leads the EU. This is the very platform that we are leading, which those such as the noble Lord, Lord Wei, and others are saying that we would wish to replicate in the future to give us opportunities. The Government’s position leaves the economy in an absurd situation, where we are choosing to leave the integrated market, which we lead and which is so important to the most important single element of our economy, and then we will seek to negotiate a relationship back with that market but will have no say in how it is managed. As the report says, at its very best this will be worse than what we have now.
If the Leader of the House’s appeal to us this afternoon to wave our Order Papers in acclamation of the fact that the Prime Minister has got us to stage 2 in the talks with the EU—but only because she has acquiesced to everything it asked for in stage 1—is anything to go by, the Government will seek credit for us securing any agreement at all. However, as the report suggests, our economy is dependent upon much more than simply political assertion.
Quite frankly the global situation for trade, as the noble Lord, Lord Liddle, said, is not necessarily conducive to us going into a new comprehensive agreement. If you had wanted to read the communiqué of the last ministerial committee of the WTO in Buenos Aires last week, you would struggle because there was none. No agreement was reached. I was in Buenos Aires last week to meet with Commonwealth Trade Ministers in my capacity as co-chairing, along with the Trade Minister from Nigeria, the Trade out of Poverty All- Party Group inquiry on trade and poverty in the Commonwealth. It was a depressing time to be in Buenos Aires because there was no major agreement or communiqué. There was no agreement on e-commerce, which had been tabled, and the US and China are both taking a country-first nationalist approach. There is no sign that it will be any more conducive when the UK tries to be at the WTO’s MC12, by which time we will be out of the powerful EU bloc and have no voice in its future—nor will we have an FTA with the EU signed.
Where does this leave us, ultimately? It leaves us with the reality that, whether it is the Africa continental free trade agreement, the Mercosur development or the emerging Pacific alliance, the focus now is all on securing EU agreements. That means we will have a second-order relationship. The noble Lord, Lord Green, referred to last week’s Japanese agreement. We will be in the regrettable situation where, at the time that that Japanese agreement with the EU is ratified, we will have left it but will still have to comply with the terms and conditions of that agreement—and be constrained in making any further agreement.
I entirely endorse the point of the noble Lord, Lord Green, that the new Trade Minister for Africa has no remit for trade and development, which is a retrograde step. I hope there is time to change that. If the solution from the Government, through the Department for International Trade and the new trade commissioners, is to provide no more clarity then we will still have to ask our questions. The noble Baroness, Lady Noakes, says that we need not be afraid to venture into the dark but, humbly, we simply ask for light and to have clarity. I hope that the Minister will be able to provide that in his summing up.
Baroness Hayter of Kentish Town (Lab)
I, too, thank my noble friend Lord Whitty and his colleagues for their excellent report, for his introduction and for getting this debate immediately following the EU’s decision that trade talks can now start. Like others, I pay tribute to the sector for its 4 million jobs, its £6 billion trade surplus with the EU, and its contribution to our economy, to many other industries and to the way that much of the world does business.
As we have heard, our economy depends on services, which are likely to comprise the majority of our exports by 2021. Those will mostly be non-financial ones such as information technology, telecoms, broadcasting, fashion—I am pleased to say—tourism, education, accountancy and law. Despite that, there is no response to the report. This is somewhat surprising given the Minister’s assertion in a Written Answer to me that the Government,
“are fully focused on making the UK’s exit from the EU, and our new trading relationship with the world, a success”,
by minimising,
“the regulatory barriers for … services between the UK and the EU”.
It is hard to think how the Government could achieve this, given the paucity of data and despite their claim to have been undertaking vigorous and extensive analysis to inform our understanding of how EU exit will affect the UK.
The truth is that those so-called sectoral analyses are neither evidence-based nor forward-looking, as my noble friend Lord Berkeley also found on his trip down to Parliament Street. I saw the one on postal services. I will not disclose what it says but I can tell the House that it had far less in it than what Royal Mail had already told me. As with many of the other reports, the interests of consumers in this sector were ignored. There appear to have been no meetings with consumer bodies, while on legal services the department met only the trade bodies and not the regulators that protect the public and consumer interests.
So the Government are aiming for new trade deals with no thought about the wider public or consumer interest and with scant attention to evidence. Indeed, when I heard that Mr Trump had banned the American public health agency from using various words including “evidence-based”, I wondered whether he was referring to our Government, whose whole approach is in stark contrast to that of the EU, where a 30-page European Parliament paper details the effect of Brexit on services. As my noble friend Lady Donaghy said, good data is vital if we want to know where we are going.
