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Oral Answers to Questions
(6 years, 10 months ago)
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Luke Pollard (Plymouth, Sutton and Devonport) (Lab/Co-op)
The Secretary of State for the Home Department (Amber Rudd)
I recognise the vital role that firefighters play in the protection of communities, as demonstrated recently during the tragic fires at the Liverpool Echo Arena car park and in Manchester. Fire and rescue services have the resources they need and will receive around £2.3 billion in 2018-19 to continue their vital work. Single-purpose authorities’ non-ring-fenced reserves increased by 88% to £615 million between March 2011 and March 2017. That is equivalent to 49% of net expenditure.
Luke Pollard
The Home Secretary will be aware that there are 20% fewer firefighters in Plymouth today than there were in 2010, but the risk has not gone down. With combustible cladding still on the tower blocks in Mount Wise and Devonport, the risk remains high. Will the Home Secretary reassure us that there will be no further reductions in the number of firefighters in Plymouth and no further reductions in firefighting funding?
Amber Rudd
The hon. Gentleman raises an interesting point. He is right that there are 20% fewer firefighters, but there are 50% fewer fire incidents that firefighters have to attend. It seems to me that that means we are still able to get the very best service from our firefighters. If the hon. Gentleman has requirements in respect of tower blocks in his community, in which he has shown a particular interest, I urge him to approach the Department for Communities and Local Government, which sometimes allows some financial flexibility to assist with additional needs.
Mr Philip Hollobone (Kettering) (Con)
In Northamptonshire, we now have a joint police and fire commissioner. Does the Home Secretary agree that that is the best way to make the best use of limited resources?
Amber Rudd
Yes; my hon. Friend is absolutely right that an excellent way to use resources most efficiently is to make sure that we have those sorts of mergers. In fact, there is now an obligation under legislation passed last year to make sure that fire authorities work more closely with the police.
Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)
The Home Secretary has already referred to the major fire that ravaged the car park at the Liverpool Echo Arena on new year’s eve, when around 1,400 vehicles were destroyed. It was only because of the magnificent efforts of Merseyside firefighters that there was no loss of life. Will she take that as a warning that Government cuts, which have slashed 42 full-time appliances down to 26 now and 18 next year, are putting lives at risk? Will she undertake urgently to review funding for the Merseyside fire and rescue authority?
Amber Rudd
I would point out to the hon. Lady the scale of the reserves that I have already highlighted and ask her to work closely with her local fire authority to ensure that it is using that money wisely. To follow up on her comments, I have the utmost respect and admiration for the firefighters who did such an excellent job in that particular incident.
Michael Fabricant (Lichfield) (Con)
In Lichfield, we have a brand new fire station, but one fewer fire appliance, which seems an odd sense of priorities in the way that the fire service is run in Staffordshire. There would be a £10 million saving if only the police and the fire service were to merge their back-office functions. What can the Home Secretary do to encourage them to do just that?
Amber Rudd
That is an excellent point from my hon. Friend, and it reinforces the point that was just made by my hon. Friend the Member for Kettering (Mr Hollobone) that the best way to achieve such efficiencies is through closer working between police and fire services. I urge him to encourage his authority—if it has not done so already—to put in the business case review for us to look at.
Lucy Powell (Manchester Central) (Lab/Co-op)
May I wish you a happy new year, Mr Speaker?
The Secretary of State has already mentioned the fire in the Lighthouse tower in the northern quarter in Manchester. Will she join me in praising the very quick efforts of the Manchester fire service, which meant that everybody was safely evacuated from what looked to be a very serious fire in that tower block? Will she also reassure me, and communities in Manchester and across the country, that the fire services will have not only the resources that they need, but the powers to inspect and ensure that private as well as social housing residential blocks are fire safe and that these fires do not spread?
Amber Rudd
I happily join the hon. Lady in congratulating and thanking the fire fighters for doing such an excellent job. She raises an important point: it is about not just resources but having the right powers. That is why we commissioned a report on building regulations from Dame Judith Hackitt, who reported her interim findings in December. We will be hearing from her later in the spring, in a few months’ time—or even in weeks—with her final report. I hope that that will give us additional guidance about what powers are necessary to ensure that these fires do not take place in future.
Amanda Milling (Cannock Chase) (Con)
Tackling waste fires represents a significant financial burden for fire and rescue services; the fire at Slitting mill has cost Staffordshire fire and rescue service in the region of £70,000 to date. Will my right hon. Friend meet me to discuss the measures that can be taken to reduce the risk of waste fires?
Amber Rudd
I also congratulate my hon. Friend’s local fire authority on the good work that it has done. I am happy to volunteer the Minister for Policing and the Fire Service for an early meeting with my hon. Friend to address her concerns.
Chris Williamson (Derby North) (Lab)
We constantly hear Ministers at the Dispatch Box talking about reserves in the fire and rescue service as if there is some sort of magic money tree, but is the Secretary of State aware that most of the reserves are already earmarked for future spend? The annual budget for the fire and rescue service in England is £2.3 billion, yet it holds only £143 million in unallocated reserves. That is less than a month’s operating costs. Is she seriously suggesting that capital reserves of just 6% are an adequate buffer for all emergencies? If she is, she is living in cloud cuckoo land.
Amber Rudd
I can generously deny that I am living in any cloud cuckoo land—to wipe that immediately from the hon. Gentleman’s views. I just think he is being too lenient on these enormous reserves that have been accumulated. They have grown by 150%; they are now 40% of annual revenue. I know that the Labour party is not familiar with careful public finance guarding, but I urge him to take a little more scrutiny to this matter, rather than treating it like some Venezuelan dictatorship.
Helen Hayes (Dulwich and West Norwood) (Lab)
Ellie Reeves (Lewisham West and Penge) (Lab)
Jo Platt (Leigh) (Lab/Co-op)
Mr Tanmanjeet Singh Dhesi (Slough) (Lab)
The Minister for Policing and the Fire Service (Mr Nick Hurd)
Before Christmas, the Government proposed a new police funding settlement for 2018-19 which will increase funding by up to £450 million across the police system. It is for police and crime commissioners and chief constables to determine the number of officers required for their force areas.
Helen Hayes
On new year’s eve in West Norwood, 17-year-old Kyall Parnell became the 39th victim of a fatal knife attack in England and Wales in 2017. To solve the growing tragedy of knife crime, the police need to be able to work creatively in partnership with communities, the NHS, and other public sector agencies, but the loss of 20,000 officers since 2010 means that forces across the country are stretched to breaking point. Will the Minister guarantee that there will be no further drop in police numbers?
Mr Hurd
The short answer is that that is down to the Mayor and the leader of the Met. The hon. Lady is entirely right to talk about these tragic losses of life in tragic terms; lives have been cut very short. However, she is wrong to focus entirely on the question on police officers, because the last time London saw a spike in deaths from knife crime was in 2008, when there were roughly the same number of police officers as there are now.
Ellie Reeves
In December, I went out with my local Safer Neighbourhood team. Despite the tremendous work they do, two officers per ward is not enough. Added to that, my local police station in Penge recently closed. Met police numbers are set to fall below 30,000. Given the rise in violent crime in London, will the Government now commit to investing in our police and reversing the cuts?
Mr Hurd
Police numbers in London have been stable for some time, going back to 2008. Any decisions on future projections are to be taken by the Mayor and the head of the Met. If the Mayor does what we are empowering him to do, this settlement will mean an additional £43 million for the Met on top of £200 million of reserves. The force has made great strides in efficiency but, according to Her Majesty’s inspectorate of constabulary, continues to require improvement. Of course, public safety in the capital matters a great deal, which is why the Met police have 1.6 times the number of officers per head than the national average.
Jo Platt
Constituents in Leigh are bearing the brunt of the Government’s police cuts, with Greater Manchester police officers cut by 23% since 2010. That is nearly 2,000 fewer officers on the streets of Manchester. The Home Secretary rightly praised the officers involved in the response to last year’s terror attack in the city, yet GMP face further real-terms cuts to their resources. What steps will she now take to ensure that our local police force is adequately resourced to keep the people of Leigh safe?
Mr Hurd
I am sure that the hon. Lady will welcome the fact that the number of police officers in Greater Manchester actually rose in 2016, and the fact that the police funding settlement will result in an additional £10 million going into Greater Manchester policing. She may also want to ask the Mayor why reserves for Greater Manchester have gone up by £29 million.
Mr Dhesi
In 2014-15, the provisional grant allocation for the police was just over £8 billion. However, the Home Office announced in December last year that it would be just £7.325 billion for 2018-19, despite the fact that inflation is predicted to be 7% over that period, according to the Office for Budget Responsibility. As this is a substantial real cut in police funding, would the Minister like to suggest where savings could be made on a scale that would protect police numbers?
Philip Davies (Shipley) (Con)
I thought I had better get in quick before the Prime Minister’s inevitable call to me. [Laughter.]
There has been a very worrying increase in crime across the Shipley constituency over recent months, and my constituents and I expect to see more police officers. The first duty of the Government is to protect the public and keep them safe, and I have to say to the Government that they are not putting enough focus on police resources. Will they please give the police the resources that they need to keep our constituents safe? The Government are in danger of being very greatly out of touch with public opinion on this issue.
Mr Speaker
I am sure that she is keeping a job open for the hon. Gentleman; I feel more certain of it now than ever.
Mr Hurd
I had better keep my answer short then, Mr Speaker. I understand my hon. Friend’s point. The police funding settlement means that there is more cash going into policing in Yorkshire. How that money is allocated is up to police and crime commissioners and to chief constables; they are directly accountable to the public they serve and to the Members of Parliament who serve those constituents, so these representations need to be made directly. What is not in doubt is that up to £450 million of new investment will be going into British policing next year as a result of the funding settlement.
Theresa Villiers (Chipping Barnet) (Con)
The Mayor of London has something over half a billion pounds in reserves. Does the Minister agree that some of that should be spent on strengthening police resources in my constituency?
Mr Hurd
The Met’s budget is set to grow to £2.5 billion. There are reserves of £200 million in the Met. In addition, the Mayor has his own reserves. Funding per head for officer numbers is running at over one and a half times the national average in London. It is time—I speak as a Londoner and a London MP—for the Mayor of London to give a serious answer to the question, “What are you doing?”, because at the moment the answer is just writing letters to the Home Secretary, and that is not good enough.
Nigel Huddleston (Mid Worcestershire) (Con)
Although the number of police officers is very important, so are their skills and the nature of the crime they are dealing with. Given that we are now 20 times more likely to be a victim of online crime than offline crime, can the Minister assure us that the police have the skills to deal with crime in the digital age?
Mr Hurd
I thank my hon. Friend for making an incredibly important point. I know that my constituents are much more vulnerable to crime on their computers at home than they are when walking down Ruislip High Street. We have to respond to the changing nature of crime in this country. The number of police officers matters a great deal, but the capabilities inside the service matter enormously. That is why this Government are investing £1.9 billion in cyber-security.
Rebecca Pow (Taunton Deane) (Con)
Happy new year to you, Mr Speaker.
This is really all about getting the best service for the funds we have invested. Avon and Somerset police have seen a 180% rise in sexual offences and a 42% rise in recorded domestic abuse in the past four years. Can the Minister confirm that any new funding, either from Government—that is most welcome—or raised through an increase in the precept, can be directed to these growing areas of crime?
Mr Hurd
If the PCC uses its new powers, Avon and Somerset should receive £8 million of new investment next year, and that will need to be allocated to local priorities. The numbers that my hon. Friend states about the growth in reporting of crimes such as domestic violence are striking, and I would expect that to be reflected in local priorities.
Richard Drax (South Dorset) (Con)
Martin Vickers (Cleethorpes) (Con)
The Minister for Policing and the Fire Service (Mr Nick Hurd)
The Government are very keen to encourage further collaboration between the blue-light services and have taken actions through the Policing and Crime Act 2017 to empower exactly that.
Richard Drax
I wish you and your family a happy new year, Mr Speaker. I congratulate my right hon. Friend the Home Secretary on retaining her job. She is doing splendid work.
Can the Minister reassure me and my constituents that, given that collaboration is potentially leading to a sort of patchwork quilt of service across the country, he will ensure that the integrity of services will be maintained?
Mr Hurd
My hon. Friend makes an important point. I would say two things. First, joint police and fire governance will improve accountability because there will be a single point of accountability, democratically elected. Secondly, in relation to the efficiency and integrity of fire services, I hope that he will welcome a very significant reform introduced by this Government—the introduction of independent inspection of fire services.
Martin Vickers
I recently held meetings with the chief constable and the chief fire officer for the Humberside area, and welcomed the fact that they are collaborating more closely. Can the Minister reassure my constituents that in an area that contains chemical plants, oil refineries and other dangerous plant, the fire service will not take its eye off the ball in its main role?
James Frith (Bury North) (Lab)
Twenty-two-year-old Steven Dyson’s body was found in the River Irwell in Ramsbottom on Saturday morning, six days after he went missing on new year’s day. It is at the worst of times that we often see the best of people. Will the Home Secretary join me in thanking Greater Manchester police, our fire service, and the hundreds of local volunteers who spent last week looking for Steven, as well as Ramsbottom British Legion, which hosted the campaign centre, and all the local businesses that donated items to our cause? The outpouring of support was incredible, and I hope that it goes some way to giving strength to Steven’s dear mum and everyone mourning.
Mr Hurd
I am sure that the whole House would want to associate itself with the hon. Gentleman’s remarks and to pass on our condolences to the young man’s family. Of course I join him in paying tribute to the hard work of all the emergency services involved in that tragic circumstance.
Judith Cummins (Bradford South) (Lab)
Does the Minister accept that there is already a great degree of co-operation and collaboration between our blue-light services and that any move by the Government to force further formal collaboration through mergers could be detrimental to all services?
Mr Hurd
I entirely agree with the hon. Lady that there are fantastic examples of collaboration across the country —fire and fire, police and police, and across the blue-light services—and evidence is building about the benefits, not just financial but in terms of service to the public. We are simply saying that where police and crime commissioners want to seize such an opportunity to improve accountability for local performance, we will enable them to do so, but they still have to deliver a strong business case and they still have to consult their communities.
James Gray (North Wiltshire) (Con)
Like my hon. Friend the Member for South Dorset (Richard Drax), I was very uneasy about the amalgamation of the Wiltshire fire service and the Dorset fire service last year. Does my hon. Friend the Minister not agree that it makes subsequent co-operation with the ambulance service or the local authority very much more difficult? Is their amalgamation irreversible, and if so, what will he do about the other amalgamations he seeks?
Mr Hurd
I thank my hon. Friend for that question. My understanding is that that amalgamation is actually working well, and has largely been welcomed across the system. It does present challenges for further amalgamations because of boundary issues, but I would ask him to open his mind to the benefits of that merger, which appear to me to be very real.
Preet Kaur Gill (Birmingham, Edgbaston) (Lab/Co-op)
The Parliamentary Under-Secretary of State for the Home Department (Victoria Atkins)
Provisions in the Policing and Crime Act 2017 ban the use of police cells as places of safety for under-18s, restrict their use for adults and reduce the maximum period of detention to 24 hours. Information on the length of time for which people are detained under the Mental Health Act 1983 pending an assessment is not held by the Home Office, but we are seeking to ascertain the scale and nature of this issue and we are reviewing the available information that we were provided with last month by the College of Policing.
Preet Kaur Gill
Under the Police and Criminal Evidence Act 1984, the police have just 24 hours to hold someone with a mental illness. The College of Policing shared with the BBC last December the fact that 264 people were held for longer than this, including a mentally ill child who was held for five days. Is the Home Secretary aware of this report, and what steps have been taken to remedy the situation?
Victoria Atkins
Very much so, and I thank the hon. Lady for raising this important issue. We know that there is an issue in this area, and she will be pleased to know that her constabulary—the West Midlands—in fact does very well on this. It did not use police cells at all for such detentions last year; indeed, since 2013 it has used them on only 14 occasions. Of course, however, any such occasion is one occasion too many. She will I am sure join me in being pleased that the use of police stations as places of safety nearly halved last year, but we need to do more.
Mike Wood (Dudley South) (Con)
Does the Minister agree that a police cell or a police station is not a suitable place for an innocent person suffering from mental health problems, and will she support initiatives such as the mental health triage projects in the West Midlands to make sure that people with mental health problems get the medical support they need when they need it?
Victoria Atkins
Very much so. My hon. Friend will be pleased to know that health places were used as places of safety in more than 26,000 cases last year, compared with 1,029 cases of using cells, but we are determined to try to sort this out.
Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)
On the question of detention, the Minister will have read recent reports that immigration detainees are being paid £1 an hour. Will the Minister assure the House that no children are currently being held in detention, that no pregnant women are currently being held in detention and that no one is being paid below the legal minimum wage in any of the immigration detention centres?
Victoria Atkins
As I say, we are determined to ensure that places of safety are in appropriate places—health places—and we are investing £30 million to try to ensure that happens. If there are any individual cases that the right hon. Lady would like to bring to my attention, I will of course consider and review them very carefully.
Ross Thomson (Aberdeen South) (Con)
The Secretary of State for the Home Department (Amber Rudd)
The Government are clear that carefully controlled migration benefits the economy, our Exchequer and our communities in general.
Ross Thomson
I thank the Secretary of State for that answer. The Scottish Government, as well as Scottish National party Members of this place, have been calling for immigration to be devolved. Does my right hon. Friend agree that any separate immigration systems would do nothing except lead to chaos, confusion and extra barriers for those looking to live and work in Scotland as well as in the rest of our United Kingdom?
Amber Rudd
My hon. Friend is absolutely right. Immigration is a reserved matter, and applying different rules of immigration to different parts of the UK would complicate the system. He might share my view that if Scotland wants to attract the brightest and the best, as the rest of the country does, it might think twice about raising its own taxes, because that might put people off.
Dr Paul Williams (Stockton South) (Lab)
The NHS reports that almost 10,000 European Union doctors, nurses and support staff left the country in the year following the referendum. Is the Home Secretary aware of those levels of staff shortages, and how does she see the situation developing if there are further restrictions on migration for work purposes?
Amber Rudd
We really value the incredibly important work that EU migrants do in our health service, and there are no plans to restrict the way in which they can come and work here. They make such an important contribution. I am aware that some of them have gone back to work in countries that have had a strong economic recovery, such as Spain. There has also been a higher level of English language test to make sure that all health professionals in our service are able to communicate very clearly and effectively with patients.
Kirstene Hair (Angus) (Con)
What progress has the Secretary of State made in designing a system that allows soft fruit farmers in Angus and, indeed, across the United Kingdom to access seasonal labour from overseas?
Amber Rudd
I thank my hon. Friend for her question. I know that she is very concerned to make sure that agriculture has the support it needs from overseas workers. The Migration Advisory Committee will be looking at the issue for us, and we expect it to report later in the year.
Sir Edward Davey (Kingston and Surbiton) (LD)
May I congratulate the Home Secretary on having just made a positive economic case for immigration? However, how does she think that the message given by the immigration cap, Brexit, a hostile approach to immigrants and the general rhetoric of many of her Conservative colleagues help to make that case?
Amber Rudd
The right hon. Gentleman cannot take the moral high ground on immigration. We wholly recognise the value that immigrants bring when they arrive in the UK, with the brightest and the best working in our hospitals and attending our universities. We are wholly positive about immigrants. We want to do this in a way that controls our borders and delivers on the reductions to which we have committed.
Douglas Ross (Moray) (Con)
Education is vital for the economy. A constituent of mine, Heather Cattanach, returned to Canada, but Home Office delays in looking at her application left a vacancy in the Moray Primary School where she taught. I have previously raised this issue with Ministers. Will the Home Secretary now look at it urgently so that the case can, I hope, be concluded?
Amber Rudd
I thank my hon. Friend for raising an issue about which I know he has been particularly concerned. I cannot comment on this individual case, but as soon as we have a new Immigration Minister, I will volunteer him or her to speak to my hon. Friend.
Afzal Khan (Manchester, Gorton) (Lab)
International students make an enormous contribution to our economy—Labour estimates the figure to be £25 billion a year. Will the Secretary of State confirm that the Government now support Labour’s policy of removing international students from the net migration target?
Amber Rudd
I would like to reassure the hon. Gentleman that we value the contribution that those students make to our economy, cultures and university towns. In the past 10 years there has been a 25% increase in their number, and in recent years there has been a 9% increase in the number of them attending Russell Group universities. Those numbers remain uncapped and we continue to welcome them.
Joanna Cherry (Edinburgh South West) (SNP)
Business, trade unions and universities in Scotland have all asked this Government to look at devolving immigration to Scotland. In a report just before Christmas, the Institute for Public Policy Research think-tank said that devolving immigration would assist the Scottish economy. Will the Home Secretary now look seriously at those recommendations and at the request of business, the unions, think-tanks and universities in Scotland to devolve immigration?
Amber Rudd
The hon. and learned Lady and I have discussed this issue before, privately as well as publicly. She is aware that the Migration Advisory Committee will look at different areas and regional areas in the United Kingdom, so I respectfully suggest that she come back to me to continue the conversation when it reports, but we have no plans to devolve immigration.
Joanna Cherry
I thank the Home Secretary for saying that she will at least look at the issue. Bunessan Primary School on the island of Mull has received only one application for its vacancy for a Gaelic teacher. It came from a fully qualified teacher who was Canadian but had trained in Scotland. Despite her being the only candidate for the job, the Home Office has refused her visa application twice. Does that not show that a one-size-fits-all UK immigration policy is not working for the Scottish economy and not working for rural communities?
Amber Rudd
I am surprised to hear that there are not more Gaelic speakers in Scotland who might apply for the job, rather than Canadians. Again, I suggest that the hon. and learned Lady come to see the new Immigration Minister at some stage because there may be more to the matter than what she has said in the House. It is difficult to comment on individual cases.
Mr Speaker
I hope that that Minister will know all about the situation on the island of Mull, preferably on day one.
Gillian Keegan (Chichester) (Con)
Giles Watling (Clacton) (Con)
Craig Mackinlay (South Thanet) (Con)
Mrs Sheryll Murray (South East Cornwall) (Con)
The Minister for Security (Mr Ben Wallace)
I am standing in for the Immigration Minister, but hopefully not for too long.
In addition to the recent introduction of new coastal patrol vessels, Border Force has an ongoing upgrade programme for its cutters. It recently installed new electro-optic surveillance systems on its cutters, and it is currently upgrading radars and replacing the rigid inflatable boats used by cutters to deploy boarding teams to ensure that they remain a highly effective maritime security platform.
Gillian Keegan
Does the Minister believe that the UK Border Force is adequately resourced to safeguard small harbours and landing sites, such as those in my Chichester constituency? Our harbourmaster has already been involved in apprehending people smugglers, working with coastal communities who look out for suspicious activity. Is he considering using volunteers to support patrols in areas such as Chichester harbour or Selsey Bill? Does he agree that there is no substitute for trained and qualified Border Force professionals?
Mr Wallace
By the end of the financial year, the Border Force maritime fleet will have six CPVs and three cutters in the UK, plus two cutters deployed overseas to deal with the issue upstream—one in the Aegean and one in the central Mediterranean. Border Force has invested £108 million in new technology and capability to deal with some of those challenges and will commit a further £71 million this year.
Giles Watling
While I was volunteering with the lifeboats at Walton-on-the-Naze, I learned how important local maritime knowledge is. I believe that such intelligence would be useful to Border Force when solving and preventing crime. Is Border Force engaging with other agencies, including the Royal National Lifeboat Institution, the coastguard and pilot boats, to share intelligence, tackle crime and keep our coastline safe and secure?
Mr Wallace
The key to improving our coastal security is better collection and exploitation of data. Some of that happens through full-time people, but it also happens through the many volunteers who populate the coastal paths and watch stations of our communities. That is why Border Force has set up the multi-agency general maritime intelligence bureau to bring together the existing organisations of HM Coastguard, HM Revenue and Customs, Border Force, the Ministry of Defence, and the bureaux linked directly to the National Maritime Information Centre.
Craig Mackinlay
Will the Minister tell the House what other measures the Government are undertaking to protect and secure the UK border?
Mr Wallace
Border Force, the National Crime Agency, the police and other law enforcement agencies are working with international partners to secure our borders from a range of threats, including modern slavery, human trafficking and terrorism. Over the past two years, Border Force has invested £108 million and £71 million.
Mrs Sheryll Murray
In addition to the vital work of Border Force vessels, will my right hon. Friend congratulate the Royal Navy and other agencies on ensuring that the rules are enforced in our fishing waters?
Mr Wallace
Many people forget that our border is manned not just by Border Force but by HM Revenue and Customs, the Royal Navy, which does an amazing job on fisheries protection, and volunteers, both through the Royal National Lifeboat Institute and the coastguard. Together, they form a large set of eyes to keep watch on our coastline. That is why we have developed Operation Kraken to ensure that all reported threats go to a central place where they are analysed and acted on.
Melanie Onn (Great Grimsby) (Lab)
Happy new year, Mr Speaker.
The Daily Telegraph today reports that new checks will be introduced at ports to help to stop the import of dangerous high-powered laser pens. Does this mean that the ports of Immingham and Grimsby will see more Border Force staff to help with these new checks?
Mr Wallace
What the hon. Lady will see is better use of the information we have now to target our resources in the right places. Just sending Border Force officers or customs officers to turn up randomly usually has no effect at all. If we can base it on information and work well with shippers, such as Fast UK Parcel, and all sorts of organisations shipping such contraband into the country, we can make sure that the right resources are delivered to the right places.
David Hanson (Delyn) (Lab)
The Minister will know that his own figures show that 27 of the 62 small ports had no visit whatsoever from a Border Force operative over 12 months last year. That will not be solved by volunteers; it needs Border Force staffing.
Mr Wallace
The right hon. Gentleman will know from his previous job that the borders are policed not just by Border Force but by counter-terrorism officers, HMRC officers, coastguard officers and fishery protection officers. On top of that, as he will also know, the voluntary network of people such as the RNLI are the eyes and ears, and when a report is made, a suspicion raised or intelligence received, the National Crime Agency and others attend the scene to deal with it.
Pete Wishart (Perth and North Perthshire) (SNP)
And there is another body to be added to that list. Over Christmas we learned of the Government’s plans to put in place a special volunteer force to help police our coastal communities. This Dad’s Army-type operation is apparently to be responsible for helping keep us safe and protect us from terrorism. I wonder if the Minister is going to come to the Dispatch Box and say, “We’re doomed”, or complacently tell us, “Don’t panic!”
Mr Wallace
The only people who are doomed are the Scottish National party. Unlike the hon. Gentleman, I have actually worn a uniform. He will know that uniformed services rely on a range of specials and Territorial Army support to meet the specialist requirement we need. All uniformed services should be able to take advantage of the good will people want to provide, and if we want to use specials and Territorial Army support, we will.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
Happy new year from my party, Mr Speaker.
Given what the Minister just said about the role of the Royal Navy, is it not rather worrying when we read about all these Royal Navy warships being tied up at harbour and not at sea?
Mr Wallace
I am sure the hon. Gentleman wants to make sure that our naval ships put to sea are properly serviced and properly equipped for their latest patrol. That is why ships tie up in port—not for any other reason—and why we deploy ships when needed to match the threat. He will also know that fishery protection vessels are often up and down the north-east of Scotland, where his constituency is located.
Sir David Amess (Southend West) (Con)
The Minister for Security (Mr Ben Wallace)
The Government take the threat of cyber-crime extremely seriously, which is why we have committed to spending £1.9 billion to support the national cyber-security strategy. This includes boosting the capabilities of the National Crime Agency’s national cyber-crime unit and investing in the cyber teams within regional organised crime units to bolster our response.
Sir David Amess
The Jazz Centre UK, a UK-wide charity with its headquarters in Southend—yet another reason why Southend should be a city—recently had £10,000 hacked from its account. Will my right hon. Friend reassure us on what further safeguards can be put in place for vulnerable charities to protect them from cyber-crime?
Mr Wallace
I am grateful to my hon. Friend. If he writes to me with the details of that case, I will be happy to look into it for him. I am particularly concerned because where something is hacked, it is usually called a “cyber-enabled” crime, which often gets a reimbursement from financial institutions. In general, we have invested in the National Cyber Security Centre in order to stop that type of fraud. It is out there, busy advising many organisations, voluntary and large scale, about what they can do to make themselves safer online. It is also why we are investing in technology to try and counter it.
Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)
Cyber-crime is one of the fastest-growing forms of crime, but after we have left the EU, the European Commission will still issue directives that relate to tackling cyber-crime; Europol will still continue to operate to apprehend criminals; and the European Court of Justice will still issue rulings. What steps is the Home Office taking to ensure the continued alignment of UK laws and regulations in this field—
Mr Wallace
We are working on a third party treaty to address just that. It is absolutely our intention to continue collaborative working in all areas of security with our international partners, whether they be in Europe or further afield, because that is the way to solve it.
Mr Speaker
I do apologise if I missed something extremely valuable. If I did, I suggest that the right hon. Member for Hackney North and Stoke Newington (Ms Abbott) place it in the Library of the House, where I imagine it will be regularly and exhaustively consulted.
Oliver Dowden (Hertsmere) (Con)
The Secretary of State for the Home Department (Amber Rudd)
The Government’s counter-extremism strategy, which was published in October 2015, established a comprehensive approach to the tackling of extremism through a wide range of activities aimed at countering extremist ideology. We are also launching a new commission for countering extremism, which will identify and challenge extremism and advise the Government on new policies to address it. The appointment of a lead commissioner will be announced shortly.
Oliver Dowden
Flying the flag of the political wing of the anti-Semitic terrorist organisation Hezbollah is provocative, incites extremism and is deeply offensive to our Jewish community, but the flag can still be seen flying at events such as the al-Quds day marches in London. Will the Home Secretary update the House on what steps are being taken to prevent that from happening?
Amber Rudd
I am aware of, and very sympathetic to, the issues that my hon. Friend has raised. I have discussed the matter with Assistant Commissioner Mark Rowley, and I know that the police are not ignoring it. As my hon. Friend has rightly said, only Hezbollah’s military wing is currently a proscribed terrorist organisation, but its flags are the same as those of the political wings that are not proscribed. For an offence to be committed, the context and manner in which the flag is displayed must demonstrate that it is specifically in support of the proscribed military wing of the group.