We now face a momentous decision about what sort of trading nation—indeed, what sort of society—we want after March 2019. Is it to be some freewheeling, buccaneering economy rewarding the richest and the devil take the hindmost, free of consumer, environmental, safety and worker protection? Some seem to think so. The Sun reported:
“Ministers want to scrap EU laws which limit the working week to 48 hours”,
and might even put at risk the paid holidays we all enjoy.
Following Mr Rees-Mogg’s call for regulatory divergence to be a red line, the Foreign Secretary now envisages a deal giving Britain the power to ditch EU laws—code for lower standards. It is unclear whether Mr Johnson recognises that, in order to trade with the US, we would have to abide by its rules, as the noble Lord, Lord Green, indicated, over which we would have no say—a true vassal state—or whether he is simply seeking to undermine the Prime Minister.
Do we want that deregulated economy or do we want a consensual, profit-sharing, more equitable nation, preserving the environment, ensuring protection for consumers and treating workers with respect? The EU 27 fear that it might be the former, with lower standards ending a level playing field. Apart from their suspicion that that is our vision, there is distrust of the Brexit Secretary. He was even named in a resolution in which the European Parliament, which has to endorse the withdrawal deal, noted that,
“comments ... like those by David Davis calling the outcome of phase one of the negotiations a mere ‘statement of intent’, risk to undermine the good faith that has been built during the negotiations”.
That is a serious criticism of our main negotiator.
Aside from the report before us today, there appears to be no analysis of the mechanism, let alone the cost, of leaving the internal market, despite the warnings from the sector of failure to protect its interests. Most urgently, the sector calls for a rapid agreement on transition on the same terms as now. We on this side are clear that the priority must be a transition within the single market and a customs union, abiding by the common rules of both. This is what industry wants and our economy needs while we negotiate a longer-term relationship. It is also what the EU expects. Its guidelines for moving forward focus on the transition period with the UK in the single market and customs union, maintaining the four freedoms and the jurisdiction of the ECJ. The sooner the Government accept that the better, and the happier our importers and exporters will be. And the sooner the Government accept that an ambitious trade policy and regulatory divergence are mutually incompatible, the easier it will be for them to start serious talks.
I turn to some specific sectors. The UK, as we know, is the largest legal services market in Europe. The market is worth £30 billion and employs more than a third of a million people. The Law Society and Bar Council have spelled out their worries about Brexit, while the Legal Services Consumer Panel, on behalf of clients, has raised the problem that, with no agreement, consumers would not be able to be represented by UK lawyers in EU courts and could lose the protection of confidentiality with their lawyers. Furthermore, civil, family and commercial judgments are currently enforced throughout the EU, allowing consumers to sue or defend themselves in their home courts. With family disputes, the mutual recognition of divorce, maintenance and adoption orders is vital in protecting children and family rights. So a rapid settlement is needed—or else, from April 2019, a child might be taken out of this country with existing court orders suddenly failing to be recognised elsewhere. For these reasons, and that of mutual recognition of lawyers’ qualifications, audience and practice rights, a no-deal scenario would be a major setback for legal services and for their clients.
A particular issue arises with insolvency. At the moment, the regime gives confidence to investors about their ability to recoup money, through the mutual recognition of appointments, so that liquidators can rapidly freeze or capture assets across the EU which are due to creditors here or in another EU country.
Then there are the creative industries. We heard about a much broader approach from the right reverend Prelate the Bishop of Leeds. I will not go through what he said or tackle that issue, but I welcome and endorse the importance of what he said. As we heard from the noble Lords, Lord Aberdare and Lord German, the music industry generated export revenues of £2.5 billion in 2016. In that industry, tours are vital for building fan bases and revenue. Loss of freedom of movement would be hugely detrimental to this sector. The Government must recognise the specific needs of musicians and seek an early answer to the threat of visas being required for EU performances, and must ensure that the EU’s high-level protection for copyright works is maintained post Brexit.
Architecture and its 80,000 people contribute £5 billion a year to the economy and £500 million-worth of exports. A bad Brexit could cut EU exports by a third. The industry relies on international talent, mutual recognition of qualifications and non-tariff barriers. What comfort can the Minister offer it?
The Government do not appear to have the faintest idea of what they want for the service sector. David Davis told Andrew Marr that he wanted a Canada-plus-plus-plus—CETA hardly touches on services—but then he also said that he would not be negotiating sectoral deals. It is hard to know what he means. Furthermore, given that many sectors are dependent on EU agencies, as we have heard, run by boards comprising only EU members, what are the Government trying to achieve regarding UK participation post Brexit?
The service sector depends on the EU regulatory framework, particularly mutual recognition of qualifications and intellectual property, and the free flow of data. Will the Government commit to retaining regulatory alignment and ensure mutual recognition of professional qualifications, which is so crucial to our architects, lawyers, engineers and accountants? These sectors, as we have heard, are highly dependent on talent and the freedom to recruit skilled practitioners. How do the Government propose to safeguard these?
In addition to the new EU Committee’s report, Deal or No Deal, my noble friend Lord Whitty’s report has warned of the crippling impact no deal could have on services. What is the Government’s assessment of the impact on services of no deal, which would restrict the movement of people and forbid trade with the EU on a preferential basis? Finally, will the Government undertake to refuse any agreement whereby Gibraltar’s inclusion in the transitional arrangements is subject to a veto by Spain? Indeed, will the Minister acknowledge the key role that services play in the economy of Gibraltar and undertake to uphold any regime that protects them?
It is shameful that the Government have not responded to the report. As my noble friend Lord Liddle noted, the Government have given least thought to this sector in even contemplating the way in which they want to move forward. So I hope that the Minister will now spell out the future that the Government envisage for our vital service sector post Brexit, suggest to his colleagues that we need a White Paper on their approach and commit the Government to do whatever it takes, even if unacceptable to Mr Rees-Mogg and Boris Johnson, to safeguard the future of these industries.
The Minister of State, Department for Exiting the European Union (Lord Callanan) (Con)
My Lords, it is a privilege to respond to the debate today on the Select Committee’s report, Brexit: Trade in Non-financial Services. I am conscious of the late hour so while I will endeavour to respond to as many as possible of the points that have been made, if I miss one or two then I will look at the record and will be happy to write to noble Lords to respond to them.
I put on record my appreciation of the work of the EU Internal Market Sub-Committee, chaired so excellently by the noble Lord, Lord Whitty, who provided an excellent introduction to our debate today. Indeed, I thank all noble Lords for their excellent contributions; I think everyone spoke extremely well. Obviously I do not agree with every point that has been made, but nevertheless I think it has generally been an extremely constructive debate. The committee’s expertise and strength of analysis is clearly demonstrated in the report.
First, I shall deal with a point that has rightly been raised by the noble Lord, Lord Whitty, and other noble Lords. I recognise the frustration that the Government have not yet provided a response to the report. The Brexit negotiations are the most important negotiations that our country faces, and reaching a new partnership with the EU is in the interests of both sides. As such, the timing of any information that we publish is carefully considered to support the UK’s negotiators in securing the best possible outcome, a point that my predecessor mentioned in her letter to the noble Lord, Lord Whitty, on 26 October this year. However, I assure noble Lords that a response to the committee is now in full preparation, and we will fully reflect policy developments and the progress of the negotiations in that. I expect to be able to publish it early in the new year.
Lord Callanan
The new year. Many of the points raised by this report about our future partnership with the EU and the future of the non-financial services sector relate directly to the second phase of negotiations, which I am delighted to say we will be beginning soon. As such, I hope noble Lords will understand that I will not be able to go into great detail on some areas at this stage.
Through the negotiations we will pursue a bold and ambitious free trade agreement with the EU to ensure the freest possible trade in services, and to support the continued success of the UK’s professional and business services. Since the publication of the committee’s report we have made good progress in the first phase of negotiations, as demonstrated by Friday’s announcement that sufficient progress has been made. A key element of any future partnership will be how the UK and EU continue to trade services, a sector where the UK is a global success story. However, we cannot be complacent about this, a point well made by my noble friend Lady Noakes, who rightly drew our attention the challenges that the future flexible adaptation of services will provide to this country—opportunities that are available outside the EU.
Services are one of the fastest-growing components of the global economy and accounted for 79% of the UK economy in 2016. In his excellent speech, my noble friend Lord Wei was right to draw our attention to the need to focus on the future prospects and how we can develop and expand the sector. Both the UK and EU member states benefit from our close trading relationship. The UK exported about £63 billion-worth of non-financial services, and about £27 billion-worth of financial services to the EU in 2016—I am mindful of the scepticism that noble Lords have expressed about statistics, but those are the latest that I have.