John Woodcock (Barrow and Furness) (Lab/Co-op)
Last month, in Turkey, I met a British national who was due to be deported back to the United Kingdom on suspicion of terrorism. The Turkish authorities gave us details of six other British nationals who have been accepted back to the UK. What is the total number of Brits who have been deported back from Turkey on suspicion of terrorism and joining Daesh, and how many of them are facing charges in the UK?
Amber Rudd
The hon. Gentleman has drawn attention to a very important aspect of our relationship with Turkey. When people who have been potentially fighting for ISIS are returning to this country, we have a managed return process so that we can prosecute. I will certainly come back to the hon. Gentleman with an update on the numbers, but I can reassure him and the House that we take every return very seriously and that, when we can, we will always prosecute.
Eddie Hughes (Walsall North) (Con)
Maria Caulfield (Lewes) (Con)
The Secretary of State for the Home Department (Amber Rudd)
In March 2016 we published the cross-Government violence against women and girls strategy, which sets out an ambitious programme of reform and is supported by increased funding of £100 million. We will also introduce a draft domestic abuse Bill to transform our approach to domestic abuse, to support victims better, and to bring perpetrators to justice.
Eddie Hughes
What action are the Government taking to support refuges for women fleeing domestic violence in Walsall and throughout the Black country, whose excellent staff do so much to protect the safety of women and children?
Amber Rudd
My hon. Friend is right: excellent work is being done in the Black country to support women and children. When I visited a Women’s Aid Black country refuge, it was impressive to see the excellent work that was being done there. I can reassure my hon. Friend that Walsall Council received a share of £639,000 of funding from the Department for Communities and Local Government—it is £40 million in all—in partnership with local authorities across the Black country. In addition, Wolverhampton and Birmingham received £1.1 million between them from the Department for early intervention projects.
Maria Caulfield
Women in custody in our prisons are experiencing psychological abuse as they struggle to gain access to sanitary products, which is a potential breach of their human rights. Does my right hon. Friend agree that it is essential that women in custody have access to those products?
Amber Rudd
I thank my hon. Friend for raising that important point. I completely agree that it would be outrageous if detained women were not given access to sanitary products. I have seen the report that the Home Office commissioned. We will act immediately to ensure that where that is not on a statutory footing, it will be put on a statutory footing, so that nothing like this happens in the future.
Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)
The Home Secretary will be aware of the deep public concern about the Parole Board’s decision to release the serial sex offender and rapist John Worboys after only eight years. I am sure that she will also be shocked to learn that some of the victims have still not been contacted by either probation or victim liaison officers. I realise that the issues surrounding the Parole Board’s decision are matters for the Ministry of Justice, but can she say whether she has had any contact with the police to establish whether they are able to pursue further the cases of 19 women who came forward after the conviction, and whether those cases can be prosecuted so that justice can be done and women can be kept safe?
Amber Rudd
I share the right hon. Lady’s views on this matter, and I am sure she will have seen today’s comments from the Secretary of State for Justice, my right hon. Friend the Member for Aylesbury (Mr Lidington), about ensuring that there is more transparency in the Parole Board. I am aware that certain victims are talking about possible judicial reviews and talking to the police, but I cannot say any more than that at this point because these matters are subject to potential legal proceedings.
Stella Creasy (Walthamstow) (Lab/Co-op)
Further to the answer that the Home Secretary gave to the hon. Member from Sussex—[Interruption.] The hon. Member for Lewes (Maria Caulfield); I do apologise. Lewes is close to Sussex, I am sure.
I want to clarify a point with the Home Secretary. We would not find it acceptable to deny someone access to loo roll, so why do we think it is acceptable to deny someone access to tampons? She has said that she is committed to putting these matters on to a statutory footing. Does that include amending code C of the Police and Criminal Evidence Act 1984 and meeting the Independent Custody Visitors Association which has been working on this issue?
Amber Rudd
We commissioned the Independent Custody Visitors Association to produce the report. I share the hon. Lady’s view, but I respectfully say that I do not need reminding about this. I completely agree that of course women should have access to sanitary products, just as anyone should have access to loo roll, and yes I will put this on to a statutory footing if it is confirmed that the current guidance is inadequate. It looks likely that that is the case, but I just need to confirm it for myself.
Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)
Further to the Home Secretary’s response to the question about the John Worboys case, can she explain why her Department is still pursuing two of John Worboys’ victims, knowns as DSD and NBV, all the way to the Supreme Court in an apparent effort to avoid paying compensation? She will be aware that those victims are women whose cases the lower courts have already found not to have been investigated properly. How will pursuing them through the courts reassure the public that the Government are serious about keeping women and girls safe?
Amber Rudd
The Government are committed to keeping women and girls safe, and I hope that some of the points I have set out today will reassure the House that that is the case. I recognise the point that the right hon. Lady raises, but because this matter is sub judice, I cannot comment on it at the moment.
Paul Scully (Sutton and Cheam) (Con)
The Parliamentary Under-Secretary of State for the Home Department (Victoria Atkins)
This Government are committed to doing everything we can to tackle domestic abuse. We have introduced a new offence of coercive and controlling behaviour. We have introduced measures such as domestic violence protection orders and Clare’s law. We have put domestic homicide reviews on to a statutory footing and committed £100 million to supporting the victims of violence against women and girls. We look forward to introducing a draft domestic abuse Bill.
Paul Scully
I thank the Minister for her answer. Refuges provide valuable specialist services to protect women from having to return to abusive situations. What commitment are the Government making to refuge services, particularly those in Sutton and Cheam?
Victoria Atkins
My hon. Friend has spoken many times about domestic abuse issues, and particularly about the help that Sutton women’s centre provides to the victims of domestic abuse in his constituency. The Government have made available £40 million of dedicated funding for specialist accommodation, and refuges and bed spaces have increased 10% since 2010. We are committed to reviewing funding for refuges and to ensuring that all victims get the support they need, when they need it. The supported housing consultation is ongoing, and we will of course explore all models within the sector.
Bim Afolami (Hitchin and Harpenden) (Con)
The Secretary of State for the Home Department (Amber Rudd)
I should like to update the House on plans for the royal wedding in May. The marriage of Prince Harry and Meghan Markle is an occasion of national celebration, and that is why I launched a public consultation yesterday seeking views on the proposal to relax licensing hours in England and Wales over the weekend of the royal wedding. Extending the licensing hours on the nights of Friday 18 and Saturday 19 May until 1 o’clock the following morning will enable licensed premises in England and Wales to sell alcohol for consumption on site to those who want to continue their celebrations beyond the normal licensing hours. Whether toasting the royal couple or celebrating a football triumph, everyone should have the opportunity to make the most of this historic weekend in May.
Bim Afolami
I thank my right hon. Friend for that answer. Following last year’s police funding settlement, does she agree that now is the right time to work with and alongside police forces in Hertfordshire and across the country to keep improving and reforming the service to ensure that it is fit for the future?
Amber Rudd
I thank my hon. Friend for that question. We are able to confirm that this year up to £450 million of new money is going to support the police, while another £50 million is going towards counter-terrorism policing. However, that does not mean that we want to slow down the pace of reform in any way, so we will work with the police to ensure that there are reforms to make them more efficient and better servants to the community so that everybody has a better service overall.
Carolyn Harris (Swansea East) (Lab)
Last week, Theodore Johnson, a serial killer and repeated domestic violence perpetrator, was sentenced to 26 years in prison for his crimes. However, despite the fact that two women are murdered every week, high-risk perpetrators such as Johnson face little intervention from statutory services. With less than 1% of perpetrators of domestic violence receiving any form of intervention, will the Minister reassure us that the Government will look urgently at innovative programmes such as Drive that challenge the behaviours of high-harm perpetrators?
The Parliamentary Under-Secretary of State for the Home Department (Victoria Atkins)
I thank the hon. Lady for her question and offer our condolences not only to the family of Angela Best, but to the families of Yvonne Johnson and Yvonne Bennett. The case shows how manipulative the most violent domestic abusers can be, and I join the hon. Lady in wanting to ensure that we treat perpetrators to try to stop the cycle of violence. With the hon. Member for Bristol West (Thangam Debbonaire), I had the pleasure of speaking at a recent event for Respect, which works with perpetrators, and the hon. Member for Swansea East (Carolyn Harris) is correct that we must look at perpetrators as well as, of course, at supporting victims.
Several hon. Members rose—
Mr Speaker
Order. If everybody asks a short, one-sentence question, and if replies are correspondingly brief, far more people will be able to contribute—it is not magic—and then we will spread the happiness across the Chamber.
Giles Watling (Clacton) (Con)
The Minister for Policing and the Fire Service (Mr Nick Hurd)
The answer to an invitation to visit sunny Clacton-on-Sea is, of course, yes.
Mr Jim Cunningham (Coventry South) (Lab)
Mark Pawsey (Rugby) (Con)
The Minister for Security (Mr Ben Wallace)
The Payment Systems Regulator is working with the joint fraud taskforce and the National Crime Agency to invest in new technology to improve the speed of funds repatriation.
Mike Amesbury (Weaver Vale) (Lab)
Mr Hurd
Funding for fire services is basically being held flat against a backdrop of a welcome decline in fire incidents. At the same time, the single fire authority system is sitting on hundreds of millions of pounds of public money in reserves, so we still believe that fire services are adequately resourced.
Sir Edward Leigh (Gainsborough) (Con)
Amber Rudd
My hon. Friend and I have already met to discuss this, and it was a pleasure to meet him and various colleagues to discuss their concerns about the continuation of peaceful protests. I hope that I was able to reassure him that it is this Government’s plan always to ensure that peaceful protests can continue, wherever that is. It is also this Government’s commitment to make sure that women can access abortion safe from harassment and intimidation.
Tony Lloyd (Rochdale) (Lab)
Amber Rudd
Among the many things we can do is to carry out effective inspections, which we already have. We will be introducing a domestic abuse and violence Bill, on which we will consult. I hope we will get lots of contributions to the consultation, perhaps including from the hon. Gentleman, so that we can ensure that we stop domestic abuse and violence at an early stage and ensure that perpetrators are properly dealt with.
Craig Mackinlay (South Thanet) (Con)
Victoria Atkins
I share my hon. Friend’s concerns and thank him for raising this important issue. We have developed mobile drug-driving enforcement devices to help the police to identify suspected drug-drivers at the roadside, and they help to enforce the drug-driving offence that was introduced in 2015 to make it illegal to drive with a specified drug in the body above certain limits. The Government commissioned an evaluation of that new drug-driving legislation, and we are considering its findings and recommendations as part of future work to strengthen the law.
John Spellar (Warley) (Lab)
As the Immigration Minister, the right hon. Member for Great Yarmouth (Brandon Lewis), has done a runner, what will the Home Secretary do to clear up his lamentable record? In particular, does she think six months is an acceptable benchmark for resolving immigration cases? The Department is avoiding even that low aspiration via spurious excuses about cases being “complex.”
Amber Rudd
I would not characterise the former Immigration Minister in that way—he has done an excellent job—and nor do I share the right hon. Gentleman’s characterisation of the Department. If he has particular concerns, I would urge him to bring them to us. The vast majority of our cases are dealt with within the time set out in statutory guidance.
Sir Oliver Heald (North East Hertfordshire) (Con)
Mr Hurd
I congratulate my right hon. and learned Friend on his ten-minute rule Bill. The Government share his view that attacks on service animals are unacceptable and should be dealt with severely under the law. As he will know, the Department for Environment, Food and Rural Affairs has published the draft Animal Welfare (Sentencing and Recognition of Sentience) Bill, which will increase the maximum penalties available for animal cruelty, including attacks on service animals. The short answer to his question is that of course I would be delighted to meet him.
John Cryer (Leyton and Wanstead) (Lab)
Cuts in police services do not just mean fewer pumps, as the cuts also fall on the crews of those pumps. Some brigades, instead of sending out crews of five, are now cutting them to four. Instead of four, they are sometimes sending out crews of three or even two. Is that not dangerous and unsustainable?
Mr Hurd
The hon. Gentleman referred to police services, but I think he meant to say “fire”, so I refer him to my earlier answer: funding for fire services has kept pretty flat against a background of fire incidents falling; we feel that fire services are adequately resourced; and how resources are allocated is down to local authorities and leaders.
Paul Masterton (East Renfrewshire) (Con)
Victoria Atkins
My hon. Friend has been a constant representative for his constituents on this issue. We rely on UNHCR to identify and process the most vulnerable refugees as it is uniquely placed to determine refugee status, and to assess vulnerabilities, needs and suitability for resettlement. If UNHCR decides that resettlement is the most appropriate solution, it will then consider which resettlement scheme best suits people’s needs, which may be a UK scheme.
Jack Dromey (Birmingham, Erdington) (Lab)
Crime is rising sharply in the west midlands, yet police numbers are falling—2,000 have gone and yet more are to go in the next stages. How can it be right or fair that Hampshire, which has nowhere near the same problems or challenges, gets treated more favourably than the west midlands?
Mrs Maria Miller (Basingstoke) (Con)
The Government have a clear strategy to tackle violence against women and girls. Does my right hon. Friend share my concern about the use of non-disclosure agreements to hide violence against women in the workplace?
Amber Rudd
I thank my right hon. Friend for that question. She is a huge champion for women, and she could perhaps assist us on that issue and contribute when we go ahead with our consultation on the new domestic violence and abuse Bill.
Bridget Phillipson (Houghton and Sunderland South) (Lab)
In the past two years alone, we have lost more than 160 police officers in my area, yet we are seeing rising levels of antisocial behaviour and youth disorder. Rather than passing the buck to police and crime commissioners, why will the Home Secretary not give Northumbria police the funding that it needs to tackle this blight in our community?
Mr Hurd
It is not a question of passing the buck; we have a devolved system whereby PCCs are accountable to the public for the performance of the police. On Northumbria’s police force, I am sure the hon. Lady will welcome the fact that it is due to get another £5.1 million next year.
Mrs Anne-Marie Trevelyan (Berwick-upon-Tweed) (Con)
Will the Home Secretary tell the House what we are doing to support schools to identify when the dark web is accessed through apps that are free to download? This is how some of our most vulnerable children are accessing footage of ISIS beheadings and other disturbing imagery, which is fuelled by extremists who are trying to get new recruits.
Mr Wallace
My hon. Friend is right to raise these real concerns about online access, which is why the Department for Education and the Home Office work together on campaigns such as Cyber Aware to bring good computer hygiene and caution into the classroom so that children are not exploited online. It is also why the Government invest in the Prevent programme to make sure that the people doing this are brought to justice and that the online space is not the dangerous place it could be.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
In Staffordshire, 106 councillors from Staffordshire County Council and Stoke-on-Trent City Council unanimously oppose the commissioner’s proposal to take over the running of the fire service. He is progressing with that despite there being no public support. Why are the opinions of one commissioner worth more than those of 106 councillors?
Mr Hurd
The hon. Gentleman misrepresents the situation entirely, because the obligation on a police and crime commissioner is to produce a business case and demonstrate that he or she has consulted the local community. In this case, Matthew Ellis has done just that, which is why we are reviewing it.
Tom Pursglove (Corby) (Con)
Despite the rhetoric that we heard earlier, does the Home Secretary agree that what the vast majority of people in this country want is an immigration system that delivers both fairness and control, and that is underpinned by common sense? Will she deliver just that?
Amber Rudd
I thank my hon. Friend for his question. He makes an excellent point and sets out exactly what we want: fair, rational, controlled immigration that not only is good for this country, but gives the public confidence that we are protecting our borders and we are absolutely clear about the numbers that we are targeting.
Vicky Foxcroft (Lewisham, Deptford) (Lab)
Why does the Government’s domestic violence strategy not include fully funding refuges so that no woman fleeing domestic violence is denied access to vital support?
Amber Rudd
I reassure the hon. Lady that we are committed to ensuring that there are fully funded refuges. I point out to her that 10% more beds are available to women now than in 2010. She may know that a review is going on with DCLG to make sure that we have the best outcomes for supported housing, and I will ensure that we engage with that so that we continue to maintain high levels of availability of beds for women fleeing violence.
Anna Soubry (Broxtowe) (Con)
In 2009, John Worboys was rightly found to be a dangerous, predatory sex offender. It is a feature of those sorts of offender that they are also clever and cunning. What assurances can the Home Secretary give us that, upon his release—if he has to be released—women will be safe?
Amber Rudd
Making women safe and ensuring that we have the legislation in place for that is a priority for me and this Government overall. The particular case that my right hon. Friend raises was under discussion part way through this Question Time. She may know that there will be a review of some of the procedures, the Parole Board element and the transparency required. The Prime Minister has already said that she wants this looked at.
Rachael Maskell (York Central) (Lab/Co-op)
Control operators in North Yorkshire fire and rescue service are working under such pressure that sometimes just trainees are on duty. Will the Minister look at this issue and meet me to assess the risk to our fire and rescue service?
NHS Winter Crisis
(6 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
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Jonathan Ashworth (Leicester South) (Lab/Co-op)
(Urgent Question): To ask the Secretary of State for Health to update the House on the NHS winter crisis.
The Minister of State, Department of Health (Mr Philip Dunne)
I thank the hon. Gentleman for applying to ask the urgent question as I agree that it is helpful for colleagues in the House to be updated on the current performance of the NHS during this challenging time.
We all know that winter is the most difficult time of the year for the NHS, and I start by saying a heartfelt thank you to all staff across the health and care system who work tirelessly through the winter, routinely going above and beyond the call of duty to keep our patients safe. They give up their family celebrations over the holiday period to put the needs of patients first. Those dedicated people make the NHS truly great.
Winter places additional pressure on the NHS and this year is no exception. The NHS saw 59,000 patients every day within four hours in November. That is 2,800 more every day compared with the previous year. The figures for December will be published on Thursday. We have done more this year in preparing and planning earlier than ever before. That means that the NHS is better able to respond to pressure when it arises. In the words of Professor Sir Bruce Keogh, the national medical director:
“I think it’s the one”
winter
“that we’re best prepared for. Historically we begin preparing in July/August. This year we started preparing last winter. We have, I think, a good plan.”
Let me tell the House about some of the things that have been done differently this year. We further strengthened the NHS’s ability to respond to risk, and the NHS set up the clinically-led national emergency pressures panel to advise on measures to reduce the level of clinical system risk.
We are supporting hospital flow and discharge. We allocated £1 billion for social care this year, meaning that local authorities have funded more care packages. Delayed transfers of care have been reduced, freeing up 1,100 hospital beds by the onset of winter. Additional capacity has been made possible through the extra £337 million we invested at the Budget, helping 2,705 more acute beds to open since the end of November.
We have also ensured that more people have better access to GPs. We allocated £100 million to roll out GP streaming in A&E departments and I am pleased that 91% of hospitals with A&E departments had this in place by the end of November. For the first time, people could access GPs nationally for urgent appointments from 8 am to 8 pm, seven days a week, over the holiday period. In the week to new year’s eve, the number of 111 calls dealt with by a clinician more than doubled compared with the equivalent week last year, to 39.5%, thereby reducing additional pressures on A&E.
We extended our flu vaccination programme, already the most comprehensive in Europe, even further. Vaccination remains the best line of defence against flu and this year an estimated 1,175,000 more people have been vaccinated, including the highest ever uptake among healthcare workers, which had reached 59.3% by the end of November.
We all accept that winter is challenging for health services, not just in this country but worldwide. The preparations made by the NHS are among the most comprehensive, and we are lucky to be able to depend on the extraordinary dedication of frontline staff at this highly challenging time.
Mr Speaker
Order. For a moment I thought that the Minister intended to treat this as though it were an oral statement, to judge by the length. I think it is fair and correct for those following our proceedings to point out that this is not an oral statement offered by the Government: it is a response to an urgent question applied for to, and granted by, me.
Jonathan Ashworth
It is always a delight to see the Minister, but the Secretary of State for Health should be here to defend his handling of the crisis, not pleading for a promotion in Downing Street as we speak.
I join the Minister in paying tribute to all those NHS staff working flat out. Many of them have said that this winter crisis was entirely predictable and preventable. When you starve the NHS of resources, when you cut beds by 15,000, when you cut district nurses, when walk-in centres are closed, when we have vacancies for 40,000 nurses, when you fragment the NHS at a local level and drive privatisation and when social care is savaged, is it any surprise that we have a winter crisis of this severity?
More than 75,000 patients, including many elderly and frail, were stuck in the back of ambulances for over 30 minutes in the winter cold this December and January. A&Es were so logjammed that they were forced to turn away patients 150 times. In the week before new year’s eve, 22 trusts were completely full for up to five days. The blanket cancellation of elective operations means that people will wait longer in pain, distress and discomfort. Children’s wards have been handed over to the treatment of adults. Of course, we do not know the full scale of the crisis, because NHS England refuses to publish the operational pressures escalation levels alerts revealing hospital pressures. Given Ministers’ keenness on duty of candour, why are OPEL alerts data not being collected and published nationally for England?
The Minister mentioned the winter pressures funding, but that money was announced in the Budget on 22 November. Why were trusts not informed of allocations until a month later? That is not planning for the winter: it is more like a wing and prayer. He will know that cancelling elective operations has an impact on hospital finances. What assessment has he made of the anticipated loss of revenue for trusts from cancelling electives? Will he compensate hospitals for that loss of revenue, or should we expect deficits to worsen? Can he tell us when those cancelled operations will be rescheduled?
The Prime Minister defends this crisis by saying nothing is perfect. Patients do not want perfection: they just want an NHS which is properly funded and properly staffed without the indignity of 560,000 people waiting on trolleys in the last year, in which operations are not cancelled on this scale, and in which ambulances are not backed up outside overcrowded hospitals. Patients do not just need a change of Ministers today: they need a change of Government.
Mr Dunne
I am glad that the hon. Gentleman mentioned the Secretary of State. I want to put on record my tribute to my right hon. Friend, who has served in that position for almost as long as Aneurin Bevan, who was the first Secretary of State for the NHS.
I am delighted to be here to respond to the hon. Gentleman, who, as usual, listed a cacophony of allegations, very few of which are directly related to the challenges that our hospitals face today—the increase in demand and pressure on our NHS as a result of a combination of the increase in population and challenges posed by demographics, as well as the weather and the presence of flu in many parts of the country, adding to the pressure on staff at this time of the year.
The hon. Gentleman asked several questions. On the funding issue, he is well aware that the £337 million announced in the Budget was allocated in December. His own local trust, which includes the Leicester Royal Infirmary, received £4.2 million. It is a great shame that he chose not to welcome that extra money for his local trust. The money announced in the Budget has been allocated, but we have kept £50 million in reserve to allocate this month if particular pressures that become apparent during the course of the month need addressing.
The hon. Gentleman asked about the impact of the cancelled operations. We do not know that operations are cancelled. There have been a few thus far; procedures and treatments are being deferred. It will not become apparent until after this period has finished how many actually do end up being cancelled, so it is not possible to calculate the financial impact on any of the trusts where deferral is taking place.
The hon. Gentleman referred to the situation as unprecedented. I gently remind him that we have a winter crisis of some kind or another every year. He will have been in Downing Street in 2009-10, when, as it happens, the then Conservative shadow Health Secretary chose not to try to take advantage of the near flu pandemic at the time because he recognised that there were operational pressures on the NHS and it was not down to him to score party political points. The hon. Gentleman has unfortunately chosen to do that. At that time, tens of thousands of elective procedures were cancelled to provide capacity to cope with the emergency at the front doors of our hospitals. So this is a routine way to deal with pressure coming through hospital front doors.
What distinguishes this year from previous years is that in the past elective procedures were cancelled within hours of operations being due to take place. Sometimes it was the day before and sometimes it was on the day. That caused patients considerable distress and gave rise to considerable problems for staff. We have set up the national emergency pressures panel to anticipate problems when we see the signals, and we can then give notice to patients that their procedures are going to be deferred. That is a much more humane and sensible way to do things and it provides much more opportunity for hospitals to cope with the pressures that are coming through the door.
Mr Kenneth Clarke (Rushcliffe) (Con)
NHS acute services have never been better and are among the best in the world. As the Minister just said, every year we have this slightly ritual exchange about winter pressures, but does he accept that the problems are changing because of the increased number of elderly people in the population and the increased urgency of the need to solve the problem of how to admit them promptly to the right part of the service and then discharge them properly and safely as soon as they are recovered? Will he advertise further to the many people who are not aware of it the availability of emergency GP services? Will he concentrate on the reform and integration of the community care system, the social care system and the primary care services and make sure that co-operation among them is steadily improved so that they can cope better in future years, because this problem is undoubtedly going to develop?
Mr Dunne
I am grateful to my right hon. and learned Friend for making those points. He brings to the House considerable experience of what it is like to be responsible for the NHS. He is absolutely right: the number of over-80s who are presenting to hospital A&Es is going up exponentially each year. Hospitals need to adapt the way that they treat such patients to try to keep them as healthy as possible so that they can live independently for as long as possible. That is why many hospitals are now introducing frail elderly units close to or at the front door of A&E departments so that they can turn around patients and avoid admissions. My right hon. and learned Friend is also right to point to the increasing integration between the NHS and social care that is necessary to encourage more people to live independently out of hospital and leave emergency departments for those people who are urgently ill.
Dr Philippa Whitford (Central Ayrshire) (SNP)
I, too, pay tribute to staff across all four health services, where the normal pressures have been added to this winter by freezing weather and influenza. Scotland still leads in A&E performance across the UK, but we do not need to see four-hour data to understand the stress that NHS England is under. Thousands of patients have been held in ambulances for more than an hour outside A&E before they can even get in, which means that ambulances could not respond to other urgent calls, and that has obviously put other patients in danger. We have heard about patients being held in corridors for hours at a time, causing not just suffering and danger to patients, but enormous stress to those staff to whom we are paying tribute.
The Minister talks about the elderly population. We need to have beds for that population. England has halved its number of beds in the past 30 years, and now has only 2.4 beds per 1,000 population, compared with four in Scotland. Will he and the Secretary of State make sure that there are no further cuts in the sustainability and transformation reorganisation, and will they look at how they replace the money that has been cut from social care so that when elderly patients are ready to go home they can do so and free a bed for someone else?
Mr Dunne
As I have already said, the social care funding has gone up very significantly this year, and there is a second billion pounds to go into social care over the next two years. The hon. Lady is right to point to Scotland having a slightly better A&E performance than England, and the two countries are far better in performance terms than any other country that we regularly monitor, but she has to be a little careful when she talks about how Scotland is performing so much better. She talked about waits. It is the case that the over-12-hour trolley waits in England for November were half the rate of over-12-hour trolley waits in Scotland. We are providing information, and we are increasingly trying to be more transparent about the impact of winter on our health service in England. I strongly encourage her to take back to her colleagues in the Scottish Government the amount of data that is being published in England and to see whether they can try to match it.
Dr Sarah Wollaston (Totnes) (Con)
I join the Minister in thanking NHS staff and in commenting that there is nothing new about winter pressures in the NHS. What is different is that they are extending now into traditionally quieter months, and that the depth of those pressures is so much more profound over the current winter, because there has been a failure over successive Governments to plan sufficiently for the scale of the increased demand across both health and social care. Will the Minister think about the forthcoming Green Paper for social care and think about combining it with health, so that we can see this as a truly across-system approach? I would also like to reiterate the points made by the hon. Member for Central Ayrshire (Dr Whitford) about the role of bed-occupancy levels. Can the Minister tell us what the current bed-occupancy levels are in the NHS in England?
Mr Dunne
On the last point, I can confirm to my hon. Friend that, at Christmas eve, the bed occupancy rate was 84.2%, below the target of 85% that we set going into this particular winter period. Of course the rate fluctuates daily and I do not have the figures for the most recent days. We did at least start this holiday period in that position, which is a great tribute to the work done in preparing for winter. I wish to reiterate to her, as I did to my right hon. and learned Friend, the importance of the integration work being done through the sustainability and transformation partnership process between NHS organisations and social care providers. It is part of the solution for the longer-term arrangements that we need to put in place to try to make sure that people who are living longer live better, more healthily and in a more independent way out of hospital.
Mr Ben Bradshaw (Exeter) (Lab)
Where does the postponement of tens of thousands of operations leave the promise made by the Health Secretary to the Select Committee, the last time he appeared before us, that he would begin to reverse the very bad deterioration in routine waiting times for operations that we have seen in the past seven years?
Mr Dunne
Many areas of the country are doing very well with their waiting times. There are some—this tends to be concentrated in a relatively small number of trusts—where the referral to treatment targets are not being met, and need to be met. Part of the funding settlement achieved in the Budget in November is designed to bring down waiting time targets, to get more people treated within an 18-week period. That will clearly exacerbate the problem during this immediate period in which procedures are being deferred, but we hope that it will not last long.
Sir Desmond Swayne (New Forest West) (Con)
Notwithstanding the increased funding for social care, does not the principal constraint remain the inability to discharge patients?
Mr Dunne
As I said in my initial response to the question, it is very important that we improve patient flow through hospitals. One of the critical features that enables this is ensuring that patients can be discharged when they are medically fit. We have put a huge amount of effort into this during the past nine months or so. I am pleased to say that some progress is being made, but we absolutely need to focus on this area. Again, there is huge variability between systems across the country. Some have virtually no delayed transfers of care, but the numbers of DToCs in other areas are much too high. We need to learn from the areas that are doing it right and introduce that in areas that are not.
Sir Vince Cable (Twickenham) (LD)
To progress beyond the tribal arguments about funding, what is the Government’s response to the 90 MPs from both sides of the House who have urged the Government to establish a cross-party consensus to agree a funding formula for integrated health and social care?
Mr Dunne
As the Secretary of State and the Prime Minister have said, we are always interested to hear ideas for improving the health service. At the moment, we have confidence in the five year forward view; that is the route that we are taking to bring the health service forwards and make it completely fit for the future. If the right hon. Gentleman has specific points that he would like to make, I am always ready to listen.
Helen Whately (Faversham and Mid Kent) (Con)
It has been an extraordinarily difficult winter for hospitals serving my constituents in Kent. May I, too, thank NHS staff for the efforts that they have made to provide the best possible care? I welcome the extra money from the Government that has helped to open extra beds out of hospitals and to employ extra staff, particularly GPs and A&E staff. Will the Minister looks carefully at future capital funding bids and at Kent’s proposal for a medical school, so that we are better prepared for future winters and have the buildings and staff that we need?
Mr Dunne
My hon. Friend is a consistent champion of efforts to improve health facilities in her constituency. I am acutely aware of the challenge of medical training places in Canterbury, which was one of the reasons that we met last year to discuss what could be done to encourage medical students to come to Kent. I am not able to give her any specific guidance on the allocation of new medical training places because that recommendation will be coming to me over the next few months from Health Education England. We look forward to making decisions on that, and I specifically included in the criteria that rural and coastal areas should have good representation.
Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)
The Minister will have seen the images of patients at Mid Yorkshire Hospitals NHS Trust sleeping on the floor because they could not even get a trolley, never mind a bed. We have had over 95% bed occupancy rates and a shortfall of over 200 nursing vacancies, and we will have a multimillion-pound budget shortfall by the end of this year. The Health Secretary and the Prime Minister have been repeatedly warned about this by nurses and doctors at Mid Yorkshire trust and across the country, by the public and by the NHS chief executive, yet they still decided to deny him the funding he needed at the Budget. How many more patients will have to sleep on the floor before this Government act?
Mr Dunne
I cannot comment on what the right hon. Lady says happened in her hospital regarding individual patients. I acknowledge that there has clearly been a lot of pressure on space for beds, which is in large part down to a multiplicity of factors including the high bed occupancy to cope with the high admission rate. I say gently to the right hon. Lady that her area has received £3.3 million to help to cope with winter pressures; that is not an insignificant amount. As to nursing vacancies, we absolutely recognise that we need to increase the number of nurses in this country, which is why we announced last October a 25% increase in nurses in training. That will start to take effect from next September. In addition, we have introduced the new alternative route into nursing of the nursing associate role, and we expect several thousand of those to start shortly.
Several hon. Members rose—
Mr Speaker
Order. It might be helpful to the House if I inform Members that I am looking to move on to the second urgent question at no later than 4.30 pm, so inevitably some people will be disappointed on this question. The longer each question and answer takes, sadly, the more people will be disappointed. I am in favour of fewer disappointments. I am sure that colleagues share that ambition with me, not just in general, but including in terms of its implications for their own question.
Mr Peter Bone (Wellingborough) (Con)
Does the Minister agree that the social care system is broken and that the leader of the Liberal Democrats is right that we are not going to solve the problem unless we all work together?
Mr Dunne
I do not think my hon. Friend will be surprised if I say no, I do not agree that the system is broken. I do accept that it requires more funding, and that is why more funding was provided. It also requires local authorities to work more closely alongside the NHS to try to share these problems and find solutions together.
Liz Kendall (Leicester West) (Lab)
The Minister said earlier that he did not know how many operations had been cancelled—maybe a few. Let me tell him that in one week alone 300 operations were cancelled in Leicester. I find myself unusually agreeing with the hon. Member for Wellingborough (Mr Bone)—social care is broken. Will the new Cabinet Office Minister be leading on the social care Green Paper, as the previous one did, and if not him, who?
Mr Dunne
I am glad that the hon. Lady has referred to the social care Green Paper, because that will be published this year, providing an opportunity for all Members to participate in it. It does not sit within my set of responsibilities, so I will come back to the hon. Lady on exactly who will be leading on it.
Maggie Throup (Erewash) (Con)
My constituents can access Derby and Nottingham hospitals. The two trusts have been allocated an extra almost £7 million for winter preparedness. Will the Minister reassure me and my constituents that there will be a full analysis of how that extra money is spent, so that we can learn lessons to make sure that we build on good practices for next year?
Bambos Charalambous (Enfield, Southgate) (Lab)
Is the Minister aware that on six of the seven days after Boxing day, all of north Middlesex hospitals’ general and acute beds were occupied? Does he agree that this state of affairs is totally unacceptable, that more investment is needed in our emergency health services and that much better planning is required for any future winter crisis?
Mr Dunne
I confirmed to the House at the beginning of my remarks that we believe that planning is essential. We started planning for this winter at the end of last winter, and I expect that we will continue to do so for the coming winter. As for what happens in individual hospitals with the individual pressures that they have, it is down to the local NHS leaders and clinicians to determine what capacity they need, and they need to plan for that, too.
Kelly Tolhurst (Rochester and Strood) (Con)
In Medway, we have seen great pressures in the system over the past few weeks. We have seen advance planning at Medway Maritime Hospital and extra funding going into the clinical commissioning group. Does my hon. Friend agree that the staff at the hospital have done an outstanding job so soon after coming out of special measures and that it is important that we should hold the CCG to account on where this money is spent?
Mr Dunne
I visited the Medway hospital when it was still in special measures and saw the pressures with the configuration of the A&E and the challenges that that posed to good patient flow. I am pleased that significant investment has already gone into Medway to try to resolve some of those physical characteristics. I absolutely agree that we should praise the staff of the hospital for the work that they have done in turning it around so well.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
Three months ago at the Health Committee, Jim Mackey, the head of NHS Improvement, told us that
“we are running tighter than any of us would really want to and we have not had the impact from the social care investment…that we had hoped for; so, it will be difficult—it will be very tight—over winter.”
The Government knew that this crisis was coming, and the social care investment to which the Minister has referred this afternoon has not been enough. Why have this Government not acted?
David Tredinnick (Bosworth) (Con)
Will the Minister congratulate the doctors and healthcare workers of Leicestershire on their excellent work over Christmas but recognise that the problems of A&E are not just about the supply of services, but about trying to reduce demand through triage, the involvement of the 111 service at A&Es and dealing with drunks who are abusing the old doctrine of a service free at the point of delivery?
Mr Dunne
I am very pleased to respond to my hon. Friend on a subject that is not always at the forefront of his mind. He is absolutely right to highlight the abuse of the health service by certain people—revellers—who turn up at hospitals in an unfit state to be treated. In some places, we have introduced holding areas to ensure that they do not disrupt the work of the hospital.
Norman Lamb (North Norfolk) (LD)
The Minister will be aware that the tragic case of the elderly lady who lost her life while waiting four hours for an ambulance is not an isolated one: there are constant failures of care across the country every day of the week. If he recognises that this is completely intolerable, will he not respond to the 90 MPs from across this House who have demanded that the Government get a grip and work, on a cross-party basis, to come up with a long-term solution?
Mr Dunne
I am always interested in what the former Health Minister has to say on these subjects, because he speaks with considerable authority. On ambulances, it is obviously unacceptable for there to be delays of that nature and leading to that kind of outcome, and we absolutely need to ensure that all trusts, when these incidents occur, look very carefully at trying to prevent them from occurring again. We have now—in part, in response to the pressures that the ambulance service has been under—set up a national ambulance control centre to try to help co-ordinate ambulance responses where services are not meeting the targets in certain parts of the country or our requirements in individual hospitals.
Andrew Selous (South West Bedfordshire) (Con)
It was back in 1994 that Germany got an integrated system of health and social care, with dedicated funding to pay for it. Will the Minister commit to moving forward, both at pace and at scale, with the sustainability and transformation partnerships, which are our answer to this problem?
Tracy Brabin (Batley and Spen) (Lab/Co-op)
May I press the Minister a little bit further on the photographs, which were taken by a constituent of mine, of people sleeping on the floor? These poorly people had been waiting on chairs for hours and had not been given a bed or a trolley. What I did not hear in his response was an apology. Is it not now time for the Minister to apologise to those affected?
Mr Dunne
The hon. Lady will have heard last week the apology from the Secretary of State to patients having operations postponed, and I am absolutely prepared to apologise today to patients who are not able to be treated as quickly as we would all like them to be treated. There are seats available in most hospitals, where beds are not available. I cannot comment on what happened in her individual case, but I agree with her that it is not acceptable.
Amanda Milling (Cannock Chase) (Con)
I pay tribute to all the staff who work at Cannock Chase Hospital. A key advantage of this hospital is that it does not deal with medical emergencies, so no elective operations have been cancelled. Does my hon. Friend agree that this clearly demonstrates the real value of Cannock Chase Hospital to local patients?
Mr Dunne
I absolutely agree with my hon. Friend that improving out-of-hospital capacity in our communities is vital. That includes capacity in medical centres and community hospital settings wherever they are outside the acute hospitals, which are inevitably under the most pressure at this time.
Mike Hill (Hartlepool) (Lab)
Constituents of mine recently waited several hours for an ambulance, owing to the North East Ambulance Service running at a high state of alert. What are the Government doing about the crisis in the ambulance service?
Mr Dunne
This financial year we have introduced the new ambulance response programme precisely in order to try to direct category 1 calls more rapidly, with conveyance by ambulance for those people who need it most. It is in the early stages of introduction in many areas, and we have yet to be able to analyse its impact. If my hon. Friend would like to write to me about the specific case he mentions, I would be happy to look into it for him.
Rachel Maclean (Redditch) (Con)
May I thank all the staff at the Alex Hospital in Redditch for doing an amazing job this winter? The hospital and the trust have been in special measures. I thank the Minister for his interest in my hospital and for the additional Government funding to address winter pressures. It is making a difference, with encouraging early signs in the elderly and frail unit in particular.
Mr Dunne
I congratulate my hon. Friend on her campaigning role in holding the Government to account for delivering on the capital injection of £29 million that we promised to the Worcestershire trust, of which the Alex is a key part. I reiterate to her that she should not rest until it has the money.
Mr Pat McFadden (Wolverhampton South East) (Lab)
The cancellation of thousands of elective surgery appointments simply shows that the Tories are doing what they have always done, which is forcing people to wait longer for their operations and rationing healthcare in that way. How will the Minister deal with the backlog that will be created in future months because of all the operations that have been put off?
Mr Dunne
I have to say that I am disappointed with the right hon. Gentleman. He was a Minister in the previous Labour Government, and in each quarter for which I have the figures, which go back to 2000, between 10,000 and 20-something thousand procedures were deferred or cancelled. This problem has affected this country’s health service every year, going back to the beginning of recorded data.
Robert Halfon (Harlow) (Con)
My hon. Friend will be aware that Harlow’s Princess Alexandra Hospital has among the highest rates of A&E use in England. That has been exacerbated by the winter crisis, which has caused significant pressures on the ambulance services, resulting in a constituent having to wait 10 hours for an ambulance over Christmas. Will my hon. Friend redouble his efforts to do everything possible to have a new hospital in Harlow, to help us with the infrastructure and ensure that Harlow has a hospital that is fit for purpose for the 21st century?
Mr Dunne
My right hon. Friend is another consistent campaigner in favour of improving the infrastructure and estate of his hospital. He has invited me to visit; I have seen it and I am well aware that the hospital trust has put in an application for a significant rebuild, which will be considered in the allocation of the next phase of sustainability and transformation plan funding.
Diana Johnson (Kingston upon Hull North) (Lab)
Up to 31 December, more than 400 patients had to wait an hour outside the A&E at Hull Royal Infirmary, and a further 1,000 had to wait half an hour. Has the time not come for the Minister to accept that the NHS does not have enough beds and to reverse the policy of cutting beds, which has happened under successive Governments? This Government need to take action now.
Mr Dunne
I indicated in my opening remarks that this Government have taken action. We have freed up the number of beds available through the DToC procedure, with an increase of 1,100 in the run-up to winter. We have also, as a result of the extra money we have been given, including the several million pounds given to the hon. Lady’s area, provided an additional 2,700 winter beds. The procedure for future bed closures has been made very clear by NHS England: it will not happen unless acceptable alternative community provision is available in the area.
Gillian Keegan (Chichester) (Con)
Western Sussex Hospitals NHS Foundation Trust, which runs St Richard’s Hospital in Chichester, provided excellent care over the Christmas period, despite a 9% increase in the number of patients since last Christmas. Does my hon. Friend agree that that is a tribute to excellent leadership, brilliant staff and innovative planning with other local community services to improve processes and anticipate this annual need?
Dr Paul Williams (Stockton South) (Lab)
I worked as a doctor on the NHS frontline last week. I saw elderly patients who would have been better off being looked after at home by community and social care, and people waiting far too long for ambulances. Cancelling non-urgent work just makes more patients suffer. What does the Minister say to the woman with Crohn’s disease who is in pain and has terrible symptoms now that the bowel operation for which she has already been waiting for six months has been delayed again? The only way she will get the operation now is if things get even worse and she becomes an emergency case.
Mr Dunne
I put on the record my appreciation of the hon. Gentleman’s role not only on the Health Committee but in undertaking shifts, as he mentioned. On deferred procedures, we have given very clear instructions that time-critical operations should not be cancelled—cancer operations should not be cancelled. Ultimately, it comes down to the clinical decisions that are made at each hospital about who they should treat and who they believe can wait.
John Stevenson (Carlisle) (Con)
Clearly there is pressure on the NHS, including on the Cumberland Infirmary in Carlisle. However, does the Minister agree that we must not lose sight of the positives, such as the £1.8 million investment in cancer equipment that has just gone into the hospital and the proposed £38 million investment in a proposed cancer unit, all of which are in the long-term interests of healthcare in Carlisle and Cumbria?
Mr Dunne
Cumbria is one of the parts of the country that has had persistent challenges in the delivery of healthcare. I am pleased that decisions have been taken over the past year or so, including those about investing in improving cancer facilities in Carlisle that my hon. Friend referred to, which we hope will address long-standing issues that have not been addressed under successive Governments.
Paula Sherriff (Dewsbury) (Lab)
Despite the best efforts of NHS staff, patients in my area routinely waited over 12 hours just to be seen at hospital. We have heard from my hon. Friends about patients having to sleep on the floor. Will the Minister therefore take this opportunity to say that he will halt all further downgrades and closures of services in my area at Huddersfield Royal Infirmary and Dewsbury and District Hospital until a full assessment of capacity has been undertaken?
Mr Dunne
A significant amount of funding—some £3.4 million—was made available to the hon. Lady’s area. Reconfiguration proposals are being driven by the STP process. It is down to local authority leaders and local NHS leaders and clinicians to determine what is the best configuration of services in their area.
John Howell (Henley) (Con)
In Oxfordshire, considerable effort is being put into growing home-based health and social care systems. Does the Minister accept that that will solve the problem of delayed discharges of care by preventing them in the first place?
Mr Dunne
I agree that prevention is an important part of the long-term solution to improve healthcare outcomes for the population. I believe we are on the cusp of some significant technological advances that will allow more treatment to take place at home and more diagnostic tests to be taken without the necessity of attending acute facilities. Oxfordshire is a good leader in that.
Ms Karen Buck (Westminster North) (Lab)
Of 106 emergency beds at St Mary’s in Paddington, 105 were in continuous occupation over Christmas. Not long ago, a ceiling collapsed in a ward in that hospital. It is coping with a £500 million maintenance backlog—the biggest by far in the country. Will the Minister meet me to discuss how St Mary’s Hospital will be assisted to cope with funding a maintenance backlog that, if things went wrong at the time of these pressures, would cause an absolute calamity?
Simon Hoare (North Dorset) (Con)
As my hon. Friend and his colleagues continue to wrestle with the conundrum of the merging of social care and healthcare, I urge him to keep at the front of his mind in his discussions with healthcare providers the importance of beds in community, district and cottage hospitals in providing a segue between acute settings and returning home.
Mr Dunne
My hon. Friend is a lively champion of the community hospitals in his area, which I know provide an important service, but I am afraid that I must again refer to the STP proposals and say that it is for local clinicians and health and local authority leaders to decide what is best in their area.
Mr Speaker
The hon. Member for North Dorset (Simon Hoare) should be doubly gratified to be acknowledged not merely as champion of the said hospitals but as a lively champion at that.
Lilian Greenwood (Nottingham South) (Lab)
Nottingham University Hospitals NHS Trust and the East Midlands Ambulance Service have both declared the highest level of alert in recent days. Despite the heroic efforts of NHS staff, emergency patients’ care, safety and dignity have been put at risk, and of course other patients have had their operations cancelled. Does this not confirm that the Government’s preparations and resourcing were too little and too late?
Mr Dunne
As I have tried to explain to the House, the preparations began earlier, have involved more alternative measures than ever before and have been accompanied by considerable resource allocations right across the country, including, I think, £3.4 million to the hon. Lady’s area.
Huw Merriman (Bexhill and Battle) (Con)
Our fine GP surgeries around the country are facing the challenge of their neighbouring practices not being as well run, while many practitioners are choosing to retire because of our pension rules. Is it now time for the state to step in and provide practice where the private area will not cover?
Liz McInnes (Heywood and Middleton) (Lab)
Pennine Acute Hospitals NHS Trust, which serves my constituency, has advised the public to attend A&E for serious or life-threatening conditions only and the rest to visit the local pharmacist or call 111. What immediate help will the Minister give to community pharmacies and the 111 helpline to help them to cope with the increased demand?
Mr Dunne
The hon. Lady is absolutely right to point to the increased demand channelled in part through very local facilities such as pharmacies and NHS 111. The latter has seen a 21.5% increase in the volume of calls in the last month, but, despite that, has had nearly a doubling, compared with a year ago, of the number of calls dealt with by a clinician—just under 40%—which is very impressive.
Andrew Bridgen (North West Leicestershire) (Con)
On my behalf and that, I hope, of the hon. Member for Leicester South (Jonathan Ashworth), may I welcome the £4.2 million of additional winter funding for the University Hospitals of Leicester NHS Trust? To remind the Labour party what an NHS crisis really is, will my hon. Friend tell the House who was in charge at the time of the Mid Staffs crisis—
Mr Speaker
Order. I have tried over a period of seven and a half years to educate the hon. Gentleman, and I am afraid that on the whole my efforts have been unavailing. I have tried to explain to him that his responsibility is to ask questions about the policy of the Government, for which it is the responsibility of the Government to answer; it is not the occasion for asking questions about the policy of the Opposition or the opposing party when in government. It is a point that is so blindingly obvious that only an extraordinarily sophisticated person could fail to grasp it.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
Royal Stoke University Hospital in my constituency faces a double whammy during this winter crisis: an estimated net cost of £8 million even with the Government’s investment of this period and the loss of income as a result of the cancelation of elective surgery where income has been put to one side. How does the Minister expect the Royal Stoke and the University Hospitals of North Midlands NHS Trust to meet that cost? Given that CCGs will now have a windfall because of cancelled operations, how will he make sure that that money is reinvested in community and acute services?
Mr Dunne
As I said earlier, it is our intent to review what has happened in relation to deferred procedures this month and over the winter, and we are monitoring that on a weekly basis. We will also keep under close review what happens with individual trusts as a result of the imbalance between income and expenditure.
Philip Davies (Shipley) (Con)
The Minister is a very good man and an excellent Minister, in my opinion, but what does it say about the priorities of the Government when they are allowing so many operations to be cancelled over the next few weeks, while also pouring more and more money every year into overseas aid? I say to the Government through the Minister that people are now angry about this in the country. Billions of pounds every year are being spent on overseas aid when it is so clearly needed by vulnerable people at home in the UK. Will the Government get a grip on this? They will be massively out of touch with public opinion if they do not.
Mr Dunne
Let me gently say to my hon. Friend, who is also an important champion of the hospital in his area—we had a meeting before Christmas to talk about allocating medical places—that deferred procedures have happened at the rate of tens of thousands a quarter for very many years. What we have done differently this time is give notice to patients and hospitals that they should rearrange their schedules weeks rather than hours or days in advance.
Mr Dennis Skinner (Bolsover) (Lab)
During this winter crisis, has the Minister ever stopped to think what a barmy idea it was to allow the clinical commissioning groups to close, or threaten to close, a number of community hospitals in all parts of Britain, including Bolsover and several others in Derbyshire? Will he now get to that Dispatch Box and reverse that barmy decision?
Several hon. Members rose—
Office for Students: Appointment
(6 years, 10 months ago)
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Dawn Butler (Brent Central) (Lab)
(Urgent Question): To ask the Secretary of State for Education to make a statement on the appointment of Toby Young to the board of the Office for Students.
The Minister for Universities, Science, Research and Innovation (Joseph Johnson)
The Office for Students came into being on 1 January and will be operational from April. It will put quality of teaching, student choice and value for money at the heart of what it does. It will be helped in that regard by a remarkably broad and strong board bringing together a wide range of talents and backgrounds, including vice-chancellors, graduate employers and legal and regulatory experts, as well as a student representative mandated by statute. The board also brings a diversity of views: its excellent chair, Sir Michael Barber, was a senior adviser to a former Labour Prime Minister; and several of its members have declared themselves to be past or present members of the Labour party. This is clearly not a body of Conservative stooges, but one that draws on talent wherever it can be found.
The Opposition have called this debate to discuss one of the board’s 15 members, Toby Young. They would have us believe that he is not qualified or suitable to be on the board. Yes, Mr Young is not a university insider, but a board made up only of university insiders would be hard pressed to provide the scrutiny and challenge to the sector that students and taxpayers deserve. Indeed, the Higher Education and Research Act 2017 requires the Secretary of State to have regard to the desirability of the board’s members having, between them, far wider experience, including experience of promoting choice for consumers and encouraging competition. Mr Young has real experience of both as the founder of the West London Free School, and now as director of the New Schools Network, helping parents around the country to set up schools of their own. That experience will be important to a new regulator that will be charged with creating a level playing field for high-quality new providers to offer degrees alongside established universities.
At the West London Free School, which Mr Young set up, 38.5% of children receive the pupil premium, and they have done better than the national average for those on the pupil premium this year and last. A parent-governor at the school described him this week as being
“committed to public education, academic excellence, and greater opportunities for kids from lower incomes”.
He has won praise for supporting diversity by making the school a safe and supportive place for LGBT+ students. He is also an eloquent advocate of free speech, a value that is intrinsic to successful universities and which the OFS has undertaken to uphold. He has served with credit on the board of the US-UK Fulbright Commission, where he has been a strong supporter of the commission’s work with the Sutton Trust to help disadvantaged young people to attend US universities. Indeed, the chair of the Fulbright Commission, Sir Nigel Sheinwald, described Mr Young as an effective, committed and energetic commissioner, saying that he had seen no evidence that any of Mr Young’s remarks had influenced him in despatching his duties as a commissioner.
The hon. Member for Brent Central (Dawn Butler) has called today’s debate to discuss tweets and remarks, some of which go back to the 1980s. These were foolish and wrong, and do not reflect the values of the Government, but I am not aware that anything Toby Young has said in the past has been found to have breached our strong discrimination laws, which are among the toughest in the world. In future, of course, he will be bound to comply with the Equality Act 2010 when performing all his functions for the Office for Students. Regardless of the legal position, it is of course right that Mr Young has apologised unreservedly to the OFS board. It is also right that he has said that he regrets the comments and given an undertaking that the kind of remarks he made in the past will not be repeated. So be in no doubt that if he or any board member were to make these kinds of inappropriate comments in the future, they would be dismissed.
As the Prime Minister said yesterday, since these comments and tweets, Mr Young has been doing “exceedingly good work” in our education system, and it is for that reason that he is well placed to make a valuable contribution to the work of the board of the Office for Students, where he will continue to do much more to support the disadvantaged than so many of his armchair critics.
Dawn Butler
It is not lost on me that I am up against one of the Johnson brothers and asking questions about one of their mates.
Mr Speaker,
“Violent, sexist and homophobic language must have no place in our society, and parliamentarians of all parties have a duty to stamp out this sort of behaviour wherever we encounter it, and condemn it in the strongest possible terms.”
Those are the words of the Secretary of State for Education and Minister for Women and Equalities, the right hon. Member for Putney (Justine Greening), and it is a shame that she is not here today—I am not quite sure what job she has at the moment. I note that the Leader of the House is with us. She chairs an excellent committee in which we talk about eradicating sexual harassment, victimisation and bullying, and changing the culture in this House. I am therefore flabbergasted by this decision, and it is beyond me how the Minister can stand up and support the appointment of Toby Young. I find it hard to comprehend the appointment; I believe that it leaves the credibility of the Office for Students in tatters.
There are three areas that need to be urgently addressed today. The first is the process. What process was followed? Was the Nolan principle, as outlined in the application, applied? Was due process followed in all cases? Who was the independent assessor—I cannot find that person’s name? Why did the Department for Education exaggerate Toby Young’s qualifications and suitability for the role? Has the Commissioner for Public Appointments approved the appointment?
The second area is suitability. Have the Department for Education’s guidelines on the seven principles of public life been upheld? Most people would laugh at that, but I will leave the Minister to respond. Toby Young’s long history of misogyny and homophobia makes a mockery of such guidelines. A man who wrote about how he went to a gay club dressed as a woman in order to molest lesbians is far from appropriate. Far from apologising, however, he has defended his actions, citing free speech. That might be free speech, but surely it also shows that he is not suitable to hold public office. Just 13 months ago, someone put a sexual harassment policy document on Toby Young’s desk. He said:
“The next bit was underlined in red felt-tip pen: ‘A joke considered amusing by one may be offensive to another.’ I found out just how true those words were when I hired a strippergram to surprise a male colleague on his birthday on what turned out to be Take Our Daughters to Work Day.”
I challenge the Minister to explain that.
The third area is merit. The Prime Minister said on the steps of No. 10 that people would be promoted on the basis of merit, not privilege. Is that still the case, or does having friends like the Johnsons override all that? There are over 800 free schools, meaning that there is a plethora of suitable people who meet the criteria to be involved in the Office for Students. Is this simply a case of jobs for the boys? The Foreign Secretary—the Minister’s brother—declared that Toby Young has caustic wit, making him the ideal man for the job, but if boasting of masturbating over pictures of dying and starving children is caustic wit, I have most definitely lost my sense of humour. Why was the Prime Minister not aware of the comments before the appointment was made?
It is not too late. If there is an apology, rather than a statement of regret, will the Minister place it in the Library along with the more than 40,000 deleted tweets?
Joseph Johnson
On the point of process, Mr Young’s appointment to the board of the Office for Students was made in line with the Commissioner for Public Appointments’ code of practice, and Mr Young was appointed following a fair and open competition. He was selected for interview based on the advertised criteria and interviewed by the same panel that interviewed all other board candidates. Sir Michael Barber, who is the chair of the Office for Students, was one of the panel members, along with a senior civil servant and an independent panel member from the higher education sector, and that panel found Mr Young to be appointable.
As for whether the Department for Education exaggerated Mr Young’s qualifications, it absolutely and categorically did not. Mr Young was a teaching fellow at Harvard and a teaching assistant at Cambridge, positions for which he received payment. The Department for Education never claimed that they were academic posts. As I have said, Mr Young is a Fulbright commissioner and co-founded the West London Free School, and that experience will be vital in encouraging new providers and ensuring that more universities are working effectively with schools.
Robert Halfon (Harlow) (Con)
The Minister will know that I am a supporter of his work and of universities, but things have gone badly wrong here. I accept that Mr Young has done great work on free schools, but so have many other people. I am not talking about the things he has done on Twitter; I am more concerned about some quite dark articles in which he talks about the disabled and the working classes. Much more significantly—I have the article here—in 2015 he talked about what he calls “progressive eugenics”, which is incredibly dark and dangerous stuff. I suggest that my hon. Friend look again at the appointment, because I do not think that it will give students confidence.
Joseph Johnson
I always listen closely to what my right hon. Friend, the Chair of the Education Committee, has to say, and I will look carefully at the article he has with him. Mr Young has expressed his regret and has apologised unreservedly for comments that, in some cases, were made in the 1980s. These are often very old writings and old pieces of work. I think that it is more helpful to Members if we focus on what he does rather than what he says. He has been a champion of students and of children with disabilities in mainstream education. He has a brother with learning disabilities and is a patron of the residential care home in which his brother lives, so we should not characterise him in the crude terms that Opposition Members have used. His deeds matter much more than the terms and the tweets that he has disowned.
Several hon. Members rose—
Mr Speaker
Order. Using language slightly loosely, the Minister referred at the outset to how the shadow Minister had called this debate. On advice, I gently remind the House that this is not supposed to be a debate or, therefore, the occasion for speeches either from the Back Benches or the Front Benches; it is a time for pithy questions and answers, to which I know we will now return with enthusiasm.
Alan Brown
Happy new year, Mr Speaker.
This appointment sums up this incompetent Government. Toby Young is a Tory crony, and the Department for Education exaggerated his qualifications. He thinks teachers have it easy. He has shown prejudice against the working class. He has written several misogynistic tweets and, as we have heard, talked about masturbating to Comic Relief images of children in Africa. When that came to light, the reaction of Tory MPs, including the Foreign Secretary, was to defend him.
Young himself does not seem to care. He has not made a full apology, and he says that most of the tweets are several years old, which also seems to be the Minister’s attitude. Frankly, the Minister is putting his head in the sand. It was only two years ago that Toby Young was writing about eugenics for the working class. This House is supposed to be trying to be seen to clean up its act and Conservative Members were only too keen to call for action against the hon. Member for Sheffield, Hallam (Jared O'Mara) when his inappropriate tweets were made public, so the rank hypocrisy is absolutely stinking.
It has been suggested that Toby Young is on a yellow card, so will the Minister tell us what constitutes a red card? Will this appointment process be reviewed? What will the Government do to allay the concerns of the National Education Union, of students and of the wider general public? And when will the Government lead by example?
Joseph Johnson
I refer the hon. Gentleman to the Prime Minister’s remarks yesterday on “The Andrew Marr Show.” The Prime Minister was absolutely explicit that she expects no repetition of any of the remarks, comments or utterances that have been the subject of considerable attention over the past week. Any member of the board of the Office for Students who says such things will no longer carry on in that position, and that will be the position going forward.
Mrs Maria Miller (Basingstoke) (Con)
What account did the independent appointment process take of the public views of candidates, particularly when those views might be so clearly at odds with the equality principles that the Government clearly support?