However, it should also be noted that the UK exported significantly more in both non-financial and financial services to countries outside the EU. UK services exports to countries outside the EU grew at a faster rate than service exports to EU member states over the period 1999 to 2016.
Let me now address some of the issues covered in today’s debate. On the subject raised by many noble Lords—but in particular by the noble Lord, Lord Liddle—freedom of movement, yes, of course it is the policy of my party, as exemplified in our manifesto at the general election, that we will end freedom of movement when we leave the EU. That is the policy of the Conservative Party. What he forgot to mention was that it is also the policy of his party to end freedom of movement—or at least it was last week; perhaps this week it has a new policy, but that was the policy. At least the Liberal Democrats have the benefit of consistency, although they got only 7% of the vote as a benefit of that consistency at the general election. Both the major parties committed to ending freedom of movement. Pointing out that it was the policy of my party is of course correct, but the noble Lord might have had the good grace to acknowledge that it is also the policy of his party.
The noble Baroness, Lady Hayter, asked me about consumer organisations. Two Ministers, Robin Walker and Margot James, recently held a round table with consumer groups. I am due to meet various consumer groups in the new year. In April, in evidence at the EU Justice Sub-Committee, another consumer group, Which?, said that it had very good contact with government throughout the process. We will of course have further meetings with those groups.
In response to my noble friend Lord Green, we will seek to ensure continuity, including as we move into any agreed implementation period. The way in which we maintain our international agreements during any implementation period will of course depend on the terms agreed with our EU partners.
The noble Lord, Lord Aberdare, asked about alignment. Of course, we start from a unique position, with the same rules and regulations, as the Prime Minister set out in her speech in Florence. We are committed to making the UK the best place in the world to do business, and this will mean fostering a high-quality, sensible, predictable regulatory environment. We are listening to businesses and want to minimise the regulatory and market-access barriers for both goods and services.
The noble Baroness, Lady Donaghy, asked how we are collecting more accurate statistics. We are working to best use current services data to inform our approach in future trade negotiations, and to explore new types of data. She also asked about the Trade Bill. The Trade Bill, introduced on 7 November, will ensure that the UK has the necessary legal powers and structures in place to enable us to operate a fully functioning trade policy on day one of our exit from the EU. The Bill will also establish an independent body, the Trade Remedies Authority, to conduct trade remedies investigations, providing a safety net for domestic industries against unfair and injurious trade practices or surges in imports consistent with our legal obligations in the World Trade Organization. The noble Baroness will also be aware that in the summer, we published a paper on enforcement and dispute resolution procedures. Given the absence of time, I shall not go through all the details of that.
I turn to the subject of professional business services, which a number of noble Lords mentioned. We agree with the committee’s recommendation that we must be mindful of the significance of professional and business services. The sector is the single largest exporter across all sectors of the economy, with 26% of services exports to the EU in 2016, a point well made by the noble Lord, Lord Whitty, in his introduction. The Government understand the concerns of the sector, including access to talent, being able to move people across borders to provide services, the importance of cross-border data flows and the mutual recognition of qualifications, on which I shall say more shortly. We also recognise the importance of access to talent and the fly-in, fly-out business model for the professional and business services sector. The Government will create a fair and sustainable immigration system that works for the whole of the UK.
To respond to the point made by the noble Baroness, Lady Randerson, and the noble Lords, Lord German, Lord Davies and Lord Whitty, the UK will remain an open and tolerant country that recognises the valuable contribution that migrants make to our society; it welcomes those with skills and expertise to make our nation better still.
The Government understand the report’s concerns regarding the challenges facing some parts of the sector, including the current provisions that support legal services trade. We also recognise the importance of rights of establishment to services sectors. The World Trade Organization estimates that around 55% to 60% of services trade relates to establishment overseas. The committee’s report noted how the trade in services agreement, or TiSA, provides an opportunity to update the global terms of trade for many services. The negotiations on TiSA are currently on hold; however, the UK continues to be committed to an ambitious agreement.
A number of noble Lords raised digital services, particularly the noble Lords, Lord German and Lord Aberdare. We are committed to ensuring that the UK is the global leader in starting and growing a digital business, trialling new technology or undertaking advanced research. On 1 March, the Government published the UK digital strategy, which has put in place the conditions to ensure that the UK’s digital sectors can remain world leading, alongside ensuring that the benefits of digital are felt across the whole of our country. The ability to collect, share and process data is crucial for many sectors, from financial services to tech and energy companies. The noble Baroness, Lady Randerson, was right to highlight the successes of that sector.