Joseph Johnson
Of course, the Office for Students is there to represent all interests in our higher education system. The Higher Education and Research Act 2017 puts an obligation on the Secretary of State to have regard to a wide range of factors in making such appointments, including that board members must reflect the broad range of higher education providers, those who experience higher education—the students—and those, such as taxpayers and businesses, who either pay for higher education or are on the receiving end of its product in the flow of graduates into the workforce. The Government are, of course, attentive to reactions to appointments to the board, and we want the board to be highly effective in delivering on the core duties of the Office for Students.
Afzal Khan
Toby labelled Islam a “deeply misogynistic religion,” and he referred to the choice of some Muslim women to adopt the hijab as forced by male oppression. At a time when many more young British Muslim women are entering higher education, do the Government consider it appropriate to appoint such a person to the Office for Students? What is the likelihood that Toby Young will command the respect of Muslim women in higher education who wear the hijab?
Mr Speaker
The hon. Member for Manchester Central (Lucy Powell) looked almost inconsolable not to be called. It is true that I was looking in her direction at an earlier stage and might very well do so again, but it would be a pity to squander her at too early a stage of our proceeding. I am saving her up.
Joseph Johnson
In response to the question of the hon. Member for Manchester, Gorton (Afzal Khan), and to many other questions that might relate to individual tweets, articles or comments made by Mr Young over a long period of time, the answer is basically the same. Mr Young has acknowledged, and the Government have recognised, that much of what he said was foolish, wrong, offensive or obnoxious, and it is right that he has apologised and expressed regret for what he has said, written and done. It clearly does not reflect the values of the Office for Students or of the Government, but it is also important to recognise that, since he made many of those remarks, he has continued to make a valuable contribution to our education system, to the work of the Fulbright Commission and to the network of free schools across the country, and it is for that reason that he has been appointed to the board of the Office for Students.
Several hon. Members rose—
Mr Speaker
I welcome the hon. Member for Morley and Outwood on her return from maternity leave, and let me say that it was a pleasure to attend her wedding.
Andrea Jenkyns (Morley and Outwood) (Con)
Thank you very much, Mr Speaker. It was good to have you at the wedding.
Labour Members feign outrage at Mr Young’s use of social media, but perhaps they should look at the way their own Labour activists and Momentum have treated other candidates, including during the general election. I got attacked by someone called “Corbyn Chick” for being an unmarried mother—where are the family values there? Perhaps Labour Members—[Interruption.] Perhaps if they listened rather than shouted—[Interruption.] Perhaps they should look at how their own Momentum activists and Labour party activists treat other candidates on social media. Why the hypocrisy?
Joseph Johnson
My hon. Friend makes an important point about double standards, because misogyny and misogynistic attitudes are rampant on the Labour Benches, as has been acknowledged by the hon. Member for Birmingham, Yardley (Jess Phillips), who has described a persistent pattern of
“low-level non-violent misogyny”
at the top of the Labour party. It is important that Labour Members—[Interruption.] That is what she said. It is important that Labour Members do not apply double standards when addressing this question. [Interruption.]
Mr Speaker
Order. I just say to the shadow Transport Secretary: sir, if you were a motor car, you would go from 0 to 60 in about five seconds. It is a discernible trait that I have discerned in you over a period of years and I wish to help you with this condition. Calm yourself. Just be a little calmer. There are many, many hours to go and there are many important developments to take place. Now, after due patience having been exercised, I call Lucy Powell.
Lucy Powell (Manchester Central) (Lab/Co-op)
Thank you very much, Mr Speaker.
Mr Young’s comments over the past few months and years speak for themselves, and the Government are making a gross misjudgment in now trying to defend them, but let us just take a moment to look at his record, as the Minister is so keen to talk to us about it. If he looked at the data dashboard for the West London Free School, he would find that progress 8 at that school is, in fact, average, and that its percentage of children on the pupil premium is below that for Hammersmith and Fulham and well below that for inner London. Perhaps that is why the school has only just got a “good” rating from Ofsted. I could give the Minister the names of many, many more people with much more experience, so is this not a case of “chumocracy”, as the right hon. Member for Harlow (Robert Halfon) rightly said?
Joseph Johnson
We have armchair critics who do not do half as much good as Mr Young does for disadvantaged students in London and across the country. The hon. Lady has questioned the record of the West London Free School, but its GCSE results for 2016 put it in the top 10% of all English schools in the country.
Dr Sarah Wollaston (Totnes) (Con)
I am afraid that I feel Mr Young’s comments do cross a line and are indicative of an underlying character. We are talking about the kind of person who would tweet comments to a woman about masturbating over images of refugees—this does just cross a line. I feel that he should withdraw. When we apply for jobs, we all say whether or not there is anything in our past that could cause embarrassment. If that question was asked and it was answered “no”, there is clearly a case for the board revisiting this and asking him to step down.
Joseph Johnson
I recognise that, as I have said, many of the tweets have been obnoxious and repellent in many ways—obviously, I have not seen all 40,000 of them—but it is also important to recognise that that tweet was probably eight or nine years old, since which time Mr Young has been on something of a developmental journey. It is possible that there is a capacity for reform, and we want to encourage Mr Young to develop the best sides of his personality—those that have led to him setting up good schools and to working with disadvantaged children in London so that they can make the most of their potential. It is for those reasons that he has been appointed to the board.
Wes Streeting (Ilford North) (Lab)
There is a fault line in politics, with those who want a modern democracy with people appointed on their merit rather than their mates on one side, and I am surprised that the Minister, who is meant to be a serious person, finds himself on the other side.
I ask the Minister specifically about Mr Young’s comments in the past two to three years, which the Select Committee Chairman raised, and in which Mr Young advocated what he called “progressive eugenics”—not in 2009, but in 2015. He repeated that in November 2017. The comments were removed by the Teach First website and he claimed that he had been no-platformed and censored. Does that sound like someone remorseful, who is suitable for public office? Why on earth has the Minister done this, not only to his and the Prime Minister’s credibility, but to that of the Office for Students?
Joseph Johnson
Mr Young’s work on behalf of disadvantaged and disabled students speaks for itself. He has championed inclusion in the educational institutions that he has set up. I cannot speak for the content of specific articles or tweets because, frankly, there are too many, and he has apologised for any offence he has caused, but I think that we should judge him by what he does—more so than we are currently doing.
David T. C. Davies (Monmouth) (Con)
Will the Minister confirm that Toby Young has never used social media to tweet bomb threats against rival politicians, unlike one member of the Labour party, who is named in the newspapers today, and that some of the outrage is little more than an extension of the “no platform” policy used to drive anyone with a right of centre view out of the university sector?
Joseph Johnson
My hon. Friend makes an important point, the same one that was made a few moments ago, which is essentially that double standards are being applied here. Opposition Members should look at their use of social media—for example, the appalling slurs on Conservative candidates that are frequently levelled before a general election, and the deception targeted at students about the Labour party’s intentions on student fees and tuition debt. They should consider their record on social media before criticising others.
Wera Hobhouse (Bath) (LD)
Does the Minister suggest that, simply because Mr Young, under pressure, has now apologised for his dark and dangerous comments, he no longer holds the views that he has held for many years?
Joseph Johnson
Mr Young has apologised, as the hon. Lady said. He has said that he regrets the comments, which suggests that he has moved on. He has also committed to not repeating those comments and accepted the reality that if he does, he will no longer be publicly appointed to the Office for Students board.
Mr Bernard Jenkin (Harwich and North Essex) (Con)
The Public Administration and Constitutional Affairs Committee oversees the public appointments process and we hold the public appointments commissioner accountable for the conduct of the code. This is a timely reminder that public appointments are to be held accountable. Is my hon. Friend satisfied that the panel had the due diligence they should have had when they made their appointment? What representations has he received from any member of the panel about the appointment since it was made?
Joseph Johnson
I thank my hon. Friend for his questions. The panel was correctly composed. As I said earlier, it consisted of a senior civil servant from the Department for Education, Sir Michael Barber himself and an independent panel member. They conducted the interview with Mr Young in the same manner as they conducted interviews with other candidates and found him appointable. In respect of due diligence, one has to look at what is reasonable and proportionate for a panel to do. Neither I nor the Department were aware of the offensive tweets before the appointment was made, but there is nothing unusual about that. Many of the remarks were made years—in some cases, decades—ago and it is not reasonable or proportionate for the Government to trawl through tens of thousands of tweets over many years when making public appointments.
Laura Smith (Crewe and Nantwich) (Lab)
As a woman and as the mother of a young girl, I am appalled that the Minister and the Prime Minister deem it suitable to appoint such a man to this position. He has joked about anal rape of women. He talks about women’s breasts constantly on Twitter. Will the Minister not join me in condemning this misogynistic view from someone who will be in a position of power and show all those young girls who look to the Government that it is simply not good enough?
Joseph Johnson
I agree with the sentiments the hon. Lady has expressed. Those comments and tweets are obviously obnoxious and repellent, and that is why it is right that Mr Young has apologised for them, it is right that he has expressed regret for them and it is right that he has committed not to repeat them at the risk of being immediately dismissed from the Office for Students board.
Kevin Foster (Torbay) (Con)
I have been interested to hear the Minister’s answers. Can he reassure me about what evidence he took in relation to Mr Young’s current appointment as a Fulbright commissioner and what reassurances he has that some of the behaviour we have discussed this afternoon will not be repeated?
Joseph Johnson
Mr Young does important work on the Fulbright Commission. He is a commissioner and has been reappointed to that role as a result of the good work he has done. That carries on. As I said earlier, Sir Nigel Sheinwald, the chair of the Fulbright Commission, has described Mr Young as an effective, committed and energetic commissioner and seen no evidence that the historic remarks—going back many years—have influenced him in discharging his duties responsibly on behalf of disadvantaged young people. He does very good work in promoting social mobility through the Fulbright Commission’s work with the Sutton Trust and other organisations.
Stella Creasy (Walthamstow) (Lab/Co-op)
The Minister asks us to judge Mr Young by what he does. As one of the many women who have had personal, repeated and recent experiences of his ability to lose friends and alienate people, I say to the Minister that an undergraduate student would know that it is not evidence enough of a change in behaviour for someone simply—when they have been caught out—to say sorry. Every educationist would say to the Minister that rewarding bad behaviour, as he is, sends a terrible message to our universities about the standards we accept. What more does Mr Young have to say before the Minister realises that he deserves to stay on Twitter, not in teaching?
Joseph Johnson
Since Mr Young made many of these comments and wrote these articles—which, in most cases, predate 2010—he has been appointed to the Fulbright Commission, he has been reappointed to the Fulbright Commission, he has been made director of a leading education charity and he has done important work setting up schools in west London that are delivering great outcomes for young people. That is what we should judge him by, not foolish and obnoxious tweets from the distant past.
Mr Philip Hollobone (Kettering) (Con)
My constituents have no time for unpleasant and obscene remarks, no matter who makes them. Will the Minister ensure that all appointees to the board, including this one, have as one of their first priorities a close examination of the obscene levels of executive pay for some of the senior personnel in the higher and further education sectors, which many students regard as completely outrageous?
Joseph Johnson
My hon. Friend makes a good point, and it is a priority for the Office for Students to address the spiralling top-level and vice chancellor pay in our institutions. It featured in the regulatory framework consultation, which closed shortly before Christmas, and will be prominent in the regulatory framework when that is published later in the spring.
Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)
The problem is that this man thought it was okay to publicly leer at women’s bodies while they were in the workplace, including tweeting repeatedly about women, about their knockers, their breasts, their boobs, their baps—on and on. What does it say to women and young girls across the country that a Minister is defending that—including when this man attacked a woman MP in this House in that way? Instead, why does not the Minister stand with women across the world who are saying to men like this that their time is up?
Joseph Johnson
The Government have condemned the tweets. Mr Young has apologised for them. Any repetition of language of that kind will not be tolerated.
Mr Simon Clarke (Middlesbrough South and East Cleveland) (Con)
I suspect I am one of the few people in the Chamber who has been to the West London Free School. I saw there for myself the outstanding work that Toby and his team have delivered, and they have done that blind to people’s background and wealth, to the colour of their skin and to the creed that they practise. Does the Minister agree that that record deserves to be honoured and recognised? The comments were wrong, but those deeds need to be respected and they give Toby a credible platform for taking that office.
Joseph Johnson
My hon. Friend is right to laud Mr Young’s achievements at the West London Free School, where the 38.5% of children who receive the pupil premium have done better than the national average for pupils on the pupil premium in both this most recent year and the previous one. Mr Young has created an inclusive environment. A parent governor at the school described him as
“committed to public education, academic excellence, and greater opportunities for kids from lower incomes.”
Dr Rupa Huq (Ealing Central and Acton) (Lab)
I am usually the first to congratulate my constituents on their achievements, but even Toby Young’s Acton address cannot save him on this one. In his column in The Spectator on 9 December—not historical, but mere days before his appointment—he boasted
“what a Big Swinging Dick I am.”
The column was titled “The subtle art of showing off at work”. How does that and the fact that his West London Free School has gone through five headteachers in almost as many years make him qualified for this post?
Joseph Johnson
Had Opposition Members done half as much as Mr Young has to promote outcomes for disadvantaged students, they would be in a better position to disparage his achievements. Mr Young’s school has done better than the national average for its pupils on the pupil premium in both this most recent year and the last. That is something of which he can be rightly proud.
Joanna Cherry (Edinburgh South West) (SNP)
The Minister is at pains to say that this appointment was Nolan-compliant. It is standard practice in modern times for employers to look carefully at the social media profile of those they appoint, particularly to public office. What due diligence was carried out? Were those who appointed Mr Young to the post aware of these obnoxious tweets? If so, what was it about him that made him so uniquely qualified for this post over those without such an obnoxious social media profile?
Joseph Johnson
As I have said, the competition through which Toby Young was appointed was rigorous, open and fair. Like all the interviews, his was conducted by a panel consisting of the three people I have mentioned. It was an apolitical and independent-minded board of panellists who deemed Toby Young worthy of appointment.
Maria Eagle (Garston and Halewood) (Lab)
The Minister really is seeking to defend the indefensible. As a former Minister for Disabled People, I am appalled at some of Mr Young’s recently expressed views about the place of disabled people in our society. The Minister has said that many of Mr Young’s misogynistic tweets were from many years ago, but his views about disabled people are very recent indeed. How can the Minister appoint somebody who thinks so little of the contribution of disabled people to our society to such an important position? Does he not agree that it is indefensible?
Joseph Johnson
As I have already said, Mr Young has been a champion of the inclusion of children with disabilities in mainstream education. Not only that, but outside his work with schools, he is a patron of the residential care home in which lives his brother, who has learning disabilities of his own.
Several hon. Members rose—
Mr Speaker
Order. I am looking to end these exchanges at quarter past 5, so Members need to be very brief.
Liz McInnes (Heywood and Middleton) (Lab)
The Ministers says that he condemns Toby’s Young’s past comments, but the only appropriate condemnation would be to remove him from the board of the Office for Students. Does the Minister agree that a suitable replacement would be a representative from the University and College Union, so that university staff have a voice on the board?
Joseph Johnson
No, that would not be appropriate. I take the same view that the shadow Education Secretary took with respect to the comments of the hon. Member for Sheffield, Hallam (Jared O'Mara) when she said that he deserved a second chance and that she was happy to sit alongside him because the comments happened a long time ago. In her words,
“People do change their views... it is important that they recognise that and apologise and correct that behaviour.”
That is what we are expecting Toby Young to do.
Steve McCabe (Birmingham, Selly Oak) (Lab)
If a Minister of the Crown were guilty of making these filthy and obnoxious remarks, would the Minister expect him to resign?
Joseph Johnson
Going forward, the Nolan principles of public life will be applicable to Toby Young. He will be holding a public office, as a board member of the Office for Students. That is why it has been made very clear to him and to other board members of the Office for Students that if they make these kinds of objectionable comments and remarks they will be in breach of those principles and would not be able to continue in their positions.
Anna Soubry (Broxtowe) (Con)
I wonder whether the Minister can assist Members in this way: does he think that the good people of Broxtowe are more interested in the obnoxious tweets of somebody who made those tweets many years ago but who nevertheless has an important position than they are in learning about the NHS crisis, which has affected almost everybody in this country?
Joseph Johnson
My right hon. Friend makes an important point. Labour’s priorities are curious. We have had not a word from the leadership of the party about what is going on in Iran, for example, and it is focusing instead on its feigned outrage over Toby Young. It should really focus on the priorities facing this country, not these second order ones.
Nic Dakin (Scunthorpe) (Lab)
The Minister said earlier that, in appointments to this board, there was a desire to represent the broad range of higher education providers. Why did he find space for such a controversial appointment, but no space for somebody with FE experience, when so many students are in further education?
Joseph Johnson
The board is representative of a broad range of higher education providers, as it is required to be under the terms of the Higher Education and Research Act 2017. It contains a vice-chancellor of the University of the West of England; a former vice-chancellor of BPP University; the chair of council at an arts college, the Rose Bruford College; and a senior figure from an Oxford college, who happens to be the bursar and also a director at the Oxford Centre for Higher Education Policy Studies. It is well representative of the excellent diversity of our higher education system.
Paula Sherriff (Dewsbury) (Lab)
May I gently remind the Minister that abuse comes to all candidates, not just Conservative ones? I truly want to believe that this House takes allegations of sexual harassment and inappropriate behaviour in the workplace seriously, but how can I when the Minister is continuing with the appointment of this misogynist man who thinks that it is appropriate constantly to tweet about women’s breasts, anal rape and masturbating over images of starving children?
Joseph Johnson
I do not see why we should take lessons from the Labour party on these matters. Let us take, for example, the case of the shadow Chancellor, the right hon. Member for Hayes and Harlington (John McDonnell), who made some extraordinarily intemperate and misogynistic comments about my right hon. Friend the Member for Tatton (Ms McVey). They were too vile to repeat, but typical of what the hon. Member for Birmingham, Yardley (Jess Phillips) described as the persistent,
“low-level, non-violent misogyny”
at the top of the Labour party.
Toby Perkins (Chesterfield) (Lab)
The Minister has really diminished himself over the course of the past 45 minutes, and Toby Young is really not worth ruining his own career for. Mr Young is someone who has contempt for women, contempt for disabled people, and contempt for people from deprived communities who have the effrontery to try to get into Oxford. Will the Minister do the decent thing and disown Mr Young, and see his own reputation much enhanced for doing so?
Joseph Johnson
We are going over much the same ground as in previous questions. The tweets, remarks and comments that Mr Young has made were clearly wrong. He is absolutely right to have apologised for them. Since making many of those remarks, he has continued to do good work in our educational system: he is delivering good outcomes for disadvantaged pupils at his schools in west London; and he is working hard on the Fulbright Commission. We have every expectation that he will make a valuable contribution to the work of the Office for Students.
Kevin Brennan (Cardiff West) (Lab)
I think the Minister said that Mr Young was deemed appointable by the panel without knowledge of the information on his past remarks that we have been hearing about. Were any other candidates deemed appointable by the panel, but not appointed? If that is the case, could this not be revisited with a view to appointing someone who does not have these kind of indecent views?
Joseph Johnson
As I have already said, the appointment process followed by the Office for Students board and panel was conducted in accordance with the code of practice published by the Office of the Commissioner for Public Appointments. Mr Young was appointable—many people were interviewed, as this is an important body—and it was determined that he had characteristics that would enable him to acquit those responsibilities well.
Diana Johnson (Kingston upon Hull North) (Lab)
It is quite clear from the Minister’s stumbling answers this afternoon that due diligence was not carried out on the appointment of this man. Does the fact that he deleted 50,000 tweets last week not worry the Minister? Does it not worry the Minister that today he has told us about decades of abusive and offensive comments made by this man? Surely this is the time to revisit the decision to appoint him.
Joseph Johnson
Mr Young’s online oeuvre is not a great loss to the world. Personally speaking, I am glad we do not have to go through it, and it is probably a good thing that it is lost to the world. Mr Young wants to move forward and to focus on the important contributions that he is making to the outcomes of disadvantaged young people in west London and elsewhere in the country. Digging up past tweets and other comments dating back to the 1980s really serves very little productive purpose.
Points of Order
Mike Gapes
On a point of order, Mr Speaker. During the debate on Russian interference in UK politics on 21 December last year, I misspoke. I wrongly said that Nigel Farage had attended conferences in Russia. I have been informed that that is not true. How can I correct the record?
Mr Speaker
The hon. Gentleman has found his own salvation, and we thank him for that. Nothing further needs to be said.
Catherine West (Hornsey and Wood Green) (Lab)
On a point of order, Mr Speaker. Would you please clarify whether it is appropriate for a Minister to respond to an urgent question when his brother knows personally the individual appointee who is the subject of the question? Is that in order and in line with our expectations in this Parliament?
Mr Speaker
I am very grateful to the hon. Lady for her point of order. The answer is that it is for the Government to decide who should respond to an urgent question. No impropriety has taken place. I am not myself aware of the personal relationships to which the hon. Lady refers. However, in so far as she is asking me whether there has been some breach of parliamentary protocol, the short answer is no. That may disappoint her, but it is the factual answer. She has made her point in her own way. Meanwhile, I thank all colleagues who took part in the exchanges during that urgent question; I also thank the Minister for his time and energies this afternoon. The issue has been given a very full airing.
Dr Julian Lewis (New Forest East) (Con)
On a point of order, Mr Speaker. You may remember the second time I raised as a point of order the difficulties of the Select Committee on Defence in getting the national security adviser to give us evidence in relation to the national security capability review that is currently under way. You expressed yourself in very strong terms on 27 November, when I last raised this subject. Since then, this stand-off has not made any progress, but I have discovered one thing—[Interruption.]
Mr Speaker
Order. This is a serious matter. I know that colleagues are waiting for the next business, but previous points of order were heard with courtesy. The right hon. Gentleman must be heard. This is an important matter and I want to be able to give him an informed reply.
Dr Lewis
I have discovered a matter that gives a fresh perspective on the claim that the national security adviser need only give evidence to the Joint Committee on the National Security Strategy and not, for example, to the Defence Committee—namely, that I now see from the recently published annual report of the Intelligence and Security Committee that as recently as last year the previous national security adviser gave evidence, in his capacity as NSA, to that Committee in addition to the Joint Committee. When precedent has so clearly established the fact that the NSA does speak to other Committees when it suits him, what more can I do to get him to speak to my Committee?
Mr Speaker
I am grateful to the right hon. Gentleman for his point of order. I think I am right in saying that it is open to him to require the attendance of the said witness. It would be prudent of him to be sure in his own mind that he has the support of his Committee in making any such direction or requirement. Moreover—I am sorry that these are muddy waters—giving effect to such a requirement if it is not adhered to would very likely require the approval of the House. This is therefore a matter that can take a little time, and it is not completely straightforward or immediate in terms of effect, but it is open to the right hon. Gentleman to persist. I note what he said about previous examples of the national security adviser appearing in front of the Defence Committee rather than in front of, or in addition to, other Committees, and that is certainly a powerful argument in his arsenal.
I know that sometimes Governments are inclined to invoke the Osmotherly rules as justification for saying that one official can and another official cannot appear in front of a Committee. My response to that, on behalf of Parliament, is to say that the Osmotherly rules are very much a Government creation. This House has never endorsed or recognised the Osmotherly rules. They are, perhaps, a matter of great importance in the minds of Ministers, and in particular, I fancy, in the minds of officials; they are not important in my mind at all.
Sammy Wilson (East Antrim) (DUP)
On a point of order, Mr Speaker. The House has previously discussed the remarks of Toby Young. This weekend, the MP for West Tyrone celebrated the murder of 10 Protestants at Kingsmill by dancing around a shop with a loaf on his head with the name “Kingsmill” written on it. In doing so, he has caused outrage among all decent people in Northern Ireland. Can you give me some guidance as to what action can be taken by the authorities in this House to condemn and to draw this House’s attention to the obnoxious behaviour of the MP for West Tyrone, and what action can be taken to deal with him?
Mr Speaker
I am grateful to the hon. Gentleman for his point of order. I am advised that there has been a significant number of letters about this matter to the Parliamentary Commissioner for Standards. If that be so, matters will take their course in accordance with the judgment reached by the parliamentary commissioner. More widely, though I take extremely seriously what the hon. Gentleman has said, and I share his distaste—his utter distaste—for any celebration of deaths, it is only right to point out that the Chair and the parliamentary authorities to whom he referred have locus in relation to conduct in this place. Where the alleged miscreant is someone who has not taken his or her seat in this House, I think that inevitably somewhat different considerations must apply. That said, in so far as part of the objective of the hon. Gentleman in raising his point of order was to highlight what he regarded as atrocious and unacceptable behaviour, he might be thought, and might think so himself, to have succeeded in his mission.
Taxation (Cross-border Trade) Bill
Monday 8th January 2018
(6 years, 10 months ago)
Commons ChamberRead Full debate Taxation (Cross-border Trade) Act 2018 View all Taxation (Cross-border Trade) Act 2018 Debates Read Hansard Text Read Debate Ministerial Extracts
22:16 - The House divided: - Ayes: 265 / Noes: 309 - Question accordingly negatived.
22:30 - The House divided: - Ayes: 309 / Noes: 265 - Question accordingly agreed to.
Mr Speaker
I must inform the House that I have selected the amendment in the name of the Leader of the Opposition.
The Financial Secretary to the Treasury (Mel Stride)
I beg to move, That the Bill be now read a Second time.
The Government have been clear that in leaving the European Union the UK will also leave its customs union, allowing us to establish and enhance our trading relationships with old allies and new friends around the world. Further to that, the Government have previously set out that in leaving the EU customs union and exercising the powers in this Bill, we will be guided by what delivers the greatest economic advantage to the United Kingdom and by three strategic objectives.
Sir William Cash (Stone) (Con)
Before my right hon. Friend gets deep into his analysis, may I ask him about the expression “a customs union” in clause 31, which, according to the explanatory notes, clearly includes the EU itself? Will he be kind enough to tell me, either now or later in his speech, what the distinction is between the customs union and other kinds of customs union mentioned in clause 31?
Mel Stride
Clause 31 makes provision for this country to enter into a customs union with another territory. That territory could be the existing customs union of the European Union after we have left the European Union, or it could be another territory separate from it. As he will know, such a move would be subject to a treaty and would not be entered into until a draft statutory instrument had been laid before the House and approved under the affirmative procedure, and then subsequently approved by Her Majesty as an Order in Council.
Tom Brake (Carshalton and Wallington) (LD)
The right hon. Gentleman says that he wants to do what is of “the greatest economic advantage to the United Kingdom”. Has he assessed whether staying in the customs union would be precisely that?
Mel Stride
I say gently to the right hon. Gentleman that we are going down a rather well-worn path. The answer is quite simple: in June 2016, the British people took a decision—people may have ended up on different sides of the argument, but they took a clear decision—that we would exit the European Union. As a consequence of that, we will be leaving the customs union.
Mr Kenneth Clarke (Rushcliffe) (Con)
I was almost reassured by what my right hon. Friend said in response to my hon. Friend the Member for Stone (Sir William Cash). Would it not remain perfectly lawful under clause 31 for this country either to stay in the existing union, or to re-enter it quite quickly without any further change to the law, and while remaining party to all the EU agreements with about 70 other countries and participating in them as though we were still a member of the European Union? If that is strictly the effect of the Bill, may I tell my right hon. Friend that I would be considerably reassured?
Mel Stride
As my right hon. and learned Friend will know, article 50 was invoked—the decision was taken to invoke that particular article—with the consequences that we will exit the European Union on 29 March 2019, and therefore leave the European Union customs union. However, clause 31 does indeed facilitate our future ability to enter into customs union arrangements with other customs unions or territories, subject to the express will of Parliament, as I detailed with reference to the affirmative resolution that would have to be passed by the House.
Alex Cunningham (Stockton North) (Lab)
The Manufacturing Trade Remedies Alliance tells me that 7,000 manufacturing jobs, including 2,500 in the chemicals industry, will be at risk in my constituency if the UK does not establish effective trade remedies. If there is no customs union, how will the Government guarantee that manufacturing workers will not be negatively affected by unfairly priced or subsidised imports?
Mel Stride
The hon. Gentleman raises the extremely important matter of protecting our UK producers from dumped goods in this country, goods that have been subject to excessive subsidy, and indeed import surges that arise for other reasons. That is why this Bill and the Trade Bill, which will have its Second Reading tomorrow, make provision to set up a Trade Remedies Authority with the ability and powers to investigate appropriately the kinds of issues to which the hon. Gentleman alludes, and to ensure that we are able to take remedial action, in terms of additional duties and so on, to ensure that we properly address those particular threats as and when they occur.
Stephen Kinnock (Aberavon) (Lab)
The Financial Secretary of course knows how close we came to the collapse of the British steel industry, thanks to the dumping of Chinese steel, but even though schedules 4 and 5 of the Bill refer to incredibly onerous public interest and economic interest tests, there is absolutely no detail of how so many of the practical aspects will work. Why do the Government seem to be set on leaving our manufacturing sector completely exposed to the dumping of Chinese steel, for example?
Mel Stride
I am afraid that I have to disagree with the hon. Gentleman. The Bill takes a balanced approach to the issue of protecting our domestic producers including, very importantly, steel producers. By “balanced approach”, I mean that we should also take into account the interests of consumers of those imported goods and businesses that use them in their processes. If the hon. Gentleman looks closely at the measures—we will do that in Committee—he will see that they provide for compensation where dumping has occurred and for appropriate sanctions to be made.
The economic advantage to the UK is very important, and that means continued UK-EU trade that is as frictionless as possible. It also means avoiding a hard border on the island of Ireland and establishing an independent international trade policy. As we look forward to the next stage of our negotiations with the European Union, we see that the nature of our future customs relationship with the EU, and therefore the legislation that will allow the Government to give effect to any such relationship, become all the more significant.
Damian Collins (Folkestone and Hythe) (Con)
My hon. Friend mentions the need to avoid a hard border on the island of Ireland. I know that he will also agree that we need to avoid an effective hard border on the channel crossing points, particularly the channel tunnel and the port of Dover. That is our principal road freight route for goods back and forth across the continent of Europe. It is essential that we maintain frictionless trade.
Mel Stride
My hon. Friend is entirely right. That is why we have consulted ports so extensively, most importantly that of Dover, which I visited myself. I met the port authorities down there, and members of Her Majesty’s Revenue and Customs have been closely involved in consultations with the ports. Of course, the Bill allows the facilitations that we will require—both unilateral and bilateral—to ensure that the smooth flow of trade occurs at those vital ports. It is particularly essential that we do not have any delay to the processing of imports and exports that go through roll-on/roll-off ports.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
On the specific need to keep trade frictionless, HMRC, which is part of the Minister’s Department, said that we would need an additional 5,000 customs officials. The Home Office said that it was already recruiting 300 additional staff, although I understand that they will backfill places rather than taking on additional roles. How many new customs officers are currently in training to prepare for the new customs regime in March 2019?
Mel Stride
The important point is that we are in discussions with HMRC about its funding—[Interruption.] If I may, I will answer the hon. Gentleman’s question. We are discussing with HMRC the funding arrangements it will need in the 2018-19 financial year. As he suggested, Jon Thompson has said that between 3,000 and 5,000 staff will perhaps be required. Incidentally, they need not be new recruits; they may be people who are reallocated from other parts of HMRC as we change priorities, depending on how the negotiations pan out. I am very confident that an organisation of in excess of 50,000 people will be capable of recruiting sufficient individuals of the right calibre and with the right skills to ensure that the job is done.
John Redwood (Wokingham) (Con)
Will the Minister confirm that on our current frontiers with the rest of the EU, excise, VAT, general taxation and currency are all different on the other side of the channel or the other side of the border with the Republic of Ireland, and that that all works very smoothly and mainly electronically today? Why do people think there would be a bigger problem if we needed to add another line to the electronic register because there was a customs charge as well?
Mel Stride
My right hon. Friend makes a very important point. There is no doubt that we can foresee an end state in which a very frictionless process pertains on the borders between the EU27 and the United Kingdom as a separate customs territory. There are many examples around the world of technology in particular facilitating the free flow of goods across international boundaries.
Mike Gapes (Ilford South) (Lab/Co-op)
The Minister referred to the EU’s borders. It is not only that we have a border with the Republic of Ireland, as the British overseas territories have borders. Gibraltar has a border with Spain, and Anguilla has a border with Saint Martin and Sint Maarten. Will he explain what the Bill will mean for British overseas territories?
Mel Stride
As the hon. Gentleman will know, the overseas territories are not part of the existing European customs union. However, they clearly need to be factored into our discussions and negotiations. We are, of course, close to our overseas territories and, indeed, our Crown dependencies, and we will ensure that the arrangements that would suit those overseas territories, as well as the United Kingdom, are taken into account when determining where we land this deal and the approach that we take.
Sammy Wilson (East Antrim) (DUP)
Does the Minister recognise the advice given by HMRC’s permanent secretary that it believes that all of what is required is doable, and indeed that it is confident that we can have the movement of trade without significant disruption? Does he accept that if we want a frictionless border not just between Northern Ireland and southern Ireland, but between southern Ireland and its main market in the United Kingdom, it is not just a matter of this Bill and the resources being in place, because there needs to be much more co-operation than has been demonstrated so far by the Irish Government?
Mel Stride
I thank my hon. Friend for his intervention, but I do not want to be tempted too far into the negotiations that pertain to matters between the United Kingdom and the Republic of Ireland. However, I will pick up on the point that he and other right hon. and hon. Members have made about readiness. The customs declaration services system that will need to be in place to handle around 300 million import and export transactions and declarations is well on target. It will start to go into use by this autumn and we firmly believe that it will be up and running by next January—well in time for the 29 March deadline.
Catherine West (Hornsey and Wood Green) (Lab)
The Minister is being very generous in taking interventions. Will he tell the House the estimated impact on the beef and dairy sectors in Northern Ireland, following today’s article in the Financial Times that flags up the massive cost to the industry that a completely new customs union system would entail?
Mel Stride
Any issues around impacts on the flow of goods or trade necessarily require an assessment of where exactly the deal with the EU and—specifically in the case of the hon. Lady’s question—the Republic of Ireland lands. Until we know exactly where that lands, it is not possible to start opining on those impacts. I come back to my central point: we are negotiating hard, and it is in our interests, and of course those of the EU, to make sure that we have the lowest duties possible between our trading blocs, and that trade flows as freely and effectively as possible.
Stella Creasy (Walthamstow) (Lab/Co-op)
I have been asking the Minister for many months now about the impact of the 13th directive and the ability of other countries, once we are outside the EU, to vary their own VAT requirements. How can he be so confident that by next January he will be able to implement a system that looks at import and export tariffs, given that it will still be dependent on all 27 countries determining their VAT relationship with us? Does he have an agreement with them for that deadline?
Mel Stride
The 13th directive—as the hon. Lady will know, is principally used by countries and businesses outside the EU for the purposes of reclaiming VAT within the UK—will not necessarily be an issue, depending on where the negotiation between us and the EU lands. It is quite possible—indeed, the Bill facilitates this—that continued engagement with IT platforms will allow an easy and effective method of making the kind of reclaims to which the directive relates. She raises the question of whether we have to be ready by next January. If we have an implementation period, for example, we might have considerably longer to bring the process into effect.
Mr Chris Leslie (Nottingham East) (Lab/Co-op)
To clarify, is it the Government’s policy to try to remain a member of the EU VAT area? That issue matters massively to hundreds and thousands of businesses.
Mel Stride
The purpose of the Bill is to ensure that on day one we are ready for whatever eventuality we are faced with. For example, the Bill moves us away from acquisition VAT to import VAT, as would be the case—[Interruption.] The hon. Member for Nottingham East (Mr Leslie) thinks that that is some extraordinary revelation—almost a divine revelation—but it is actually in the Bill, as he will find if he reads it. To get technical, if he really wants to find out where this will end up, I think it inserts new section 15 into the Value Added Tax Act 1994. All these possibilities will be facilitated, but it will depend on where the negotiation lands.
Nicky Morgan (Loughborough) (Con)
I appreciate that the Minister did not even get on to the section of his speech about VAT before we started to ask him about it, but following on from the previous intervention, he will be aware that many small businesses in this country have not had to deal with import VAT, because they have been dealing with imports from the EU, and that finding upfront cash to pay for that would be a real problem for them. Will he assure the House that he is aware of that issue and the concerns of small businesses about cash flow, and that he hopes to return to this matter? As he knows, we have discussed this before, and as Chair of the Treasury Committee, I will be writing to HMRC to ensure that we understand its current thinking.
Mel Stride
My right hon. Friend, who has been a doughty campaigner for the interests of business, is absolutely right to raise this issue, with which the Government and the Treasury have sympathy. We do not want over 100,000 businesses to be disadvantaged in cash terms in the way she describes, so this is certainly something that we will be looking at closely going forward. The Bill itself does not prescribe any particular end point in this context. It will be for the Government, after the passage of the Bill, to decide exactly where we wish to end up.
Nigel Mills (Amber Valley) (Con)
My right hon. Friend said that the Treasury might be inclined to be generous to businesses that had their cashflow disadvantaged by this change. Would he perhaps be less generous to large businesses that wholly disadvantage their small UK suppliers by forcing them to accept 120-day payment terms, thus effectively putting many out of business? It would be rather generous to let such businesses off earlier VAT payments on their purchases from within the EU if they were not paying their UK suppliers to a decent timetable.
Mel Stride
The issues that my hon. Friend raises are probably slightly beyond the scope of the Bill, but they are none the less important. If he would care to write to me, I should be happy to consider them, and, indeed, to meet him if he so wishes.
Richard Graham (Gloucester) (Con)
My right hon. Friend is being very generous. It would help us all if he could confirm that this is really an enabling Bill, and that it therefore should not alarm either those who wish to see the continuity of existing trading arrangements, or those who want significant differences. It paves the way for either scenario, depending on the negotiations in Europe.
Mel Stride
As usual, my hon. Friend is eloquent and to the point. He makes an important point because, as he says, the Bill is intended to ensure that wherever the deal with the European Union lands, we will be in a position to be ready on day one to ensure that we keep trade flowing across our frontiers, to the benefit of our economy, our businesses and our consumers.
Sir William Cash
I mention this only because of the very articulate response that my right hon. Friend gave to my hon. Friend the Member for Gloucester (Richard Graham). The Bill refers to Orders in Council, which the Financial Secretary has mentioned, and also includes the words “despite any enactment”. Could that include the European Union (Withdrawal) Bill, when it has been enacted? Could it also include any other transitional arrangements under a further enactment? The words “despite any enactment” are very dramatic.
Mel Stride
I think it is clause 32 that sets out the basis on which the powers will be dealt with. The Bill is extremely clear that any treaty between ourselves, as a customs union, and another territory or customs union must be subject to a draft affirmative statutory instrument. Having been laid, such an instrument would not come into effect immediately, but only when Parliament—or, specifically, the House of Commons—had considered and passed it. At that point, and only at that point, would an Order in Council follow, which would effectively bring the will of the House into law.
John Howell (Henley) (Con)
My right hon. Friend is being very generous in giving way. An important element of what he is talking about is the business community. What consultation has taken place with businesses, and what feedback has there been?
Mel Stride
My hon. Friend raises an extremely important point. At the heart of the issues that we are discussing are British businesses of all sizes. Because we want to ensure that we have an environment that is as good as possible for those businesses, consultation has been at the heart of our approach. We produced a discussion paper last year, as well as a White Paper, to which we received responses. I know that my colleagues in Her Majesty’s Revenue and Customs have been actively engaged for many months in roundtable discussions with not just businesses, but representatives of ports and airports, and all the important actors in the process of importing and exporting into and out of the United Kingdom.
Perhaps I could now make a little progress—
Mr Clarke
I am extremely grateful to my right hon. Friend for giving way so generously, and for giving way to me twice. Let me also congratulate him on the eloquent clarity that he is bringing to this whole subject. He confirmed to my hon. Friend the Member for Gloucester (Richard Graham) that this is essentially a contingency Bill in case things change, and that it covers everything from carrying on roughly as we are now to having quite different arrangements. However, does it remain the Government’s preference that things should stay the same if the negotiations are successful? Paragraph 10 of the explanatory notes states that
“it is the government’s intention that the UK’s Customs regime will continue to operate in much the same way as it does today following exit from the EU.”
Can my right hon. Friend confirm that that remains the Government’s policy intention in the context of the forthcoming negotiations?
Mel Stride
My right hon. and learned Friend raises an important point. The Government are indeed saying that we recognise the importance of ensuring that we have a smooth and frictionless trading situation between ourselves and the European Union once we have left it. Although we will have left the European Union, the Bill will facilitate our ability to have similarities in the way in which we trade. It will then be up to us to decide how we deviate from our starting point. We see the current position, under the European Union code—the customs code and the legislation in the European acquis—as a starting point to which we need to be reasonably aligned, even though we might diverge from it in the years ahead as a result of the negotiations, if that would be to the benefit of our country.
Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)
The Minister has clarified that it is the Government’s intention to continue with the existing customs arrangements, and that the Bill will allow for the possibility of a continued customs union. Can he also confirm that the content of any new customs arrangements or customs union will be decided only through secondary legislation, rather than through primary legislation? Would it not be better to have a proper vote on the Floor of the House on primary legislation on whether we should stay in a customs union?
Mel Stride
The right hon. Lady poses an ingenious question. The simple answer is that the form of the arrangements with the European Union after our exit is the subject of the negotiations. The Government have committed to holding a meaningful vote on the deal. The focus will be on whether the deal is appropriate, not on secondary legislation within this legislation. This Bill is designed to facilitate whatever the will of Parliament ends up being. That is the important point.
The Government have been clear from the outset of the negotiations that, as we implement the decision of the British people to leave the EU at the end of March 2019, we want a deep and special partnership with the European Union and that, as we move towards any future relationship, we should seek to minimise disruption and maximise the opportunities that the process of withdrawal represents. That is in the interests of businesses and individuals in the UK and the EU.
Since triggering article 50, the Government have worked intensively with our European partners to settle the issues in the first phase of the negotiations—namely, a fair deal on citizens’ rights allowing UK and EU citizens to get on with their lives in the country in which they live; a financial settlement that honours the commitments that the UK has undertaken as a member of the European Union, just as we said we would; and an agreement on the island of Ireland that preserves the territorial integrity of the United Kingdom and the stability that has been brought about by the Belfast agreement. We have made great strides in each of those three areas, and I am sure that Members on both sides of the House will welcome the European Council’s agreement last month that sufficient progress had been made on phase 1 and that we should move on to talks about our future partnership.
This development in the negotiations means that we can now look forward to discussing our future customs relationship with the EU. As I reminded the House earlier, the Government have been upfront in setting out their objectives for any such arrangement. The Prime Minister has been clear that, although we are leaving the EU, and therefore its customs union, we are not leaving Europe. So just as the UK will establish an independent international trade policy and look to forge trading relationships with new partners around the world, it is also critical that our future customs arrangements allow us to keep trade between the UK and the EU member states as free and frictionless as possible.
Wes Streeting (Ilford North) (Lab)
The Minister keeps on referring to the importance of free and frictionless trade with the European Union, but is it not time for the Government to be a bit clearer with the public that, through our membership of the customs union, we have preferential trade agreements with a further 65 countries right across the world? This is not just about protecting trade with the EU; we also need to protect those existing trading relationships. As far as any future trade deals are concerned, we must recognise that size matters, and that we are better and stronger as part of the European bloc.
Mel Stride
The hon. Gentleman raises an important point, and it is one that I largely agree with. It is important that we maintain the existing arrangements that we have been brought into by virtue of our membership of the European customs union, which is exactly why we are in discussions with those countries to ensure that we have appropriate arrangements in place once we leave the EU and its customs union. Over and above that, there will be opportunities to forge trading relationships with other countries around the world, which we are prohibited from doing at present because of our membership of the EU customs union.
Alison McGovern (Wirral South) (Lab)
My constituents are today dealing with the news of yet more job losses at Vauxhall in Ellesmere Port. We are a place that manufactures, and we want to keep manufacturing, so can the Minister tell me and my constituents exactly what these opportunities are?
Mel Stride
The opportunities will be very significant indeed—[Interruption.] If the hon. Lady will allow me, I will attempt to answer her question. Of course our trading relationship with Europe is extremely important, which is why we are having negotiations with our European partners. It is important to us and to them to ensure that we maintain those relationships to the highest degree. However, a growing percentage of our trade is now taking place outside the European Union—certainly more than was the case five or 10 years ago—and the expanding markets of the future are not necessarily going to be the countries that constitute the membership of the European Union. To answer the hon. Lady’s question directly, the opportunities lie out there in China, India, the United States and other countries around the world with which we will be able to forge a freer set of trade agreements than we have been able to contemplate during our membership of the European Union.
Ian Murray (Edinburgh South) (Lab)
The Minister continually uses the word “frictionless” and talks about keeping things as they are now. Indeed, the Bill will facilitate our keeping the customs union regulations as they are at the moment, so what principle are the Government using to take participation in the customs union off the table?
Mel Stride
This comes back to the fundamental point that on leaving the European Union we will be leaving the customs union. Then it will simply become a question of what kind of relationship we negotiate with the EU and its customs union. The Government’s position is clear on this. We want these arrangements to be as frictionless as possible. We want to facilitate trade rather than putting barriers in the way of what will be a European customs union of 27 nations after Brexit.
Wera Hobhouse (Bath) (LD)
The Minister seemed to say previously that it might not be a great thing for the UK to leave the customs union and the single market, but that we were doing it because that was the will of the people as expressed in the referendum result. Is that the only reason that we are doing this?
Mel Stride
I apologise to the hon. Lady if I said something that in any way misled her. I do not think that I actually said that. What I said was that, as a consequence of leaving the EU, we will of necessity be leaving the customs union. Now, in the negotiations, we need to strike the best possible deal for our country—a deal that is in our interests and those of the European Union and that maintains a close, frictionless, positive and mutually beneficial relationship between ourselves and a customs union of the remaining 27 members.
Kirsty Blackman (Aberdeen North) (SNP)
On the subject of the negotiations that the UK is having with countries with which it currently has free trade arrangements because it is part of the EU, and on the rules of origin issue, what discussions has the Minister had about cumulation and about whether the EU will accept UK-EU cumulation, or whether we will be required to have parts made only in the UK?
Mel Stride
As the hon. Lady will probably know, those are matters of ongoing discussion within the Department for International Trade, but this Bill and the Trade Bill, which will have its Second Reading tomorrow, are about ensuring that country-of-origin issues can be determined by ourselves under our own laws, rather than having to depend upon on those of the European Union.
John Redwood
Will the Minister confirm that the European Union made it clear to the United Kingdom that we cannot stay in the customs union and single market if we will not pay contributions or accept freedom of movement?
Mel Stride
It is entirely true that we cannot have our cake and eat it—[Interruption.] I am paraphrasing the EU, not the Government’s position. Our position has always been that we foresee a mutually advantageous trading relationship with the European Union’s customs union and, for the purposes of this afternoon’s debate, the important point is that this Bill provides and facilitates the ability to produce exactly that.
It is important to provide certainty and continuity to businesses, including the hundreds with which the Government have met and consulted since the referendum. Crucially, the Government remain firmly committed to avoiding any physical infrastructure at the land border between Ireland and Northern Ireland. That commitment and progress on the issue were formally recognised at last month’s European Council, and it will continue to inform our approach in the future.
The Government set out in their future partnership paper last summer and in the White Paper for this Bill two options for our future customs arrangements—two options that most closely meet those objectives. One is a highly streamlined customs arrangement, which comprises a number of measures to help to minimise barriers to trade, from negotiating the continuation of some existing trade facilitations to the introduction of new, technology-based solutions. The other option is a new customs partnership: an unprecedented and innovative approach under which the UK would mirror the EU’s requirements for imports from the rest of the world that are destined for the EU, removing a need for a formal customs border between the UK and the EU. The Government look forward to discussing both those options with our European partners and with businesses in both the UK and the EU as the negotiations progress.
The Government have already taken a number of important steps to ensure readiness for EU exit, including most recently at the Budget when my right hon. Friend the Chancellor of the Exchequer announced £3 billion of funding for Departments and the devolved Administrations to support their preparations. HMRC is on course to deliver a functioning customs service on day one that enables trade to flow, HMRC to collect revenues and the UK to have a secure border. The Treasury has already effectively allocated over £40 million of additional funding to HMRC this year to prepare for Brexit and continues to work with HMRC to understand its ongoing Brexit requirements. The Taxation (Cross-border Trade) Bill represents a significant part of our preparations.
Mr Leslie
I am grateful to the Minister for giving way. I sense that he is coming to a conclusion, so I wanted to get this particular question in. The programme motion specifies when he and the Government want the Bill to come back for Report and Third Reading, but how many sittings does the Minister intend the Bill to have in Committee? Many hon. Members would have expected a Committee of the whole House, but that does not appear to be the case and the Committee stage will happen upstairs. Will he guarantee that significant time will be available in Committee for those lucky Members to scrutinise this legislation properly?
Mel Stride
I will make two points. First, as the hon. Gentleman will know, such matters are for the usual channels, and his party is an important part of the usual channels. Secondly, the Bill will of course receive the normal high level of scrutiny as it passes through the House—line by line, clause by clause. Amendments can be tabled, debated and divided on if necessary. The Bill will then come back to the House on Report and for Third Reading. If he has any particular representations to make about the number of sittings in Committee, he should perhaps speak to his Whips, who can then speak to our Whips, and I am sure that we will all end up in a happy place on the issue he has raised.
Stephen Doughty
The Minister is being generous, as he always is. Having been opposing Whips at various points on various financial matters, I know that he always does these things in good faith, but I share the concern of my hon. Friend the Member for Nottingham East (Mr Leslie). Both Front-Bench teams are currently tied up with the Finance Bill that is going through—an important piece of legislation that we quite rightly oppose many parts of. Given that, we will not be able to start the scrutiny of this Bill in Committee for quite some time, and the Bill is due to be out of Committee by 1 February. The Bill will not receive full scrutiny in the House of Lords because this is a money Bill, so will the Minister tell us how many Committee sittings there will be to scrutinise a large, substantial and important Bill?
Mel Stride
The hon. Gentleman is being typically tenacious, but he asks the same question as the hon. Member for Nottingham East and he will have the same answer. I will spare the House my eloquence by not going through, once again, the same answer that I just gave.
Vicky Ford (Chelmsford) (Con)
I thank the Minister for giving way and for drawing attention to the “Future customs arrangements” paper that came out in the summer and the two potential solutions: the highly streamlined option or the new customs partnership. Will he confirm that the Government are still open minded about both options and that this Government’s priority is to maximise stability and minimise uncertainty not only for British consumers buying products from the continent, but for continental suppliers trying to sell to us and vice versa?
Mel Stride
My hon. Friend is absolutely right that the Government’s position is that we are determined to explore both models actively. The new partnership model would be a creative and unique approach to a customs union with the European Union in which we would effectively have a common customs border and no customs border between ourselves and the other EU member states. Its very uniqueness and the creative thinking needed to reach any such agreement means that it would probably happen on a longer timeframe than some of the other approaches that we will be taking, but I can confirm that we want to continue to discuss both options with our European partners.
The Bill allows the UK to establish a new, standalone customs regime, ensuring that VAT and excise legislation operates as required upon EU exit. The Bill makes a number of provisions that are absolutely essential for any future customs regime to function effectively regardless of the outcome of the negotiations. Those provisions include allowing the UK to charge customs duty on goods, including those imported from the EU, allowing the Government to set out how and in what form customs declarations should be made, and giving the UK the freedom to vary the rates of import duty as necessary, particularly in the case of trade remedies investigations and for developing countries. Moreover, it will confer a number of necessary and appropriate powers to allow the UK to respond effectively to the outcome of the negotiations, and it will give the Government the ability to make subsequent changes to the customs, VAT and excise regimes, which may be required later but cannot be predicted as this stage.
As I have set out today, the Government recognise the importance of providing certainty and continuity to businesses, so this Bill will allow the Government to make good on their intention to replicate the effect of existing EU law wherever possible as the UK leaves the EU. I look forward to debating the provisions and the underlying issues as the Bill makes its way through this House. The Bill takes significant steps to ensure that the UK is ready for EU withdrawal by allowing our country to establish a standalone customs regime and by ensuring that our VAT and excise legislation operates as required upon exit day. As we begin discussions with the EU on our future partnership, the Bill ensures that we can do so with the utmost confidence, securing our ability to deliver a robust, efficient, effective customs regime whatever deal is struck with our European partners. As such, the Bill underpins our great country’s ability to pursue its own trade deals with partners from right across the world, and I commend it to the House.
Peter Dowd (Bootle) (Lab)
I beg to move an amendment, to leave out from “That” to the end of the Question and add:
“That this House recognises that the UK will need considered and effective arrangements to ensure a customs and tariff regime, including the potential of a customs union with the European Union, is in place before the UK’s exit, in order to guarantee frictionless movement of goods at UK ports and the ability to levy customs duty and VAT and to protect manufacturing and other key industries through the power to enact protective tariffs, but declines to give a Second Reading to the Taxation (Cross-border Trade) Bill because the Government has failed to provide a coherent plan for the operation of the customs and tariff regime after the UK’s exit from the European Union or for the maintenance of frictionless movement of goods at UK ports, because the Bill is not accompanied by proposals to ensure that Her Majesty’s Revenue and Customs are properly resourced and organised to implement a new customs and VAT regime, because the needs of UK manufacturers and producers have not been properly reflected in the design of the proposals and because the Bill proposes to give excessive powers to Ministers without appropriate procedures for parliamentary consultation and scrutiny.”
Here we are at the start of another year, and it feels much the same as the last one—the same old empty Bills, long on rhetoric and short on detail. Yet always the Government’s default position is a fresh set of powers for Ministers, which is the one fixed point in a changing world. This Government seem to be taking back more control from Parliament as each day passes.
The Bill ostensibly sets out to create a functioning customs framework for the United Kingdom once we leave the European Union—hope springs eternal. We accept that such an arrangement is necessary, regardless of the UK’s future relationship with the EU or, indeed, the nature of its wider trading relationship, yet once again we have been denied any detail in the Bill itself, as hon. Members have identified. There is nothing to guarantee frictionless trade through the UK’s ports from the moment of exit, no measures properly to resource Her Majesty’s Revenue and Customs for the task and nowhere near sufficient detail on the powers and provisions of the Trade Remedies Authority that will be charged with ensuring that our vital British industries are protected. Only yesterday we saw the potentially disastrous consequences of that lack of detail, with reports on the likely result of the Government’s failure to address the EU VAT area for thousands of businesses.
In short, instead of setting up a stable customs framework, this Bill provides few of the policy or, indeed, practical considerations required for the task of leaving the European Union.
Richard Graham
It seems rather curious to criticise the Government for denying any detail while we are in the middle of a negotiation. How could the hon. Gentleman expect any Government to guarantee anything until that negotiation is complete?
Peter Dowd
This Government have guaranteed absolutely nothing whatsoever. Time after time, they hide behind the veil of negotiation.
Before addressing the Bill’s specific failures in meeting the Government’s objectives, I will raise the issue of the powers created by this Bill that enable Ministers to do whatever they want. The leave campaign’s central message, the one repeated time and again and printed across its campaign literature, was that leaving the European Union would allow the Parliaments and Assemblies of the UK to “take back control” of our law making. And yet again, every piece of legislation published by the Government relating to our exit creates more powers for Ministers, while ignoring Parliament completely. Parliament is in a persistent state of having its head patted—that is as much as Parliament is getting at the moment.
Sammy Wilson
Given where we are in the negotiations, does the hon. Gentleman accept that a Bill that allows either for no deal or for complete mirroring of the current arrangements and all possibilities in between is the best Bill we could possibly have?
Peter Dowd
The hon. Gentleman would have a point, but the Government’s record so far is to try to duck every question we ask of them. They constantly hide behind the negotiations.
Several hon. Members rose—
Peter Dowd
Lots of people want to speak, so I will move on and come back in a minute.
We now have a Government who are prepared to change the law to give themselves a majority on Public Bill Committees—that is where we are. They are prepared to ignore votes of the House on Opposition day motions, and they are now prepared to undertake the greatest centralisation of powers that Parliament has seen since the war.
Angela Smith (Penistone and Stocksbridge) (Lab)
Does my hon. Friend agree with me and many Labour Members that the programme motion needs to be more detailed and needs to make it clear that we will have proper scrutiny in Committee, with more sittings than currently appear to be on offer from the Government?
Peter Dowd
We will get as much scrutiny as possible on this Bill.
Having completely failed to create a strong and stable Government at the last election, the Prime Minister seems to be ignoring the will of the electorate and grabbing power by any means necessary. That is particularly the case with this Bill, where Ministers are being handed powers to set import and export duties, preferential rates and quotas across any good or service sector in our economy. This Bill will give the Government the power fundamentally to reshape the environment in which our economy operates with a few strokes of a pen.
Alex Cunningham
As my hon. Friend says, it is critical that Parliament has a say. CF Fertilisers on Teesside is worried about the dumping of cheap goods, particularly from Russia, if we do not get the anti-dumping legislation right. The Minister says that will be addressed by this Bill and by the Trade Bill, which will have its Second Reading tomorrow, but I cannot see anything that says so. Does my hon. Friend agree that that is all the more reason why we need much more time in Committee to ensure that such guards are put in place?
Peter Dowd
My hon. Friend makes a good point that we need to have absolute scrutiny of the Government’s proposals.
We know what the Government would do with the powers contained in this Bill. They would tear up protections for British producers and consumers, throw workers’ rights on to the bonfire and create a free-market offshore tax haven—a miserable pound-shop economy. The Government know the price of everything and the value of nothing.
The Government do not have the authority to act in that way. The referendum and the recent election show a country divided, and it is Parliament’s job to reflect the country’s will and to develop a workable consensus. This Government, much like the disastrous Major Administration, have no mandate to implement such far-reaching changes, which is why the Labour party’s reasoned amendment would deny the Bill a Second Reading. We demand that the Government return with a Bill that sets out a clear path to our mutual objective of creating a functioning institutional framework for the handling of customs once we leave the European Union, one that provides the proper powers of scrutiny to Parliament, as promised by the leave campaign and as determined by the citizens of the UK in the recent election. Anything less is an affront to our democratic process and will only spell disaster for our country as this weak Prime Minister becomes prey to the worst instincts of many Conservative Members.
Peter Dowd
I am happy to have a conversation with my hon. Friend outside the Chamber, but this is about the Government’s policy, not ours.
HMRC resourcing is another issue that we have to address. Everyone in this House agrees that we must avoid the nightmare scenario of gridlock at UK ports, with lorry queues stretching as far as the eye can see, yet the Government continue to do Brexit on the cheap with their refusal to fully fund and resource HMRC. Its staffing levels have been cut by 17% since 2010, and they are set to be cut further this year as it plans to close 137 offices across the country. The Minister must recognise the urgent need to hire and train more customs officers and HMRC staff, particularly if the Government are to meet their over-ambitious target of a fully operational customs system by 2019.
Although the Treasury is keen to tout technology as its magic solution to customs post Brexit, Ministers have failed to offer specifics on what a new customs system will look like and on whether it will even be ready in time. At the same time, there remains huge underlying questions about whether the current customs declaration service programme can deal with the sheer workload and pressure post Brexit.
A new IT system is no substitute for a fully resourced and staffed HMRC. Even with a transitional arrangement with the EU, the Treasury must recognise the urgent need to increase HMRC’s budget and staff, which is why the Opposition will attempt to amend the Bill to require Ministers to report back to Parliament on HMRC staffing levels and on the progress on testing and implementing these new systems.
Rachel Maclean (Redditch) (Con)
Does the hon. Gentleman recognise that HMRC has been given all the funding it has asked for to be ready for Brexit? Doe he recognise that the Treasury has set aside a total of £3 billion, that £400 million has gone to HMRC, that the negotiations are under way and that it will be given what it asks for to be ready on Brexit day?
Peter Dowd
There is no one in training and the staff on the ground take a completely different view from the hon. Lady.