Data transfers are also crucial for our ability to co-operate across borders on law enforcement and security issues. On 24 August, we published a paper entitled, The Exchange and Protection of Personal Data. This set out how we want to ensure the continued protection and exchange of personal data between the EU and the UK, in light of the UK’s withdrawal from, and new partnership with, the EU. In addition, as part of the Government’s commitment to ensure that the UK’s digital sectors remain world leading, the Data Protection Bill was introduced on 13 September. The Bill is intended to create a new data protection framework fit for the digital age, which incorporates the provisions of the EU’s general data protection regulation into our domestic law. The Bill will ensure that the UK is prepared for the future after we have left the EU.
In response to the point of the noble Lord, Lord Aberdare, the Government agree with the report regarding the need to engage with the digital single market. To date, the UK has been a leader in the emerging digital single market, arguing for an open and flexible market with a regulatory framework that reflects the dynamic nature of the digital economy. The committee’s report highlighted the importance of data flows. We recognise the importance of the free flow of non-personal data initiative, and resisting the introduction of unjustified data localisation requirements by other member states.
The noble Lord, Lord Aberdare, drew our attention to mobile roaming. Of course, he is correct that roaming surcharges for travel within the European Economic Area were abolished in June. Of course, in the course of Brexit negotiations, we will seek the best possible deal that delivers for UK consumers and businesses in this sector.
A number of noble Lords raised the issue of creative services, particularly the noble Lords, Lord German and Lord Aberdare, who drew our attention to the successes of the music industry. They are, of course, right. The creative sector is one of the UK economy’s greatest success stories, and is growing by 8.9% a year, making it the second fastest growing industrial sector. The high-quality content and talent produced and developed is both recognised and respected across the world. The committee’s report recognises the broadcasting sector. The UK is the EU’s biggest broadcasting hub, hosting a large number of international broadcasting companies, a point well made by my noble friend Lord Inglewood. As the committee has observed, the EU regulatory framework underpins the business model of many international broadcasters currently located in the UK, as the noble Lord, Lord Aberdare, reminded the House.
We agree with the report that continued strong protection for intellectual property is important. It helps to protect individuality and support innovation in the creative sectors. The noble Lord, Lord German, asked about intellectual property. Globally, the UK has a competitive edge in protecting and enforcing intellectual property rights. We are discussing options with users to ensure that the UK’s intellectual property regime, including protection of unregistered designs, will continue to properly support innovation and the UK’s creative industries. The report also mentioned the limitations of TRIPS. As part of its WTO membership, the UK has committed to meet certain minimum standards of intellectual property protections set out in the TRIPS agreement. I am pleased to say that, in many cases, existing UK law—either domestic or EU-derived—goes beyond these standards. We do not expect that situation to change as a result of leaving the EU.
The noble Lord, Lord Whitty, asked me about air services. As a former Aviation Minister, this is an issue close to my heart. Aviation is a critical network industry that underpins the functioning of the economy and international trade. The UK has the largest aviation network in Europe and our airports service is the third largest aviation network in the world. It is in the interests of both sides to maintain closely integrated aviation markets. The Government are seeking the best possible relationship with the EU in the field of air services and are looking at all the options to deliver that. The precise form of the UK’s future air services relationship, including with EASA and SESAR, will be a matter for the negotiations. The committee’s report mentions bilateral air service agreements. Air services between the UK and a number of countries outside the EU—notably the US—are currently determined by EU-negotiated agreements. The Government will be seeking new, bilateral, arrangements with those countries as a matter of priority. The target is to ensure that market access levels are preserved and to have identified arrangements for this before we leave the EU.
We also acknowledge in the report that ownership and control rules may have implications for both UK and non-UK airlines. The UK is, and will remain, an excellent base to do business, to establish headquarters or to found a business, including in our world-renowned aviation sector. It would not be appropriate for me to comment on the contingency plans of individual airlines. The report correctly highlights that there is no WTO provision regarding aviation services. This is a fundamental consideration when it comes to negotiating our future relationship with the EU. EU member states benefit from liberal market access. We have a common interest in getting the best possible outcome.
A number of noble Lords mentioned tourism, education and health-related travel services. The noble Baroness, Lady Donaghy, in particular, talked about education. The Government recognise the social and economic benefits of a healthy tourism sector. The UK and the EU have a common interest in securing a mutually beneficial agreement on tourism in future. The noble Baroness asked about EU students. We highly value the contribution of EU and international students, researchers and academic staff. We have listened to the concerns of the higher education sector and taken action to provide greater certainty for it.