The Bill outlines the trade remedies the Government will enforce against the dumping of unfairly priced goods. At the moment, these remedies are provided by the EU, but on leaving, the UK will have to enact and manage its own trade remedies. These measures are spread across this Bill and the Trade Bill and are of great importance to UK manufacturers. As I have said at this Dispatch Box on previous occasions, the Opposition will oppose any attempt by this Government to undermine UK manufacturing and jobs by the weakening of trade remedies, as well as any attempt to dismantle unilaterally the external tariff and open up UK markets to unfairly priced goods. This is a question not of protectionism, but of fairness and the rule of law, as countries that allow or encourage state dumping are not playing by international rules.
The manufacturing industry remains an indispensable part of the UK economy. According to the Office for National Statistics, manufacturing accounted for 2.3 million jobs in 2016 and 10% of the UK’s total economic output. These jobs are shared out across the minerals and ceramics, paper, steel, glass, chemical and fertiliser sectors. They are also spread across communities across the country, where manufacturing remains one of the largest employers. In my constituency alone, more than 2,500 people are employed in manufacturing, and the same will be true of the constituencies of many Members here today.
The trade remedies proposed in this Bill are pitiful to say the least. They are far weaker than the remedies currently in place in the EU and are weaker than those in most developed trading nations, and if they remain unchanged, they will put manufacturing jobs at risk.
Stephen Doughty
I agree very much with the point my hon. Friend is making about the pitiful nature of the trade remedies in the Bill. Indeed, I think that it poses much greater risks for industries such as the steel industry in my constituency. Does he agree that it is necessary to put paid to the myth that existed that we could not take trade remedies when we were part of the EU? Indeed, the former Steel Minister who is sitting opposite, the right hon. Member for Broxtowe (Anna Soubry), took a good decision, for which I praised her at the time, to introduce remedies on certain steel products that affected steel in my constituency. Whether these decisions are taken or not is a political choice; it is not about whether we can do this or not under the EU.
Peter Dowd
My hon. Friend is absolutely right on that point.
What is concerning is the fact that UK manufacturers and key industries have not been consulted on the trade remedies in the Bill. Perhaps the Minister can explain why, if the Prime Minister is happy to meet representatives from Toyota to agree a deal and the Environment Secretary is in regular contact with the National Farmers Union on future agricultural subsidies, he has failed to consult an industry that represents nearly 10% of the economy and employs millions on the trade remedies it needs to protect UK jobs.
Stephen Kinnock
I am sure my hon. Friend will have seen the letter in the Financial Times from the chief executive officers of the British steel, paper, ceramics, minerals and chemicals associations, along with their trade union counterparts, which puts this very well: they are deeply critical of the Bill, saying it does not do anything like what is required on trade defence and making it absolutely clear that the UK’s manufacturing base and tens of thousands of jobs around the country will be at risk if Parliament gets this Bill wrong.
Peter Dowd
My hon. Friend is absolutely right on that point, and on that issue the Government just are not listening—it is as simple as that.
As I was saying, I have no doubt that if the Minister had consulted, he would have been told by industry professionals in no uncertain terms to tear up this Bill and start again. It offers no legal certainty for UK manufacturers. Schedule 4, in particular, has little detail on how investigations will be conducted or on how calculations and remedies will be applied. In addition, a mandatory lesser duty rule is completely out of step with the direction the EU is heading in and with the majority of countries in the World Trade Organisation.
The economic interest test outlined in the Bill is of particular concern, as not only is it unique to most WTO countries, but it appears to be tipped towards the consumer and against the producer; it is absolutely out of balance. It is far too wide and gives unprecedented powers to a Secretary of State for International Trade who has already advocated lowering food standards and weakening workers’ rights. The Bill does not state the duration of the remedies that would be in place, whereas the EU currently stipulates five years. Nor is the Bill clear about the rolling over of specific EU trade remedies that are set to expire and that must be replaced by the Secretary of State or whole sectors would be left vulnerable. Those are just a few of the concerns that the Opposition have with the trade remedies outlined in the Bill, and we will raise them further and seek to amend them in Committee.
As I mentioned, the Opposition recognise the need for effective customs and tariff arrangements, which will guarantee the frictionless movement of goods at UK ports. The ability to levy customs duty and VAT as well as to protect manufacturing and key industries when the UK leaves the EU is also important—
Angela Smith
I feel that it is very necessary to ask this question, given that a majority of Labour Members are in favour of staying in the customs union: can our Front-Bench team confirm whether or not they are in favour of staying in the customs union?
Peter Dowd
My hon. Friend knows that that matter has been debated on many occasions, and I am not going to go there.
The trade remedies outlined in the Bill are woeful and will not protect UK manufacturing and jobs. Similarly, the Government have failed to provide any clear indication alongside the Bill that they will properly fund and staff HMRC to make sure it can effectively manage our customs and tariff regime post Brexit. This is yet another poorly drafted Bill from an increasingly chaotic and divided Government, who seek to award themselves unprecedented power and shield themselves from any parliamentary scrutiny. That is why I urge colleagues from across the House to support our reasoned amendment.
David Morris (Morecambe and Lunesdale) (Con)
I really wanted to contribute to today’s debate because my local port of Heysham will be directly affected by the outcomes of what we are discussing today.
I went to see the port not so long ago to talk about how we best facilitate the trade coming through it. I met the port authorities and the chief executive of Seatruck Ferries, Alistair Eagles, who envisaged that, given the way things are looking, there would be no problem with trade from Northern Ireland coming into the port of Heysham and the rest of the UK. There was one thing that concerned me around that time: press reports of a “Dad’s Army” of customs officers being recruited. Such reports were completely unfounded and erroneous, because we know now that customs officers are being recruited. The main point I looked into was the fact we could get our trade from Northern Ireland moving through the port of Heysham seamlessly, as happens now. It was agreed at the time that that could carry on, so I am glad to report to the Chamber that, judging by what I found out and the experiences of how the port is working, we do not envisage a problem.
Sammy Wilson
Does the hon. Gentleman accept that we on the Northern Ireland side also welcome the fact that the Government have made it clear that trade between Northern Ireland and the rest of the UK will not be interrupted in any way as a result of leaving the EU? Indeed, despite what has been said in this House time and time again, the Government have put forward very positive proposals as to how that frictionless trade can be conducted.
David Morris
I could not have put that any better—I agree with everything the hon. Gentleman said.
I will give just one taste of how trade works in my area. We are the first port of call—excuse the pun—for Northern Ireland. I hope that the hon. Member for North Antrim (Ian Paisley) and I are going on a little project on a Wrightbus—known as the Boris bus—from his constituency through the port of Heysham all the way down to London to demonstrate exactly how trade works within the UK and how it will flourish under the Bill.
Ian Paisley (North Antrim) (DUP)
I thank the hon. Gentleman for enlightening the House on that point. As he knows, that bus is in itself a great expression of how trade works within these islands. People from the constituency of my hon. Friend the Member for East Antrim (Sammy Wilson) work in a factory in my constituency, which draws on skills from across the whole United Kingdom, whether the tarmac manufacturers in Scotland, the electronics manufacturers in Manchester or the window developers for buses. All those skills are put into one product, which is seen every day on the streets of London, Manchester and other parts of the UK. It is a good example of how trade works practically, putting people into employment. I welcome the project that the hon. Gentleman suggested.
David Morris
The hon. Gentleman explains succinctly that the supply chain that makes the buses is immense in his constituency and in the wider UK. That is why trade must flourish between Northern Ireland, the United Kingdom and Europe.
It is a fact that we will leave the EU, and it is best to think about how we do it. The Bill covers the initial stages of facilitating that.
Mr Alister Jack (Dumfries and Galloway) (Con)
My hon. Friend is generous in giving way. I am sure that he agrees that, given that southern Ireland does 80% of its trade with or through the United Kingdom, it is also in Ireland’s interest that that carries on seamlessly. Like my hon. Friend, I have a port—Cairnryan—in my constituency, and if any of the buses are too much for others to handle, I would love them to be sent my way.
David Morris
I thank my hon. Friend for his intervention, which brings me nicely to my next point. I have to be careful what I say because I am still Parliamentary Private Secretary to the Secretary of State for Northern Ireland. I put it on record that I wish him well. He has not just been an excellent boss; he is a more than excellent friend. I welcome the new Secretary of State, whose name has just been announced: my right hon. Friend the Member for Staffordshire Moorlands (Karen Bradley).
We have a free trade border between Ireland and Northern Ireland, and we have had it since the 1920s. Two currencies operate in the area, and there is not a problem. To be grown up about the situation, there is no reason why that should not carry on. However, I urge all Members to think of the benefits that can arise from our leaving the EU. Gibraltar has been mentioned. Since Brexit was announced, Gibraltar has increased its trade by 25%, and there does not seem to be a problem with borders that it is not already experiencing. It is therefore in the interests of not just the UK but the EU that we continue with the frictionless borders and frictionless trade tariffs. That is the grown-up view.
I urge hon. Members to allow the Bill to go forward. I will vote for it this evening and I urge Ministers to heed what I have said, even though it is about a microcosm of the UK, and ensure that we get the best deal for the UK within Europe.
Kirsty Blackman (Aberdeen North) (SNP)
I am grateful for the opportunity to speak on the Taxation (Cross-border Trade) Bill, which I will call the customs Bill for ease during my speech. I am particularly delighted that we are considering it at the same time as the Finance Bill—that is excellent. I am not sure whether Hansard can capture my sarcasm there.
Is the Minister as concerned as I am about the issues that so many different organisations have raised? Perhaps the Minister and the teams in Her Majesty’s Revenue and Customs have been meeting the organisations that are raising concerns, but I do not think that they have been listening. Part of the problem for me is the wide range of organisations that are raising a wide range of issues. As many hon. Members have said, they include UK Steel, the Manufacturing Trade Remedies Alliance, the British Ceramic Confederation, the GMB and the TUC, but also the British Chambers of Commerce, the British Retail Consortium and the Law Society of Scotland. All those organisations have raised issues, which are not all specifically about trade remedies. There are therefore several problems with the Bill, not just with one aspect but across the measure.
The Bill has 166 pages and creates so many delegated authorities that the Government have had to produce an 174-page document detailing them. The majority relate to the negative procedure, though some relate to the affirmative procedure. In four instances, the UK Government create Henry VIII powers—the power to amend or repeal an Act of Parliament—which are particularly concerning. We have consistently raised concerns about Henry VIII powers, and we will continue to do that. The Chartered Institute of Taxation said:
“The Bill will, we understand, have the powers to amend primary legislation using secondary legislation; raising similar concerns around delegated powers as with the EU (Withdrawal) Bill.”
UK Steel said that
“key aspects of the UK’s trade legislation will evade proper parliamentary scrutiny”.
It is a major concern when UK Steel, a trade body that represents important manufacturers, makes such comments.
The number of organisations that are raising concerns is worrying for Members, as is the fact that so much of the Bill will dodge proper parliamentary scrutiny. Those who supported Brexit as a means to strengthen parliamentary sovereignty are being incredibly badly served yet again by the UK Government. Sovereignty for the Government is very different from sovereignty for Parliament. I urge the Minister to read the Law Society of Scotland briefing on the Bill. It suggests several amendments, and much of its concern is about the lack of requirement for Ministers to consult when making secondary legislation.
Stephen Kerr (Stirling) (Con)
The hon. Lady has mentioned at least twice the Law Society of Scotland briefing document, which I have in my hand. It is a very useful and positive contribution to informing Members of all parties about the Bill. I will quote from it so that we are all clear about the context. In its general remarks, the Law Society of Scotland says:
“We recognise the necessity for this Bill”.
That conclusively states that the Bill is a necessity. Does the hon. Lady accept that?
Kirsty Blackman
Because the UK Government decided that we are leaving the customs union and we will therefore need our own customs procedures, it is sensible, given that it was an entirely EU competence, for the UK to create its own customs framework. However, if the UK Government had done what we suggested and remained part of the customs union, the Bill would not be necessary. Although the Law Society of Scotland says that the Bill is necessary because of the decisions of the UK Government, it raises several concerns. I ask the Minister to read the briefing, which suggests a number of amendments, particularly on consultation.
Hannah Bardell (Livingston) (SNP)
Further to the point made by the hon. Member for Stirling (Stephen Kerr), has my hon. Friend seen the briefing from the Manufacturing Trade Remedies Alliance? It says:
“These proposals are much weaker than we have in the EU (and also weaker than those of most other Trading Nations). Weaker remedies cost jobs.”
Just because we have legislation—and bad legislation—it does not make what is happening a good thing.
Kirsty Blackman
I absolutely agree with my hon. Friend, who speaks for us on international trade. She is right about trade remedies and I will come on to that specific point later.
Although the Bill is general, it is also wide ranging. I want to consider some of the issues relating to HMRC that the Minister mentioned earlier. The new CDS software is set to replace CHIEF—customs handling of import and export freight—the current system, in 12 short months. The Public Accounts Committee report in November stated:
“It would be catastrophic if HMRC’s new customs system, the Customs Declaration System (CDS), is not ready in time and if there is no viable fall-back option.”
It expects the number of customs declarations that HMRC must process each year to increase fivefold. Every time I and other hon. Members have questioned the Minister about this, he has been particularly blasé and unflustered about the tight timetable. The PAC also said that HMRC’s timetable is incredibly tight, given the amount of work still to do. HMRC will only know by July 2018 whether the system works as intended—I am surprised that HMRC will only know by July 2018, but the Minister thinks it will all be fine—which is only one month before the first traders start to use it, and gives very little time to take remedial action if anything goes wrong.
It is vital for our exporting businesses that the customs software works. We have consistently raised concerns about this and we will continue to do so. I appreciate that the Minister is nodding, but we will keep the pressure on to ensure that it happens.
Hannah Bardell
My hon. Friend is making an excellent speech. How much faith does she have in the Government and the implementation of the software programme, given the disaster they are having with the change programme and the closure of HMRC offices?
Kirsty Blackman
UK businesses have several questions about the capacity of HMRC to deal with the volume of customs declarations, and many businesses will have to make customs declarations for the first time. Businesses are already concerned about the loss of the HMRC hotline that they could previously access. One business contacted HMRC with a query and received a reply seven months later. Seven months is not an appropriate timescale. If HMRC cannot respond to complaints and questions timeously now, how will it do so in the future after a fivefold increase in the need for customs declarations?
In a post-Brexit scenario, businesses will—in an incredibly short timescale and whether we have a trade deal or not—have to come to terms with new customs software. They will also have to come to terms with a new system of customs duties, ways to export and other massive changes. That means an incredible amount of uncertainty. When drafting the Bill, the Government could have been clearer about how the new customs system would work, therefore getting rid of a level of uncertainty. I know that they do not yet have a trade deal, but if they had been able to implement the software earlier or be clearer about how the processes will work, it would have been better for businesses.
Broadly speaking, businesses have been in favour of the replication of the Union customs code in the future. I mentioned the issue of rules of origin, and the Minister also referred to it earlier. There is a major problem with those rules. The Minister said that they should be determined by the UK Government in negotiation. As a side note, the current UCC, at 61.3, contains options for declaring origin. That does not appear to have been replicated in the primary legislation, and the British Chambers of Commerce, on behalf of its members, want to see certainty for the future on that matter.
Major problems are brewing on rules of origin, especially the duration of any transition agreement that the UK Government strike. At the very least, the Government need to negotiate interim free trade agreements with countries that the EU currently has FTAs with. Many of those trade deals allow UK companies to export because of the recognition of cumulation with EU content. For example, the trade deal that the EU has with South Korea, for example, says that
“a car will be originating in the EU if no more than 45% of the value of the inputs have been imported from outside Korea or the EU to manufacture it.”
So if the UK—in this brilliant scenario with its amazing negotiating team—manages to convince Korea, at least temporarily, to replicate the trade deal that it has with the EU, changing all references to “EU” to “UK”, for example, that will be all well and good, but it will not solve the issue of cumulation for many of our businesses. Take for example a widget that is created in the UK. It may have many parts from other EU countries. It may have 60% EU content, which it needs in order to be exported to South Korea. However, it may not have 60% UK content. Under the previous rules of origin system that we had as part of the EU, that worked fine and the widget could be exported to Korea. But if Korea says that it wants the widget to have 60% UK content, it will be a major issue for businesses which will no longer be able to export those widgets.
Eddie Hughes (Walsall North) (Con)
I am afraid that I am not very familiar with our trade level with South Korea. I wonder whether the hon. Lady has picked a particularly obscure example to demonstrate her point, rather than looking at the countries we will do substantial trade with in the future. I hope that I will be able to get some more information on that point.
Kirsty Blackman
I picked South Korea and car manufacturing because the percentage is particularly high. However, many other areas of trade and exports have percentage requirements. Because we have not needed rules of origin for products from the UK—we have been able to add all the EU content—it has not been a consideration for businesses. They have been able to export if they can prove that a certain percentage is from the EU. It is an issue not only for the trade deal with Korea, but for all sorts of trade deals that the UK has because it is part of the EU. The concern is not that we will not be able to do new trading, but that our current trading will become a major issue as of March 2019, if we do not get the appropriate rollover and grandfathering in place.
Joanna Cherry (Edinburgh South West) (SNP)
Perhaps my hon. Friend will join me in correcting the hon. Member for Walsall North (Eddie Hughes), as South Korea is very important for Scottish trade. As a result of the EU-negotiated deal, whisky goes to South Korea on a 0% tariff. The former chief executive of the Scottish Whisky Association has expressed the view that without the heft of the EU, Scottish whisky—the UK’s biggest export—would not have had the benefit of that deal.
Kirsty Blackman
I appreciate that information.
There are so many technical issues that will have a major impact on jobs and manufacturing in UK. When I have asked the Government about this, the answers I received were pretty fluffy. I have asked about cumulation—mainly outside the Chamber—as it is a major issue that the UK Government have not taken seriously enough. It has been raised especially by the Society of Motor Manufacturers and Traders. If hon. Members look at how many times cumulation has been mentioned in the Chamber, they will find that it is very few.
Vicky Ford
I thank the hon. Lady for mentioning the incredibly important matter of cumulation. It is by cumulation that a British car that has components from other parts of Europe manages to be sold to third countries under existing agreements. My recollection is that the Minister said that the Department for International Trade would look to continue having agreement on cumulation, and that the Bill will give it the legal tools to continue such negotiations. Does the hon. Lady agree that the Bill is necessary as an enabling package to allow us to have a customs relationship with Europe and other parts of the world in the future?
Kirsty Blackman
I think that we should remain in the customs union and the single market, because then we would not have any of these issues. I appreciate that the Minister says that the Government are looking at this, but I am trying to make it clear how important this matter is, and I hope that I have been able to do that in my discussion of cumulation.
Richard Graham
The hon. and learned Member for Edinburgh South West (Joanna Cherry) raised the importance of the EU FTA deal with South Korea—indeed, it adds some £2 billion to our exports every year—but the interesting question is why the EU has been able to make free trade agreements only with South Korea and Vietnam. What about the rest of Asia? Does the SNP believe that sufficient progress has been made in expanding our trade, especially in Scottish whisky, across the whole of Asia, or could the process perhaps have been done more energetically and dynamically by Britain making its own free trade deals?
Kirsty Blackman
There are EU FTAs with many countries and we trade through them. Because the EU has such a large market, it is able to strike much better free trade agreements than the UK Government will be able to strike for their much smaller market. That is just the reality.
On the capacity of HMRC, I also want to talk about the issue of authorised economic operators, which was mentioned a lot in the customs White Paper. Relying on the AEO system causes a bit of a problem, as the UK is just not that good at either promoting or administering it. Some of the rules applied by HMRC are nearly impossible for many of the smaller operators to meet, such as the requirement we have heard about that the person who is in charge of customs in organisations has three years of customs experience. Some of our businesses have been trading exclusively with the EU, so they cannot meet that requirement very easily. HMRC must look at this as a matter of priority, and particularly consider the situation in Austria, where it takes less than three months for an initial AEO application to go through. Germany has increased the number of authorised economic operators incredibly successfully. The UK Government could benefit from looking at those countries when they consider making changes. It is not about making the regime slacker and enabling more people to jump through the hoops for AEOs; it is about making the process of applying for and getting AEO certification more accessible and streamlined. I know the UK Government have had representations on this matter, and I urge Ministers to consider them and act as soon as they can. We need to get the system in place as soon as possible so that companies can register and receive the certification to become AEOs in advance of the exit date.
As we heard earlier, there is also an HMRC capacity and streamlining problem in the area of VAT. That was also raised in the media recently in the context of the British Retail Consortium’s concerns. The changes to the VAT regime could create major cash-flow problems for businesses, and they might have to restructure or take on burdensome new cash-flow loans. The BRC says that there is no impact assessment produced by the Treasury about the costs of these measures in terms of additional compliance burdens for business, nor about what the costs of HMRC collecting and refunding these upfront costs would be. It seems that there is a real problem and that the required VAT changes have been pretty badly thought through.
I also want to raise the issue of virtual free trade zones. The Bill contemplates only physical free trade zones, but a virtual zone would allow businesses along the supply chain to benefit from simplifications and facilitations without having to incur the time and expense of individual applications, such as with inward processing relief. The British Chambers of Commerce has requested that the Treasury consider the possibility of including virtual free trade zones in its powers relating to designated free zones.
In the context of HMRC, I also want to mention import VAT on gifts from the EU, which I have spoken about before. Folk will be shocked when they get a bill because they have received a gift worth more than £39 from somebody in the EU. Such a system currently applies if people get a gift from elsewhere in the world, but the Government are suggesting that it should also apply in the case of goods from the EU. That is a major concern, because as there has been free movement and people have been able to live in other European countries, it is perfectly feasible that an awful lot of people will have family members in other EU countries and therefore will be likely to receive gifts of a value of over £39. I want to make it absolutely clear that if and when people start getting those bills, they will be totally caused by Brexit, leaving the customs union, and the proposed changes to VAT.
Trade remedies have been mentioned, particularly by Labour Members. Some of the evidence about the matter that the International Trade Committee received last year was concerning. The EU currently has anti-dumping and countervailing measures that would normally be expected to still be in place after Brexit day, such as a five-year measure that was put in place two years ago, meaning that it will have about two years to run at the time we leave the EU. Bernardine Adkins of the law firm Gowling WLG told the Committee that
“it won’t be possible to grandfather the measures, otherwise you will face problems with the World Trade Organization.”
If she is right, we have a pretty significant problem, especially because the call for evidence the Government issued at the end of November seems to suggest they do not know which trade remedies are relevant to UK companies. If the UK Government have to create a trade remedies agency, get it up and running, and furnish it with details that have not been provided in this Bill—how to conduct investigations, how subsidies are to be defined, how to assess if a UK industry has been injured, how to define a UK industry, and how to calculate the level of duties and guarantees needed to rectify the injury caused—and if they have do all that before putting in place even the trade remedies that currently exist, we have another problem.
UK Steel has been particularly vociferous in its criticism of this aspect of the Bill. It says that the chief and overriding concern is that schedules 4 and 5 to the Bill, concerning anti-dumping and anti-subsidy measures respectively, contain very little detail. It goes on to point out that for many of our major trading partners, including the EU and US, such issues are covered by primary legislation. The UK Government have chosen to deal with this through not primary legislation, but secondary legislation. That is yet another concern that we have about the Bill. The Bill does not even have the level of detail of the WTO agreements, so if the Government had included those, the Bill would have been substantially better.
The lesser duty rule is also a significant issue, as the UK Government are looking to go in that direction at a time when the EU is looking to move away from it. This is a concern for us, and for UK manufacturers and jobs in particular.
I and my party have general concerns about the loss of the customs union and the single market. We also have very specific concerns, which echo the views of businesses, about aspects of this Bill. A Fraser of Allander Institute report last year said that 134,000 jobs in Scotland are supported by trade with the EU, and Brexit threatens to cost our economy in Scotland £11 billion a year by 2030 and to result in many fewer jobs. The OECD highlighted in June last year:
“In case Brexit gets reversed by political decision…the positive impact on growth would be significant.”
There are major issues about tariffs if we leave the single market. The EU average tariff on imports from outside the EU was 5.2% in 2014. The average tariff on food was 15%. Skimmed milk exported into the EU from outside the single market attracts a tariff of 74%. If our organisations get hit by these tariffs when they are exporting—if we end up outside the EU single market and customs union as part of a no-deal scenario —we will not just have the problems I have mentioned about issues with the Bill, trade remedies and how HMRC will cope with all this. All these things are an incredible problem. Would it not be better and easier, and would it not be in the economic interests of everyone in this country, if the UK Government were to say, “Actually, we are going to stay in the single market and the customs union”?
Damian Collins (Folkestone and Hythe) (Con)
This debate and the presentation of this Bill are incredibly timely. Before Christmas, at the European Council meeting, the Prime Minister moved our negotiations on leaving the EU on to the second phase, with the agreement of the other member states, and we will now discuss the future relationship and the future trading relationship. It is important that, so soon after that Council meeting, although there is still a lot more to be done and negotiated in terms of how that relationship will work, we are debating a vital piece of enabling legislation that gives the Government the legal power to implement whatever is negotiated.
We could have a different scenario, where the Government could negotiate without any legal basis to implement the agreement. They could just negotiate on the basis that they would then have to bring legislation forward at some point in the future. There is no guarantee there would be the time to do that, and it would be a rather strange process to go through. It is far better that the Government are able to pass enabling legislation that gives us the legal authority to implement what they negotiate. At least then, when negotiating with the Europeans, they know that we can implement what we negotiate and we will not be left high and dry because we have run out of time.
Sammy Wilson
That is an important point, and it has been reflected in the speeches from Members from two Opposition parties. Does not the hon. Gentleman therefore find it rather odd that on one hand they talk about urgency, yet on the other hand they have tabled motions saying we should not proceed with this Bill on Second Reading?
Damian Collins
Absolutely. If we waited until every question that has been posed today could be answered—if, indeed, they can all be answered—before we introduced legislation, we could end up with no time for scrutiny or debate, or to implement the legislation in the first place. We can enter into the negotiations on our future trading relationship with any sort of purpose only if it is clear that we have in place the legal frameworks to implement whatever we agree and only if the EU negotiators can see that the UK has the legal basis to implement its own regime and requirements, whatever the trade deal or scenario.
The hon. Member for Aberdeen North (Kirsty Blackman) presented a compelling amount of detail in her speech. It is tempting to lay out all the difficulties and say that there is no point in introducing legislation until we have an answer to all the problems that seem insurmountable, but that would be entirely the wrong way to go about it. We need to make sure that the enabling legislation is in place. It can also be tempting—I say this as someone who campaigned for Britain to remain in the EU—to rerun all the arguments that were made during the referendum, as if the referendum had not happened, but it did happen and the country voted to leave the EU. It is now our responsibility to put in place the legal framework that enables the Government to negotiate so that we can put in place the best possible deal. It is far better that we do that now than in a year’s time.
Sir Oliver Heald (North East Hertfordshire) (Con)
I do not know whether my hon. Friend agrees, but the speech we have just heard from the hon. Member for Aberdeen North (Kirsty Blackman), in which she highlighted some important issues relating to cumulation and other matters, is an example of why the Bill is such a good part of the process. It is giving people the opportunity to highlight important issues for the Government.
Damian Collins
Absolutely, and that is the spirit in which the comments made by the vast array of trade organisations and businesses that are seeking to engage in the process should be interpreted. They are giving us notice of the issues that they believe we need to get right for their sectors. That does not mean that there is a concern that we will not get those things right, but they are right to flag up the things that we have to get right.
I was particularly pleased to hear the Financial Secretary say in his opening remarks that the Government intend to establish a system of frictionless trade at our major ports and other major places of trade with the EU. That is very important for my constituency in Kent, just as it is incredibly important for Northern Ireland. We need to ensure that trade can flow freely.
Ministers from the Department for International Trade will be working hard not only to put in place good trade deals that continue the free trade agreements we currently have with other countries as a consequence of our membership of the EU, but to negotiate trade agreements with other countries around the world. Such agreements will be incredibly important for our future success, but there is something about trade that is rather inevitable: countries tend to trade a lot with other countries to which they are near, because the cost of such trade is obviously far lower. There is a reason why we trade more with Belgium than with Brazil—although I wish we could trade more with Brazil—and that is that Belgium is very nearby. The cross-channel routes and the routes across the border in Northern Ireland are fundamental for our economic success. That is where frictionless trade really matters so that people can move their goods quickly and speedily. In many businesses, particularly those that work in food or with cut flowers and other perishable goods, the quick, “just in time” movement of goods is vital. Businesses on both sides of those borders will be affected equally.
I was pleased to hear my hon. Friend the Member for Morecambe and Lunesdale (David Morris) talk about the initiative he will be undertaking with the hon. Member for North Antrim (Ian Paisley) to bring a Wrightbus down to London. I visited the Wrightbus factory in Ballymena, where the company makes a fantastic product that has become an icon of the London streets. Although the Wrightbus Boris buses do not operate on continental Europe, I urge my hon. Friend and the hon. Gentleman to continue their journey down to my constituency and through the channel tunnel, because it is so important to maintain the flows of trade not only between the countries of the UK but between the UK and continental Europe. A third of the trade of Warrenpoint port in Northern Ireland runs from the Republic of Ireland to Northern Ireland, into mainland UK and on to continental Europe. We need to keep trade running frictionlessly through all those points.
Mr Jim Cunningham (Coventry South) (Lab)
People could not disagree with a lot of what the hon. Gentleman is saying, but in the real world at some point we are going to face tariffs, whether it is outside his constituency, on continental Europe or around the rest of the world. If we want a clue about that, we should look at the recent actions of Donald Trump’s Administration in relation to Bombardier. Food supply chains could also be threatened.
Damian Collins
The hon. Gentleman makes an important point. Manufacturing is such an important part of the economy of Coventry, where his constituency is. Tariffs are important. Of course, we want a free trading environment among the countries with which we trade, not only in Europe but around the world. I looked back at one of Margaret Thatcher’s speeches—I am sure the hon. Gentleman is just as keen a student of those speeches as I am—to see how she made the case for the single market to businesses before it was created. She rightly highlighted that, although trade without tariffs is obviously important, what is much more important is getting rid of artificial barriers to trade, such as the restriction of goods from markets because they are not seen to comply with certain standards or the creation of artificial delays that can make trade in goods that need to be moved quickly uneconomic. It is just as important to get trading agreements and the flow of trade right as it is to get the tariff situation right.