We have already committed to underwrite successful bids for Erasmus+ which are submitted while the UK is still a member state, even if they are not approved until after we leave and/or payments continue beyond the point of exit. Home fee status is also secure for the duration of students’ courses. Bids for higher education study periods submitted before the exit date will include mobility in the 2018-19 and 2019-20 academic years. We have also confirmed that research councils will continue to fund postgraduate students from the EU whose courses start in 2017-18.
The report mentions trade in education and health-related travel services. The reciprocal rights that will apply following the UK’s exit are subject to the wider negotiation on our future relationship with the EU. We support existing processes of voluntary co-operation in higher education, such as the Bologna process, which contribute to improving skills and employability in increasingly competitive global environments.
I will say a word about the mutual recognition of qualifications, which was raised by the noble Lords, Lord Whitty, Lord German and Lord Berkeley, and the noble Baronesses, Lady Donaghy and Lady Hayter. They all raised the importance of the mutual recognition of qualifications, which has also been the subject of negotiations on the withdrawal agreement. The Prime Minister has been clear that she wants EU nationals in the UK and UK nationals in the EU to be able to continue their lives broadly as now. That is why we have agreed the continued recognition of qualifications where recognition decisions were received or where recognition procedures were ongoing before the withdrawal date. This will cover qualifications recognised under the mutual recognition of professional qualifications directive, lawyers practising under host title and approved statutory auditors.
We are committed to getting the best possible deal for the United Kingdom in negotiations; that includes for the non-financial services sectors. We will continue to update Parliament on the negotiations for our departure from the European Union. Again, I would like to reassure noble Lords that we are working to formally publish our response to the committee’s report as soon as possible, and that will be early in the new year.
I am grateful to all noble Lords for their contributions over the course of this wide-ranging and informative debate. I am sure that the House will continue to play a valuable role in the work of the Government and contribute towards securing a deal that works for everyone.
Lord Whitty
My Lords, in view of the hour and the state of my throat, I will be relatively brief. I thank the Minister for his response. In default of a previously written report, he has covered a lot of ground. I am not entirely clear why the department could not have written that down before. Nevertheless, I am grateful for it and look forward to a more detailed reply in the new year which fits his remarks in the general positioning of the Government following the conclusion of the withdrawal arrangements and the discussions that have now taken place at the highest level on the Government’s approach to Brexit.
There are two key points about this report. I thank all noble Lords who have participated in the debate—both the members of the committee and the newcomers. I was particularly grateful to see the noble Lord, Lord Green, join us. I will certainly take his point and will read the Japanese agreement in more detail than I have done hitherto. Those noble Lords who are outsiders will have noted, from the rather clever sequencing of speeches, with the noble Baroness, Lady Noakes, being followed by my noble friend Lord Liddle, that the committee is not always easy to control or to bring to a consensus. However, broadly we do, and the report reflects our experience of that, whatever our preconceptions.
The two key things are these. These sectors—this wide range of sectors—are very important to this country. I think that many of us did not realise quite how large or how important they are, and they require special attention in relation to trade discussions. Hitherto, we had the suspicion that their leverage had been somewhat less than that of traditional sectors such as manufacturing and the City. It is therefore important that their voice is heard.
Their voice was, by and large, pretty unanimous. It was not that they wanted the status quo, but they were keen on the single market and wanted to move more rapidly than the EU was moving towards something like the single market. However, we know that that is not the Government’s preferred option; we are talking about the structure of a free trade agreement. All of us, whatever our previous preferences, are focused on what the nature of that agreement now is.
What we need more from the Government than we had tonight is an indication of how the esoteric elements of these various industries will fit in with their approach to negotiating that free trade agreement. If the Minister is able to give us at least an indication of that without betraying all the cards in the negotiations early in the new year, I am sure that all of us would be most grateful—as, more importantly, would be all those sectors. There is a lot of uncertainty and concern, and these sectors are all people based. They serve people and employ people, and their assets are not fixed but are intellectual and people-based assets, which means they are highly mobile. The success that the UK has hitherto had in these sectors is a fragile but very important thing, and we need to preserve it.
I hope that the approach of the Government in the trade negotiations does not ignore these sectors and that in fact there is a brave new world out there. I have as yet to be totally convinced that the Government have reached that point, but we will continue to monitor it, and I am sure that the Government will provide us with some further information.