Stephen Kerr
My hon. Friend is making a powerful speech in favour of frictionless, free and fair trade. I hope he agrees that, as we go through the Brexit process, it is important that nothing is done to create any barriers to the internal operation of the UK market, by which I mean Great Britain and Northern Ireland.
Damian Collins
My hon. Friend makes an important point. Frictionless trade is just as important between Northern Ireland and Great Britain as it is on the island of Ireland. It is vital to the economies of the island of Ireland and Great Britain and to everyone who lives and works on the island of Ireland and in Great Britain. As I said earlier, because of our proximity and the integrated nature of so many of our businesses, that trade is so important, and it is vital to the protection of so many jobs. There should be no artificial borders in the Irish sea, and nor should there be borders that create friction on the island of Ireland or with the continent of Europe across the English channel.
Sammy Wilson
The hon. Gentleman makes an important point that is sometimes overlooked in these debates: it is vital for the Irish economy that there is no line of demarcation or border on the Irish sea, because its main market for either the sale or the transit of goods is Great Britain. If we simply talk about the border between Northern Ireland and the Republic, we miss the point: there has to be integration among all the islands.
Damian Collins
That is absolutely right. As the hon. Gentleman will know, a third of the goods processed through Warrenpoint port in Northern Ireland come from the Republic of Ireland, so it would do great damage to the economy of the island of Ireland were artificial barriers to be put in place. The same is true for goods that move through what is effectively the Great Britain land bridge to the continent of Europe. A large amount of goods from the Republic of Ireland are exported to continental Europe through ports such as Dover, as well as through the channel tunnel, and it is vital for so many businesses and for the free flow of trade that they are not treated as goods being imported from a third country but allowed to flow freely just as they currently do.
It is important that we make sure not only that we get the tariff regime and the rules of trade right, but that part of our preparedness is about ensuring that we have the right physical infrastructure alongside the enabling legislation that the Government are seeking to pass. I was really pleased to hear the Chancellor announce £3 billion in the Budget to help the UK to prepare the physical infrastructure it will need for trade. Technological solutions can be put in place to make sure that trade can flow without restrictions and frictionlessly at the key trading points and the key points of entry to other markets, but the infrastructure also needs to be put in place now.
It is particularly important for my constituents in Kent that we provide a long-term solution to deal with issues such as Operation Stack. If trade is being held up, for whatever reason—be it bad weather in the channel or strike action in one of the French ports—we need the physical infrastructure in place to keep Kent’s roads open. As part of our preparations for a future in which we can keep goods and services flowing freely around our key points of trade, it is important that we have in place the right physical infrastructure. That includes a commitment to deliver the Operation Stack relief lorry park in Kent. I was pleased that the Financial Secretary was able to confirm before Christmas that the £250 million that the Government had earmarked for the delivery of that vital piece of infrastructure is still there, and I hope we will see good progress on the design this year. Not only can that relief lorry park be considered as a piece of infrastructure for dealing with Operation Stack, which can happen at any time—it has happened while we have been a member of the EU and could happen again in future—but that physical infrastructure will be there in case we need it because of delays in the movement of goods.
Anna Soubry (Broxtowe) (Con)
My hon. Friend is making a good speech in which he is, of course, advocating free trade, in which we all believe—or at least Conservative Members do. Does he, like me, see the profound irony in our discussing how we are going to have to have new technologies, put in new systems and do all these other hugely complicated, very expensive things, in order to cope with leaving the customs union, even though we believe in and want free trade? Does he not think it would be much more simple and sensible just to stay in the customs union?
Damian Collins
My right hon. Friend makes a compelling point, but we have to accept that other political issues are being considered alongside the management of trade: our general future relationship with the European Union as a partner European continental country, but not as a member of the EU itself; whether we should have arrangements whereby the level of regulatory alignment is such that we effectively become a satellite state—a client state—of the European Union and not an independent one; and the extent to which we have to fully comply with and implement rules that we have no further part in designing in future. That is what creates difficulties around membership of the customs union and the single market. As she knows as well, the issue of membership of the single market also comes alongside considerations around the issue of free movement of persons as it is defined now.
If there is a way, through negotiation, to resolve those difficulties and to keep a system of trade that we have got used to and that works so well for our economy, without any deviation from the current system at all, and to deliver the other political objectives that people voted for in the referendum, I will welcome that. However, what we are talking about here is making sure that we prepare, both through the laws and the physical infrastructure, for a different scenario whereby, if we are not able through negotiation to replicate what we have now, we have a system in place that can deliver something that is just as good.
There are many unanswered questions because that process is still being negotiated, but, as I said at the start of my remarks, it is far better that we have the debate about what we want the system to look like now, at the same time as giving the Government the legal power to negotiate and implement what they want in future. Now is the right time to be having that debate. I am sure that there will be plenty of other opportunities for the House to debate the specifics of the deal as we progress through the negotiations this year. But now is the right time to be having this debate.
As I have said, maintaining a system of free trade is clearly what we all want and what we want to see delivered. We need to ensure that we have the legal infrastructure in place and invest in the physical infrastructure, so that we can implement the deal that we have, and in particular keep frictionless trade on the island of Ireland and at our key points of trade in Kent —at the channel tunnel and at the port of Dover—with continental Europe.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
Let me start by commending the work of the Manufacturing Trade Remedies Alliance, an organisation that is being serviced in a secretariat format by the Ceramics Confederation in my constituency. Working with a number of other trade bodies and trade unions, it has put together comprehensive work to try to make the Bill better. It is not seeking to torpedo the Bill, or to say that the status quo is what we should have. It has genuinely tried to engage to highlight the practical problems with the Bill and to propose solutions that it knows, both as workers and as employers, will benefit its manufacturing industry. I just wanted to put that on the record.
I wish to commend the hon. Member for Aberdeen North (Kirsty Blackman) for her speech, which covered, although in some depth, a number of quite technical points. This is where we are getting to in the Brexit negotiations: the time of painting in primary colours has almost gone, and we are now talking about the individual details that mean so much to our constituents. In my constituency, in Stoke-on-Trent, in the heart of the potteries, no more broadly will the impact of trade remedies and a proper customs arrangement be felt than in the ceramics industry.
In my constituency, around 5,000 jobs are directly related to manufacturing. Across the city, there are 15,000 such jobs, and even more when we tie in the supply chains and support services that make those industries flourish. Madam Deputy Speaker, if you go to any decent hotel around the world, to our own Tea Room, or to any high-class restaurant and turn over the plate, you will undoubtedly see, stamped with pride on the back of that piece of ceramic, “Made in Stoke-on-Trent” by Steelite, Churchill or Dudson. Those companies have been an ambassador for British business around the world for many years.
Only today in our local newspaper, The Sentinel, Jon Cameron from Steelite noted that 75% of every product that he makes is exported around the world. Therefore, the free trade arrangements that we have around the world, some of which are secured through the European Union, are important because they are about jobs in our constituency and jobs in our city. The hon. Member for Walsall North (Eddie Hughes) asked about South Korea. South Korea is one of the largest emerging markets for British ceramics in the world, and we are increasingly selling it more and more tableware and tiles than anywhere else. It is important that we recognise that countries that may seem obscure for some parts of the broader trade arrangements have huge impacts on smaller manufacturing areas where exports are becoming an increasingly important part of what we do.
What I wish to focus on today is the arrangements for market trade remedies. At the moment, the ceramics industry has a certain level of protection via the EU’s market protection arrangements, which affect tableware and tiles. Both are being looked at right now. They are being renewed through the European Parliament, so they are being scrutinised and looked at. The intention is that, where we know that there are market distortions caused by non-market economy countries such as China and Russia, the playing field is levelled.
We talk about free trade, but we should also be talking about fair trade. It is not fair on British manufacturing if Chinese companies are able to produce below-market value, cheap, low-quality tableware, import it into the UK, undermine the local manufacturing base and then distort the market and get away with it. Such practices cause job losses in Stoke-on-Trent and do serious long-term damage to the local market and the local industry. They also mean that, essentially, we are handing over domestic production to Chinese companies. What happens then? Once those companies have driven local producers out of the market, they put up their own prices, and suddenly there is no alternative. The next time I go on holiday, I do not want to turn over my plate and see that it is not made in Stoke-on-Trent. For me, that would be a symbol that we have got it wrong in terms of how we approach British manufacturing.
One in seven of the jobs in my constituency is linked to manufacturing, so making sure that we have those correct protections in place is vital. Across my neighbouring constituency of Stoke-on-Trent North and in Kidsgrove, nearly 19% of the workforce are involved in manufacturing. There are still parts of our country where manufacturing is the fundamental base of the work that we do. Making sure that we have those correct protections in place is vital to ensuring that we still have a manufacturing base that we are proud of in Britain.
Under schedule 4, the Bill will provide a number of mechanisms for the Manufacturing Trade Remedies Alliance, but, unfortunately, they are lacking. This is not a political point; it is a point of fact. As the hon. Member for Aberdeen North pointed out, they do not include a system for how we calculate injury from non-market economy countries. They do not point out how we calculate injury. The Bill commits us to the mandatory lesser duty rule, which is something that the EU is moving away from. It is looking at a conditional lesser duty rule.
The lesser duty rule basically says that, if we can demonstrate that there is injury to our market because of subsidy by a non-market economy country’s activities, we will only seek to remedy the lesser of those two injuries. We may still have goods being imported into our country below market value, distorting our market in a way that is unfair and we will be happy to accept that because it is the lesser of the two duties. That is fundamentally wrong. It is something that the EU is moving away from. We could easily have adopted the wording that was chosen by the EU and put it into the Bill, because it was supported by this Government in the European Council and by our MEPs across the piece.
Mr Jim Cunningham
This is not necessarily on ceramics, but when it comes to research and development for industry, the United States uses the defence budget. Does my hon. Friend agree that that is what we are up against if we pull out of the single market?
Gareth Snell
My hon. Friend is trying to tempt me down a particular course of discussion around single market membership, which I do not really wish to address as part of the Bill, but I do understand his point. In this Bill, not only do we have a set of Trade Remedies Authority procedures that are not particularly well defined and an attempt to wed ourselves to a mandatory lesser duty rule, we are also seeking to include an economic interest test—again, something that very few countries use. The only time we would see either a public interest test or an economic interest test is when we have multinational organisations such as the EU. We will not be in that position, yet we will be wedding ourselves to an extra layer of bureaucracy and complication to our trade remedy process that does not necessarily give the best outcome for British industry.
Unfortunately, there are a lot of the areas where this Parliament and this House should have some right of scrutiny, but where that is being brushed aside. This will all be done through written ministerial guidance, secondary legislation and statutory instruments. There is nothing in the Bill that immediately gives this House and all Members present the opportunity to properly define what we want to see regarding market and trade remedies.
There are a number of matters, which I am sure will come up during Second Reading of the Trade Bill tomorrow, that relate to the membership of the Trade Remedies Authority, the way in which it will be run and its budget. There are also questions around the cost of the investigations and who will be responsible for that cost. In the EU process at the moment, the trade itself makes up a good proportion of the cost, but it does so knowing that whatever remedy it gets out will more than offset the cost of the remedy process. There is no guarantee that that is the case for whatever system we set up once we are outside the customs union and the single market. That could simply result in a situation where industry does not take the risk—where it does not want to put the funding in place to do the investigation and to work out the dumping and injury levels because it does not know what they will look like beforehand. Therefore, any remedy would be of no benefit to the industry once it has made up those initial costs, so it simply will not do it. We will have a situation where we are not able to protect British industry and British business because the system is complicated and opaque.
The Financial Secretary to the Treasury is no longer in his place, but he has agreed to meet the British Ceramic Confederation to talk about some of the issues I have raised. I am grateful to him for doing so, and I hope that he will hear sense in the comments made this evening. When we leave the EU and come out of the customs union and the single market, there are a number of things that we can do to strengthen British business, put us in a better position and demonstrate to the world that Britain is still a manufacturing nation. We still make things. Nowhere is that more evident than in Stoke-on-Trent, where we make things and sell things of great beauty and high art around the world. We can continue do that, but only if we put the protections in place. Once we are outside the EU, we will have the freedoms and flexibilities to put in place the protections we want.
Having read this Bill, I fear that the Government are trying to come up with the lowest level of protection that they possibly can, which is of interest economically to only a few groups of people and whereby the Minister himself would have the ability to override future decisions. Therefore, I support the reasoned amendment; I hope that the Government have heard my comments; and I look forward to scrutinising this legislation further.
Nigel Mills (Amber Valley) (Con)
It is a pleasure to follow the hon. Member for Stoke-on-Trent Central (Gareth Snell). I concur with many of his remarks on the ceramics industry, although I am the MP for Denby Pottery, so we may have a slight disagreement on the premier manufacturer of such products. Perhaps we should move swiftly on.
I welcome this important Bill. It is absolutely right that the Government have brought it forward at a relatively early stage in the Brexit process, and it is important that it clears this hurdle tonight. If we are going to leave the EU’s customs union when we leave the EU, it is a simple fact that we will need to have our own customs arrangements and rules in place for that day. By doing so, we can keep collecting the tariffs we get from non-EU imports. As well as keeping that revenue, we can keep important trade matters flowing and the important reliefs in place.
A Bill like this can be quite frustrating because there are lots of interesting customs issues that we would like to debate, such as what the EU deal and any new tariffs will or will not look like, what the administration process will be and how we will fix the Irish question—if we can perhaps refer to it as that—but this Bill does not answer all those questions. Instead, it puts in place the architecture that we can then use to answer those questions when we know what our deal with the EU will be. It is right that this Bill goes through because we need to get all the nitty-gritty detail of our new customs process in place as early as we can, so that it can be understood by all the businesses out there that will need to comply with it and all the software producers that will need software in place. A lot of people will need to be trained on the new duty codes, including which ones apply to their products, how they comply with all these rules, what software systems will be needed and how they will interact with the new HMRC ones. All those things have to be done as early as possible if this is going to work on the day that we finally leave.
I have some comments on specific parts of the Bill. I was not really trying to find in the Bill the detail of what the customs rules will be and exactly what the text says. I think that what we have pretty much mirrors the EU customs rules, and we are just creating our own regime to do much the same thing. That is probably the spirit of the European Union (Withdrawal) Bill, and I appreciate we have to do this as a separate Bill for ways and means purposes. Most people who operate in this area will understand the mechanics that the Government are trying to produce, but what we want to understand is how we can make complying with the burdens of that as easy, straightforward and cheap as possible for the businesses that have to do it. A key part of that is the authorised economic operator system.
When the Public Accounts Committee took evidence on authorised economic operators, it found that about 604 businesses in the UK had that status. Now, that is not a very large proportion of the existing importers that could be using that status. It is about a 10th of the number that Germany has. There needs to be a real impetus during the passage of this Bill and afterwards to ensure that HMRC is doing everything it can to get businesses signed up to that process, so that we have as many of those operators in place as we possibly can when we really need them. That will help those businesses, but it will also help HMRC because it will know which businesses they do not have to check and which will be compliant, rather than having to do risk assessments on them all. What is not entirely clear in the Bill is the status of a business that is already an AEO. If someone has been approved under the EU regime, will that approval grandfather into our regime, or will they have to reapply for it? If someone signs up now, will they be in the same position? I think we should be very clear that if we think a business has that status now, there is no reason why they cannot have it going forward as well.
The Select Committee on Northern Ireland Affairs, which I serve on, has been doing quite a lot of work on customs issues, including visiting Switzerland to see how the border with the EU works. We saw that we can actually minimise the amount of declarations needed if we can make the systems mesh, synchronise and talk to each other. We do not want to see a business making a declaration in the UK for the export of something and then making an equivalent declaration in France when that is imported into the EU system. If a system is designed so that businesses can make one declaration for both regimes, it will halve the work and make things a lot easier. I cannot quite see in the Bill a provision whereby we can take the power to create a system that talks to the other regime in that way. I cannot see a measure whereby, for example, a business could make a declaration in France and where we could then get that data and deem that business to have complied, and vice versa—if a company makes an export declaration here, can that be passed on to the French? Clauses 25 and 26 are about co-operation, but I hope that in drawing up these rules the Government have thought through how we can get a simplified, joined-up system so that we can minimise the amount of compliance we need for those compliant businesses.
Clause 27 is an interesting provision, as it will give the Government the power to create fees in connection with the import process. Perhaps the Government could just reassure us that they are not planning on charging an import fee for the pleasure of complying with these new rules; that might be an unnecessary cost to trade. Will the Government be clear exactly where they see the role of fees and what they think those fees might be? I just cannot see that every time someone imports a widget, they should pay HMRC a fee for that pleasure.
There was some debate on clause 31 in the opening remarks. That clause is about forming customs unions. I have some concerns about what the Government are trying to achieve here. I can see that it is attractive to have the power in place, if we want to create a customs union with our overseas territories as we all leave the EU at the same time in our various different ways; I have no particular objection to that. I can also see that when we do a transitional deal with the EU, we want to be able to bring it into force effectively. But we are supposed to be agreeing the transitional deal by March, which will give us a year to put it into place before we actually leave. I am not quite sure why we need such a broad-ranging power in the Bill because, as far as I can tell, there is no time limit or geographic limit on this power. In theory, we could do a customs union with the trans-Pacific trade area in 25 years’ time, and it could go through on the affirmative resolution process. I am not sure that that is what we intend.
Customs unions are generally quite significant and powerful things, where we agree not only not to charge tariffs on the other side and vice versa, but to have a common set of external tariffs. Indeed, there is a provision in clause 31 that says we will accept that when a Government change dates on a tariff, that change can apply in the UK. Now, I suspect that we are not envisaging the Jersey Trade Minister setting our tariffs for us. I am guessing that that is aimed at some kind of EU arrangement.
If we do have a year to put in place a transitional provision, it would be better to do that in a considered way through primary legislation so we understand what it means rather than have it go through by some kind of parliamentary back-door process where we cannot talk about the detail or try to amend the substance. These things can be very significant. There can be large amounts of revenue at stake, or issues about which industries we choose to protect. We need to try to clarify exactly what the Government are trying to do in clause 31, and exactly how long this power needs to exist for and what geographical extent we are prepared to give to it.
On the Irish customs question, we cannot expect anything in this Bill to look at that specifically. One of the proposals that we have come up with for fixing the customs border is to exempt all micro, small and medium-sized businesses from needing to comply with the customs rules, presumably so that they would not need to do the declarations or pay any tariffs on goods going across the Irish border. However, I cannot see where in the Bill the Government have taken the power to do that. One could argue that it is covered by the reliefs in clause 19, but is that really the solution that we are expecting in the Northern Ireland context? Perhaps the Government should sensibly take the power to deliver this in the Bill and make sure that it can be achieved if negotiated.
I have some final points on the VAT issue, which was raised earlier. It is clearly perfectly fair for importers from the EU to point out that they are going to be cash-flow disadvantaged compared with their current situation if they have to pay VAT immediately when they import the goods rather than on their next VAT return once they have processed the transaction. That would put them in the same position as somebody importing from outside the EU. It is encouraging that the Treasury, for once, is prepared to be generous in that situation and create a regime where those businesses may not face that cash-flow implication. We ought to think very carefully about whether we want to treat an import from France differently from one from the USA in this situation. Will this generosity on cash flow apply more widely than the EU?
A lot of the lobbying on this has come from the British Retail Consortium. Businesses in my constituency that trade with the large retailers tell me that they are being pretty brutally squeezed on the amount of credit that they have to give to those large retailers—up to 120 days in some cases. If the Government intend to create a targeted, generous regime to help the cash flow of people importing goods from outside the UK, perhaps they should make it available only to businesses that treat suppliers within the UK with some kind of fairness, to have a level playing field. It would be a bit crazy for it to be better for their cash flow to import goods from the EU than to buy them from the UK supplier round the corner. I hope that could be another stick to encourage large businesses that treat their small suppliers quite badly by saying, “Yes, we accept that there is an issue, but we will only let you have this cash-flow advantage if you’re behaving fairly to others in terms of their cash flow.”
I welcome this important Bill and hope it gets a speedy passage through the House.
Anna Turley (Redcar) (Lab/Co-op)
I want to take the opportunity provided by this Bill to raise an important opportunity that could bring as many as 90,000 jobs to this country—and, in particular, many to my own constituency. It relates to part 2 of schedule 2 and can otherwise be referred to as the introduction of free ports.
Around the world there are approximately 3,500 free trade zones employing 66 million people across 135 countries. There are currently none in the UK. Conferring free trade status on a UK port would place it administratively outside of customs territory. It would mean that goods could be imported, manufactured or re-exported inside the free trade zone without incurring domestic customs duties or taxes, which is paid only on goods entering the domestic UK economy. As well as bringing benefits through customs taxes and duties, free zones also support economic activity through financial incentives such as research and development tax credits, regulatory flexibility, and tax reductions. They are recognised around the world as playing a major role in retaining, re-shoring and growing domestic manufacturing activity and boosting trade. In the US there are 250 free trade zones, and they also play a major role in the economies of Singapore, Hong Kong, Indonesia and the United Arab Emirates.
Ports are already a vital strategic asset for the UK, accounting for 96% of all trade volume and 75% of trade value. The free port concept builds on our maritime history and an existing UK strength. The creation of a free port would increase employment and economic activity in areas where economic need is high and could play a major role in rebalancing our London-centric economy. Of the country’s 30 largest ports, 17, including Teesside in my own constituency, are in the bottom quartile of local authorities in the index of multiple deprivation. I make no apology for lobbying for such a status on behalf of the port in my constituency. Teesport has strong structural advantages for being favoured for free port status. It has a deep-water facility providing lock-free access to the sea, with strong road and rail services. Teesport is versatile and adaptable. The facility handles 5,000 vessels and 40 million tonnes of cargo a year. The port is integral to the Teesside manufacturing complex, incorporating chemicals, engineering, renewable energy, and agri-tech. The South Tees development corporation is overseeing the former SSI site—the biggest industrial opportunity the UK has seen since the second world war. When the Government closed the steelworks in 2015 and 3,000 Teessiders lost their jobs, the Government promised to do all they could. On the Prime Minister’s most recent visit, she told us that we had to look to the future. Well, we are—the question is, are the Government?
The development corporation—the only one outside London—has set out its ambition to create 20,000 additional jobs in high-value manufacturing over a 25-year period, adding £1 billion in gross value added for the local economy. This would be substantially enhanced through the creation of a free port. Incorporating the development corporation area, together with the Teesport facility and in conjunction with adjacent industrial sites such as Wilton and North Shore, into a free port area would help the region to build on its current strengths in chemicals, steel, energy and logistics, and realise our vision to become the most attractive place in the country for high-value manufacturing.
Led by the north-east process industry cluster and the former hon. Member for Hartlepool, Teesside is the location of the largest integrated chemical complex in the UK and the second largest in western Europe in terms of manufacturing capacity. The sector has inputs to a range of other key industries such as aerospace, automotive, and life sciences. The sector is highly productive and competitive but faces a number of challenges such as increasing global competition, high operating costs, the need to attract investment from global parent companies, and skills shortages. A free port could be part of a range of policy solutions to maintain and enhance the attractiveness of investment in this sector in the UK and on Teesside. Free port status for Teesside could make the area the gateway of the north, rebalancing the economy and making the region’s manufacturing base more competitive and attractive.
This Bill provides an opportunity to establish the legislative basis to enable such a system to be set up in the UK, potentially giving a quick and powerful boost to the British economy as we go forward in Brexit negotiations. However, such a zone is not dependent on leaving the EU. Other member states have free ports, including the ports of Bremerhaven in Germany, Le Verdon in France, and Shannon in the Republic of Ireland. In fact, there are currently 85 free port zones within the European Union. Moreover, the Secretary of State is already empowered to designate free ports by statutory instrument under section 100A of the Customs and Excise Management Act 1979, which is still in force. Indeed, the UK itself had five free trade zones until 2012, at which point the statutory instruments that set them up expired, so the framework is in place and the opportunity is there. I hope that this Bill can clarify the situation. Part 2 of schedule 2 allows the Government to regulate on free ports. I hope that the Minister therefore agrees that this is the perfect moment to reopen the debate on free ports, to be bold, and potentially to create a new one—preferably on Teesside.
I conclude by asking the Minister the following questions. First, does he agree with the principle of free ports, and does he recognise the role they can play in driving and rebalancing our economy? Secondly, will the Government be using this Bill to amend the free port powers created by the Customs and Excise Management Act? If so, will they use the opportunity to bring forward powers to enable Teesport to become a free port or subject to special customs arrangements?
Richard Graham (Gloucester) (Con)
In following the hon. Member for Redcar (Anna Turley), I can only applaud her support for her local port.
I support this Bill. Above all else, as I said earlier and the Minister confirmed, it is an enabling Bill to create a post-Brexit functioning customs, VAT and excise regime. Because this is being done well ahead of the results of the negotiation, it does not predetermine the result. That necessarily disappoints those in this House who want the predetermined detail in order to see the extent to which the Bill suits their own vision of what our post-Brexit relationship should look like. In so doing, the Bill satisfies those for whom the Bill is intended—not politicians, but traders, exporters of goods and services, businesses and organisations, including universities and hospitals, with cross-border business in a wider sense—for we and, above all, they need to have in place the mechanisms for setting import duties, regulations, protections, dispute resolution procedures and so on, whatever the final trade and customs arrangements with the EU turn out to be.
That should be uncontroversial, but because the details are not in the Bill, Members are finding all their concerns and worries in their own imaginations. After a speech of some half an hour, for the hon. Member for Aberdeen North (Kirsty Blackman) it all boils down to the fact that she wants to stay in the current customs union with the European Union. For the hon. Member for Stoke-on-Trent Central (Gareth Snell), it is about protecting the ceramics industry. With respect to him and to Stoke-on-Trent, however, no customs Bill can do that, for the customs Bill is about making arrangements for future import duties, not about defining the new technology and brilliant designs that the world admires and wants to own, which is what will determine the future of the ceramics industry there.
Stephen Kerr
My hon. Friend is making a powerful speech. Does he agree that without this Bill we will have the archetypal cliff edge that the Opposition parties go on and on about? By not supporting Second Reading, they risk creating the cliff edge that they are always going on about.
Richard Graham
My hon. Friend is absolutely right. He brilliantly pre-empts the point I was about to make, which is that although some Opposition Members have described the uncertainty that they say the Bill will cause, the Bill will precisely help to avoid the cliff edge that all of us—but, above all, businesses—want to avoid. I thank him for his intervention.
The key is that the Bill will ensure that a customs regime is in place for cross-border business to flourish, whatever the results of the negotiations. To be honest, I think my right hon. Friend the Member for Broxtowe (Anna Soubry) underestimated the importance of technology not just in business, but for our customs processes. Regardless of whether or not we had decided to leave the EU, replacing the existing customs system, CHIEF, with the new IT platform, CDS, will, although it comes with a caveat about new Government IT systems, help our customs regime—it is currently rated fifth out of 160 countries in the world for its efficiency by the World Bank—to maintain or improve our position. The trusted trader system used by Canada and Australia, for example, has obvious replicability for trade at the border between Northern Ireland and the Republic of Ireland.
At the same time, the Bill is not devoid of ideas. The earlier customs White Paper outlined the two key negotiating positions for the Government, the first being a streamlined option and the second being a new customs partnership. My own belief is that if our European partners—that is entirely the right word for members of an organisation with which we have 44% of our exports—prove pragmatic in their interpretation of the new partnership, I very much hope that option 2 will prove possible. This option would allow the UK to mirror EU customs arrangements and trade policies for goods that are eventually to be consumed within the EU—even if they are first used, as it were, in the UK—thereby ensuring that the right amount of EU duty is paid without introducing new customs processes between us. This would be a practical benefit from a new partnership that I very much hope will come forward from the negotiations.
Let me turn to the amendment. The hon. Member for Bootle (Peter Dowd) talked with some passion about the manufacturing jobs in his constituency—rather fewer, I have to tell him, than the 4,000 manufacturing jobs in Gloucester; we all have manufacturing as a key element of our constituency business. He has concerns about the Bill’s impact on manufacturing, and the amendment therefore raises three objections to the Bill, which I will come on to. At the same time, there is clearly a certain demand from Opposition Members for an internal Labour debate about their party’s position on the customs union. The hon. Member for Nottingham East (Mr Leslie) would like a special debate on whether the preference of the leading Opposition party is for a customs union or for the customs union, and I am sure others from the Scottish National party would add weight to his discussions on that subject.
The truth is that Labour’s objection to powers coming back to the UK because we are “denied any detail”—the hon. Member for Bootle used that phrase—is bizarre, given that the whole point of the Bill, as my hon. Friend the Member for Stirling (Stephen Kerr) mentioned, is to avoid a cliff edge by putting in place the mechanisms needed, whatever the result of the negotiation, which has not yet started in detail. At the same time, Labour is complaining that the Bill gives powers back only to the Government, rather than to Parliament. In fact, of course, all the detail post-negotiation would come to Parliament through secondary legislation, on which all of us in this House would decide.
Mr Leslie
Has the hon. Gentleman had a chance to look at clause 31(4) in relation to forming a customs union with the United Kingdom? He can correct me if I am wrong, but I do not think that that would necessarily come before Parliament. It would be done by Her Majesty through an Order in Council.
Richard Graham
On that specific detail, the hon. Gentleman may well be right, but, ultimately, Parliament will decide the shape of any future agreement.
Richard Graham
Let me respond to the intervention, if I may, and I will then come to my hon. Friend.
The key thing in all the arrangements for a future customs union is that the precise nature of its structure has not yet been decided. It is all still up for debate, and the Bill is therefore an enabling Bill that puts in place the future mechanisms.
Nigel Mills
I was just trying to help my hon. Friend. The answer is in clause 32(10), which states that the Order in Council cannot happen unless this House has approved the order first.
Richard Graham
Precisely. I am grateful to my hon. Friend. Everything comes back to this House.
The point about the options that the Government have set out and the new customs partnership is that this will have huge practical benefits. Let me give a couple of examples. We could apply our own tariffs to goods destined purely for the UK. For example, for mangoes from India and the Philippines, which are not really a competitive product with anything we grow in this country, there is no reason why the EU should determine what tariff we apply. However, if a basic bicycle was made in another part of the Commonwealth and then exported to the UK for further modifications for onward export to the EU, it would make absolute sense for us to mirror the EU trade and customs arrangements.
The future customs arrangements, which are being negotiated, will therefore have profound implications for our future trading opportunities, and the Bill provides the way forward and opens the door to success, whatever the outcome of the negotiations. That is why the Liberal Democrat amendment, seeking a guarantee that the UK’s trading relationships with the EU and the rest of the world are not damaged, is so bizarre. How can anything like that be guaranteed, particularly during a negotiation? That was doubtless the reason why the amendment was not selected for debate.
This evening, one Opposition party is concerned about guarantees while a negotiation is going on, and another—the main Opposition party—is complaining about being denied any detail about the same negotiation, which has not yet properly started, while a third has already decided, regardless of the results of that negotiation, that it is all a terrible mistake. This evening therefore provides us with an opportunity to back a Bill, which should be entirely uncontroversial politically, that enables the businesses and manufacturers in all our constituencies to know with certainty that, whatever the results of the negotiation, we will have in place the mechanisms for their future exports. It is precisely because the Bill is practical and flexible and because it caters for all outcomes, while making sure that there is no cliff edge, that all of us should support it this evening.
Mr Chris Leslie (Nottingham East) (Lab/Co-op)
The Bill has profound implications for our economy, for many of our constituents, and for businesses that operate in our constituencies. It gives the Government considerable powers to levy customs duties on goods coming from the European Union, which would be an incredibly damaging spiral for the British economy to enter into as it would not only affect employment opportunities and business costs, but put in jeopardy the stability of the border between Northern Ireland and the Republic of Ireland. The notion that the proposed duties will apply and that we will somehow also retain frictionless, uninspected borders is oxymoronic—it is not possible. Despite a rather cleverly worded phase 1 agreement between the Government and the European Union, in which they basically decided to kick the issue into the long grass to be determined later on, the question has not yet been resolved and the situation is incredibly serious.
The referendum ballot paper did not mention customs duties or VAT, and it certainly did not mention the customs union. That was not the subject of the question that the British public were asked. Perhaps some Government Members read something between the lines, or perhaps when they squinted in a particular way and stood on one foot they read something on the ballot paper that the rest of the country did not. The country has not voted to leave the customs union, yet the Government and the Prime Minister take it totally for granted that we should all naturally accept that outcome.
Stephen Kerr
I am sure that the hon. Gentleman was conscious during the entirety of the referendum campaign. I certainly was and I can assure him and the House that there were frequent references to the definition of the European Union as a single marketplace and a customs union. In fact, that was how the EU came to be defined on television and in the debates. I do not know where the hon. Gentleman was, but it was very clear that the British people knew exactly what leaving the European Union meant. To say otherwise is, frankly, to turn one’s back on the common sense of the British people.
Mr Leslie
Just because the hon. Gentleman asserts that it was very clear does not mean that that was the case. In fact, his own friend and colleague, Daniel Hannan, a Member of the European Parliament, was very clear that the single market was incredibly important and that no one proposed leaving it. Many other hon. Members said similar.
Phil Wilson (Sedgefield) (Lab)
It was also made quite obvious during the referendum campaign that £350 million a week would be spent on the NHS, but I do not think that has come to fruition either.
Mr Simon Clarke (Middlesbrough South and East Cleveland) (Con)
The Prime Minister at the time was perfectly clear that leaving the European Union did indeed involve leaving the single market and the customs union. It is sophistic in the extreme to suggest that people did not mean to leave the European Union and its institutions when we voted to leave.
Mr Leslie
Oh, that’s right—he is not here anymore. I vaguely remember who the Prime Minister was at the time.
The ballot paper text is a matter of record for all to see. It asked whether we should remain in or leave the European Union, but it did not go into the details, because in a parliamentary democracy those sorts of details are naturally left to us. This is on our shoulders. We are accountable to our constituents for interpreting that referendum result and putting it into effect, always with an eye on protecting their best interests. That is our job—it is what we are elected to do.
Government Members may think that it is in their best interests to leave the customs union, but that was not on the ballot paper. I disagree with them. I do not think that leaving the customs union is in our best interests, and certainly not those of my constituents. We are talking about a potential impact on half the goods traded by the United Kingdom, as half our goods trade goes to the European Union. These are not inconsiderable issues. Some 2.5 million lorry journeys a year through Dover might be affected. Whole businesses have set up “just in time” business models, down to a matter of minutes, for how goods and components will be sourced throughout supply chains and how inventories will be sourced from across the whole European continent, but they now face being upended not only by the potential duties imposed by the Bill, but by other, non-tariff barriers including bureaucracy, additional form-filling, registrations and inspections. Goods coming in might have to go to one side, both at the port of departure and at the port of entry, to be checked for sanitary and phytosanitary compliance. There are all sorts of inhibitors to the free flow of goods. I and other Opposition Members are talking about free trade. That is what we should be standing up for, which is why this is an incredibly important issue.
Kerry McCarthy (Bristol East) (Lab)
I draw attention to my entry in the Register of Members’ Financial Interests. This is not just about goods being physically sold in other European countries. Musicians who tour Europe face real uncertainty about whether their instruments and merchandise, whose sales a lot of bands rely on, will be viewed as imports into those countries. There is a lot of uncertainty about what will actually be classed as a good crossing a border.
Richard Graham
I know that the hon. Gentleman holds his views deeply and sincerely; colleagues of mine hold very different views equally sincerely. Surely the crucial thing for all of us, however, is that the Bill allows for any of those possible outcomes. It does not predetermine the result of the negotiations or determine whether the United Kingdom will have a future free trade agreement with the European Union that replicates almost completely the existing customs union. Therefore, surely we can agree tonight about the importance of having a mechanism in place that avoids the cliff edge that all the businesses in all of our constituencies want to avoid.
Mr Leslie
If only that were the case. In fact, that same point is raised in paragraph 9 on page 6 of the explanatory notes, which states:
“The Taxation…Bill does not presuppose any particular outcome from the UK’s negotiations with the EU.”
That is not true. The Government have absolutely presupposed that the customs union is off the table. It is the ultimate presupposition, if ever anyone wanted a definition. This Bill apparently does not allow us to stay in the customs union, but it should allow us to do so, because I happen to believe that there is a majority in this House of Commons for membership of the customs union. I have a little job of work to do to continue to persuade my own party’s Front Benchers of that particular point, but I will try my best to do so because I think they will eventually recognise that being part of the customs union is incredibly important for our economy not just in the transition period, but for the longer term. I believe that the numbers are here in the House of Commons to support that and that it will eventually be proven.
I am disappointed that the Government have tried to twist parliamentary procedure by deeming this measure to be a money Bill. It is Mr Speaker who will decide whether or not it is a money Bill, and I think he will do so at the end of this particular Commons procedure. The Government, though, in a slightly tricksy way, are putting through the Bill following a Ways and Means resolution. Why have they done that? They have gutted the Trade Bill and stuck everything they possibly can into what was the customs Bill so that it cannot be amended by the House of Lords. It is the most obvious trick in the book—rule 101 for a Minister. I have been around the block a number of times, and I have to tell the Minister that there are whole clauses in the Bill, such as clause 31, that are about the formation of a customs union. How is that a matter purely for a money Bill? It is absolutely an issue of public policy to do with our trading alliances that the other place should have every right to pass comment on. If it has advice and suggestions for this place, it should be allowed to amend the Bill.
Stephen Doughty
I completely agree with my hon. Friend’s point. Is it not underlined by the fact that the Government’s programme motion neglects to state how many days’ scrutiny the Bill will receive in the Public Bill Committee, let alone on the Floor of the House, but does state that the Committee will be done by 1 February? If the Committee does not start for a week or a couple of weeks because the Finance Bill and other measures are going through, there will be an extraordinarily small amount of time for detailed scrutiny of a 56-clause Bill with numerous schedules that will potentially have serious impacts on our economy.
Mr Leslie
That is why I suspect that the other place will look at the truncated scrutiny. I tried to get this out of the Minister earlier—not the Minister before us, but the Financial Secretary to the Treasury. It was not a Cabinet Minister who came to the Chamber to introduce the Bill, by the way, but I am told that a reshuffle might be going on, so perhaps the Chief Secretary or even the Chancellor are in negotiations. The junior Minister acquitted himself reasonably well at the outset—as well as he possibly could, given the line that was scripted for him to take—but I think that a Cabinet Minister should have presented a Bill of such scale and importance. It deserves proper scrutiny in this place, with the right number of Committee sittings, because otherwise the other place will have to do that job for us.
The Parliamentary Under-Secretary of State for International Trade (Mark Garnier)
I am happy to confirm that the Bill will have eight Committee sittings in the House of Commons.
Mr Leslie
I can only hope—fingers crossed—that I am selected for the Committee. I know that my hon. Friends on the Front Bench will be keen to have me on it. I try my best to be as constructive as possible at all times, so I hold out great hope for that.
Part 1 of the Bill is very wide-ranging. My hon. Friends have made speeches about trade remedies in respect of anti-dumping and subsidy provisions. Perhaps the Minister will use his winding-up speech to cast a little more light on what the UK’s policy will be on competitive trade and, in particular, on subsidy issues. I know that Government Members have an interest in many aspects of trade with places such as China and other non-market economies. The question about subsidies is important, so I would like to hear a little more from the Government about what their policy stance will be. Will we cut and paste the existing EU approach or not?
A number of big decisions have to be made. When our constituents find out that we will have the power to raise or lower a particular duty, the widget manufacturers or whatever in our constituencies who might be prone to it, or whose competitors might be prone to it, will take great interest in contacting Members of Parliament to say, “Will you push the Government to raise this duty?” or, “Will you push Ministers to lower that duty?” This has the potential to fill our inboxes for decades to come.
Members of the European Parliament—we have sort of outsourced much of this policy to the EU for 40 years—have a number of scrutiny powers in respect of customs and excise and trade agreements that we will not have when those matters are brought to the House of Commons. I worry very much about trade agreements. Members of the European Parliament have the right to comment on them and even to suggest amendments to them. Of course, they then give final consent to trade agreements, but that is not part of the current Administration’s package under the customs and trade Bills.
Vicky Ford
I remind the hon. Gentleman of what the Financial Secretary said from the Dispatch Box: any new free trade agreement that the UK signs up to will be subject to the affirmative procedure in this place.
Mr Leslie
Of course, that is an unamendable procedure. I think that, at the very least, the Government will be pushed by the other place into a super-affirmative procedure whereby the Commons has a Committee that looks at the details and suggests amendments and changes. Ministers may then plough ahead if they want, but a super-affirmative procedure would mirror more the powers of MEPs in these matters. A simple aye or nay would be a dilution of the scrutiny powers that we currently have democratically via elected Members of the European Parliament.
I want to focus on part 3 of the Bill. In the past couple of days, a lot of attention has been given to the number of firms that do business across the European Union. They think of their trade not as imports and exports, but as arrivals and dispatches. Whether they are buying components from Birmingham or Bristol or from Brussels or Berlin, they treat them all the same for customs and excise and VAT purposes. That will potentially not be the case under the Bill.
Even if we stayed in the single market and the customs union, we would not necessarily be in the EU VAT area, which is outwith the customs union. That is another decision that Ministers will have to face up to and take. I would like the Bill to be amended so that we stay in the EU VAT area or, at the very least, have a proper impact assessment of the implications of leaving it. That is the position of the British Retail Consortium, which argues that leaving it would mean a potential bureaucratic burden for businesses that currently, if they are importing goods from EU member states, can treat the acquisition VAT through the normal quarterly lodgings of their VAT returns. Henceforth, those firms will potentially have to pay VAT up front—it is known as import VAT—at the point of entry, so at the border, at the port, at Dover, at the channel tunnel or wherever it comes in, each time there is that level of transaction. To look at it in the round, the customer would pay the same amount of VAT at the end point, but it would be incredibly disruptive to the cash flow of those firms.
I looked online and at the explanatory notes, thinking that there must be a regulatory impact assessment of that situation, because the Bill abolishes acquisition VAT and introduces import VAT on goods, including those from the European Union. There does not seem to be a particularly rigorous impact assessment. I do not know whether I have missed it. There was one for the Trade Remedies Authority, but there does not seem to be one for the import VAT proposals. There ought to be an impact assessment, because that is Cabinet Office best practice, but I cannot seem to find it.
Again, I do not think voters were necessarily tuned into the implications on the EU VAT area when they cast their votes on the ballot paper. I may be criticised again for saying this, but I did not see the EU VAT area on the ballot paper. Perhaps I was not looking closely enough. Perhaps Government Members will help me out and point to where it was.
Currently, 140,000 British companies have to go through the rigmarole of registration and compliance when importing from outside the EU. A further 132,000 firms that do not trade beyond the EU but source their imports and components from within the EU will potentially be added to that. Knocking on for 300,000 businesses will be hit by this. According to HMRC’s own statistics, the number of transactions that are hit by customs duties and, therefore, potentially by import VAT will go from 55 million trades to 255 million trades a year, with all the paperwork and rigmarole associated with that level of bureaucracy.
Stephen Doughty
My hon. Friend is making incredibly important points about the practical implications of the Bill and the proposed changes. Was he not concerned, therefore, that the Financial Secretary refused to confirm whether any additional customs officers were being proposed or were in training? In fact, he seemed to suggest that they would be reallocated from other roles within HMRC or the Home Office. Given the scale of the additional bureaucracy that is being proposed, is that not deeply worrying?
Mr Leslie
We will have to hear from Ministers how they propose to deal with the extra 200 million trades going through the new system. I hope to read more in the impact assessment. If the Government can cope with, or have proposals to ameliorate, some of that administrative burden, we would like to see it in the impact assessment.
On top of that, my hon. Friend should know that, as I think was mentioned earlier, HMRC currently has a computer system or IT software called CHIEF. What does it stand for? I will not try to deal with the acronym—oh no, I can; you will be glad to know, Madam Deputy Speaker, that it stands for “customs handling of import and export freight”. CHIEF will be retired in January 2019—keep that date in mind, as it is crucial in the transition. We are moving to a new system called the customs declaration service. It is costing £157 million to implement and is potentially great news, but all these 130,000 new traders will suddenly be brought into this new system, and they will need to be given time, leeway and flexibility to get used to a system that they currently do not have to operate. I want to hear from the Minister what approach the Government will take to gradually phase in the new system while bringing so many extra businesses into that procedure.
Jim Shannon (Strangford) (DUP)
We have had the good fortune over the last week to see some of the news, including BBC news. In the last week the BBC has visited businesses on the mainland. There seems to be a confidence among businesses and private enterprise across the whole United Kingdom of Great Britain and Northern Ireland in what the Government are doing in relation to the points that the hon. Gentleman is making. Does he accept that a lot of those companies understand the issues and are happy to put them in the hands of the Government?
Mr Leslie
That is not quite the impression I am getting from the business community. Trade bodies, such the British Retail Consortium and others I have mentioned already, are voicing their concerns, but many businesses are also waiting to see if there is any clarity on the details of how this will pan out. The warm words about phase 1 agreements—“We can sort these things out”, “Don’t worry, it will all be fine”—will only butter so many parsnips. Ultimately, businesses want to know how it will affect their bottom line, how they will cope, what sort of new systems they will need to put in place, what sort of employees they will have to bring in, and so on.
Stephen Doughty
I am afraid I disagree with the hon. Member for Strangford (Jim Shannon). He and I get on very well, but I am not hearing the same thing. The Freight Transport Association has made very clear the consequences of even marginal delays to customs procedures, such as those caused by the introduction of a new IT system and the additional time spent processing declarations. It has said that the addition of an average of two minutes to customs processing would result in a 17-mile queue from Dover back to Ashford; four minutes takes the queue back to Maidstone; six minutes back to the M25; eight minutes, and we are at the Dartford crossing and Essex. We could not have a clearer illustration of the types of problems that could be caused. These are substantial changes and, even with the best will in the world, they will have substantial impacts on trade.
Mr Leslie
That is why we should not just rush the Bill through as though it were a minor, technical copy-and-paste exercise. These are fundamental decisions we are having to grapple with, both in this House of Commons and in the other place, and it is not appropriate that it be deemed a money Bill. Yes, aspects are to do with taxation, but others are not and broaden out into trade and other areas. The Government might think they can deal with this tactically in that way but I do not think it appropriate.
I encourage my Front-Bench team, and all hon. Members, to support remaining in the customs union. I give notice to my Front-Bench team in particular. I asked the shadow Chief Secretary to the Treasury about the Labour party’s policy on the EU VAT area, a specific area of policy we need to get to grips with. The Bill should be amended so that we retain our involvement and participation in the EU VAT area, as that is the clearest, simplest way of retaining the current benefits. I am sure that amendments will come along on this issue, and when they do, I hope that all hon. Members will think carefully about what to do.
As for this evening, I worry that this VAT issue is yet another potential horror story in the Brexit saga. We pull at one thread and yet more issues start to tumble down on top of our constituents and the business community. It is not right to facilitate duties being put on trade with our nearest neighbours and closest economic allies across the EU, and that is why I hope that we will oppose the Bill this evening.
Julia Lopez (Hornchurch and Upminster) (Con)
If we are to deliver Brexit, the UK needs to leave the customs union and establish its own customs regime. Without doing so, the UK will be precluded from striking its own free trade deals and left open to certain judgments from the European Court of Justice. I fear that those who believe we can honour the referendum result while staying in the single market or customs union are simply wishing to deliver Brexit in name only.
The Bill is widely drafted in order not to prejudice the eventual outcome of any deal we strike with the EU. It instead ensures that the UK can respond to its new status, whatever the circumstances in March 2019. That could include a no deal scenario—something that would represent a wasted opportunity of historic proportions on the EU’s part. Our Government have already made it clear that the UK wants to maintain free, frictionless trade with the EU and that they wish to maintain continuity with EU law at this stage on customs, excise and VAT to give businesses certainty.
There would be no need for chaos at customs or increased tariffs if our standalone regime could be linked closely to the EU’s, potentially in a new customs partnership. The question is whether the EU has the capacity to recognise its own interests and, more crucially, the interests of the people it governs. Until 2008’s financial crisis, global trade had been growing at up to twice the rate of global output for decades. Ever since, trade has slowed to be in line with, or sometimes below, growth in the global economy and political upheaval has followed.
As a founding World Trade Organisation member, the UK has long been a passionate advocate for liberalised trade. It is time to regain that leadership role and push back against the superficial allure of protectionism. The Bill sets the scene for that. While it introduces the potential for levying tariffs, giving us the tools to protect against dumping, it also allows us to adopt a unilateral trade preference scheme for developing countries to ensure trade further replaces aid as the primary poverty alleviation tool.
The Bill also aims to manage the flow of goods at our ports. Over the summer, I visited London Gateway, a state-of-the-art port in Essex with modern HMRC and Department for Environment, Food and Rural Affairs facilities and spare capacity. A logistical hub is being developed to deliver goods directly to London and the south-east rather than via midlands distribution centres. German grocer Lidl has already taken space there. The competition from nearby ports such as Tilbury, with its vast Amazon fulfilment centre, keeps freight costs low and ties into the Government’s ambitions to unlock the entire Thames Gateway with a new river crossing and more homes. This plan and these efficiencies strip out cost to retailers, helping to offset any potential increase in tariffs. Our customs systems are already highly efficient, but the Bill sets up an authorised economic operator scheme to indicate the fulfilment by exporters and importers of recognised compliance standards and makes provision for HMRC-approved warehouse operators. These measures should fast-track shipments. We now need to identify the sectors most exposed to any new cost and resource HMRC appropriately, which is what the Government are doing.
In my capacity as a member of the International Trade Select Committee, I would like to say something about tariff-free quotas. As an EU member, the UK is party to over 60 free trade agreements that permit our trading partners to export a certain volume of goods to the EU tariff-free. Along with the Trade Bill, this Bill provides the foundation for the continuation of these deals after Brexit. We hope that this grandfathering process will be straightforward, but our trading partners may use the opportunity to renegotiate terms, and rules of origin might add complexity to existing trade. Rules of origin define where a product was made and help to determine the application of quotas, preferential tariffs and trade remedies.
At present, the UK can export to the EU with no restrictions on the value of imported intermediates from third countries, and this will likely change once we are out of the customs union. Origin is generally conferred based on where a good was obtained or manufactured or where the last substantial transformation took place. Cumulation of origin allows for greater flexibility when using raw or semi-manufactured materials from certain third countries. Currently, as an EU member state, the UK benefits from the pan- Euro-Mediterranean cumulation zone.
Cumulative rules of origin may prove hard to negotiate, requiring trilateral discussion between the UK, the EU and the third country concerned. None the less, the UK’s departure from existing free trade agreements is not challenge-free for the EU either. Those FTAs were negotiated on the basis of access to an EU economy that included a UK market, which, in 2015, amounted to 17.5 % of the EU’s GDP, and which contains some of its most voracious consumers. If we withdraw that market from the FTA, there will inevitably be an impact on its functioning, if not on its legal character. The EU plans to remove the equivalent of the UK’s market share from the duty-free quotas that it offers its trading partners. Otherwise, EU domestic producers will have to compete with a greater inflow of tariff-free foreign goods. FTA partners, however, are understandably very unhappy at the prospect of a substantial reduction in their tariff-free quotas.
If the EU can think imaginatively and flexibly about a customs link to the UK economy, with potential agreement on rules of origin at least for a transition period, the potential problems of both sides can be addressed. The EU’s default arrangements relating to rules of origin are relatively liberal, and processes already exist for exporters to self-certify origins. Agreeing on those processes, and ensuring that businesses sign up to them now, should be a priority.
Kirsty Blackman
May I pursue the issue of tariff-rate quotas? Is it not the case that, even if countries receive the same amount in total—if they were previously able to distribute 100 tonnes of goods, and in future they could distribute 70 to the EU and 30 to the UK—they might challenge that on the basis that if the UK market collapses, they will not be able to transfer that amount to another country, as they currently can?
Julia Lopez
My point is that any issues relating to tariff-rate quotas will affect not just the UK but the EU, and it is therefore in the EU’s interests to try to reach an accommodation with the UK.
I welcome the Bill, which is about preparedness and which, given its wide drafting, allows for any negotiated outcome. I hope that it sets us up for a new chapter in our long history as a proud, global trading nation.
Tom Brake (Carshalton and Wallington) (LD)
Let me start where the Minister started. He spoke of wanting to secure the greatest possible economic advantage for the United Kingdom, but I am afraid that what we have is a series of Ministers who are wilfully proceeding with Tory Brexit decisions that they know are damaging to the UK’s economic interests.
Some Conservative Members—although not Ministers —state openly that they realise that what the Government are pursuing is damaging to our economic interests. Some are embarrassed by that, and I shall not embarrass them by naming names; they are keeping their heads down and staying quiet. Some think that this is a price worth paying. Some believe that it will benefit the United Kingdom, although sometimes the advice that they give to others is the complete opposite of their claims to that effect.
All those who follow this debate, whether they are leave or remain supporters, ought to be aware that Ministers are advocating a move that they know is damaging to the UK’s interests and that they are doing so because on 23 June 2016, on one day of the electoral cycle, people voted to leave the European Union. People need to remember that Conservative Members who were overwhelmingly in favour of our remaining in the EU know that this will cause us damage, but are proceeding with it nevertheless. The Government will not admit that, and they will not release the information that would enable us to know it. We have already had the rather circular argument about sectoral analysis, impact assessments and so on. The one thing that the Government are not willing to do is share the information about what the economic impact of Brexit will be.
The hon. Member for Folkestone and Hythe (Damian Collins), who is no longer in the Chamber, made a very sensible point. He understands perfectly well the impact that leaving the EU and the customs union would have on the port of Dover. He rightly pointed out that countries trade more effectively with countries that are close to them. That is why the idea that there is a trade deal out there with Australia or New Zealand that will replace the trade deals that we have with the European Union is a fiction.
There have been many references to frictionless, seamless trade. That is fine; everyone wants to achieve that. The only problem is that, so far, no one has actually identified how it will work. It is great to have the aspiration, but in practice no solution is available. The same is true of the border between Ireland and Northern Ireland. The hon. Member for Nottingham East (Mr Leslie) confirmed that that can has been kicked down the road. No solution has been identified in phase 1 of the negotiations. It has been accepted that there is a huge problem, but also that the can will be kicked a little further down the road.
Mr Simon Clarke
The whole point is that the Irish border issue cannot be resolved until we know the wider context of the trade agreement that has been established. The right hon. Gentleman is getting the logic back to front.
Tom Brake
We will wait and see whether I have got the logic back to front. I suggest to the hon. Gentleman, however, that the idea that it is possible to have on one hand a completely seamless border and on the other hand a United Kingdom that is outside the European Union does not work. There must be one of two solutions. The first, relating to where that border sits, would be very unpopular with members of the Democratic Unionist party, while the second goes against everything that the party in power is advocating. I do not think that there is a simple solution, and that is why I think that the issue has been kicked down the road. I suppose people are hoping that, perhaps as a result of phase 2 of the negotiations, there will be a miracle solution that will make possible a frictionless, seamless border between Ireland and Northern Ireland, but given that no one has identified it so far in the 18 months or so that have elapsed since the referendum, I am not confident that anyone will come up with it in the time that remains.
I believe that the Bill is unnecessary and, indeed, highly damaging. It was required only because the Government have set themselves against the solution that is our staying in the customs union. The hon. Member for Gloucester (Richard Graham) tried to highlight the differences between Labour Front Benchers and some of his hon. Friends, which is easy enough to do, but he could equally have chosen to highlight the differences on the Tory Benches. At least one Tory Member, the right hon. Member for Broxtowe (Anna Soubry), considers the solution that the Government are trying to identify in all their fudges and workarounds to be staying in the customs union, and I agree with her. If there are differences of opinion, they exist on both sides of the House, not just between Labour Front and Back Benchers.
We will oppose the Bill’s Second Reading, not for—I was going to say mealy-mouthed reasons, but that might be unfair. I do not know the hon. Member for Bootle (Peter Dowd) terribly well, but I have no reason to believe that he is, in fact, mealy-mouthed. I must say, however, that Labour Members are trying to sit on the fence for as long as is physically possible, in spite of repeated interventions from their own side. At some point, they will have to jump in one direction or the other. It must be getting very uncomfortable for them, sitting on that fence. The longer they sit on it, the sharper and more uncomfortable for their backsides it will become. At some point, they are going to have to jump. I hope that they will jump in the direction that they are being encouraged to do by some of their Back Benchers and by the Liberal Democrats, the Scottish National party, Plaid Cymru and the Green party—namely, in favour of staying in the customs union and the single market long term, not just as a means of massaging support over the next few months but in the long-term interests of the United Kingdom.
As I have said, I do not want to describe Labour Front Benchers as mealy-mouthed, but there is clearly some difficulty with the position that the Labour party is trying to adopt, and I would like some clarity on this. Labour Members say that they are interested in preserving jobs, for instance, and I wonder what work they have done to assess the impact of a substantial number of job losses in the transport industry. A lot of goods are transported from the Republic of Ireland to Dover through Northern Ireland and the United Kingdom. Those involved are thinking of simply cutting out the rather complicated business of crossing the UK border altogether and instead shipping the stuff straight from Ireland to, say, Cherbourg. That would result in the loss of many jobs in Britain along the way.
We have heard many references to the VAT change, which could affect between 100,000 and 150,000 businesses. Concern was expressed earlier that some larger businesses can be quite aggressive towards small suppliers, but a lot of the businesses affected will be small businesses that suddenly find themselves in difficulties with their cash flow. I wonder what analysis the Government have carried out on that. I am afraid that, as in so many areas relating to Brexit, the answer is that there has been no impact analysis and that the Government are simply proceeding with these changes.
One of the key claims by the leave campaign was that leaving the EU was about cutting red tape. I would love the Minister to confirm that the measures in the Bill will cut red tape for businesses, but frankly I cannot see how businesses will benefit from a reduction in red tape in any shape or form as a result of this legislation. Instead, businesses that are not subject to red tape at the moment will have to take on red tape that they have never previously had to deal with. The Minister must at least try to address that point, given that one of the main claims made by leave campaigners was that leaving the EU would cut red tape for businesses.
We could talk at length about the delegated powers, as we have done on many other Bills relating to Brexit, but there is no point in rehearsing the arguments that have been made on those Bills, because the Government are clearly intent on taking advantage of the situation and cutting Parliament out of the loop as much as possible.
If the Government want to proceed in the way that they are doing at the moment, trade remedies will be essential. Members will be aware that trade remedies are currently implemented by the EU, which has more than 100 such measures in place against imports from 25 countries. To what extent does the Minister expect those measures to be replicated? Also, does he believe that it will be possible for the UK, operating alone, to have more effective trade remedies than those currently implemented by the EU with its 28 member states? Again, we need clarity, honesty and accountability. We need to hear from the Minister whether he thinks that the trade remedies available to the United Kingdom on its own will be weaker and less effective than what is currently available to us as a member of the European Union.
I welcome the fact that the Government will legislate to ensure that we can maintain a system of trade preferences for developing countries. I have already referred to the VAT issue and to the impact on red tape. I hope that the Minister can confirm that the Bill will have no red tape implications, although it is hard to see how he could possibly do so. [Interruption.] Would my hon. Friend the Member for Edinburgh West (Christine Jardine) like to intervene on me?
Tom Brake
No. Okay. I thought my hon. Friend was poised to come in with a trenchant point. I am sure that she has one, and that she is saving it up till later.
The Government have brought forward a Bill that is needed simply because they have chosen to adopt one of the more extreme Brexit options open to them: settling for no deal whatsoever or coming out of the customs union. In those circumstances, it is clear that they will need to provide the legislation that is set out in this Bill and that trade remedies will need to be in place. I have put to the Minister some specific questions about whether he can demonstrate that the Bill will not impose an additional red tape burden on businesses and whether the trade remedies that he is advocating in the Bill are likely to be more effective for the United Kingdom than the ones currently available to us through the European Union. With that, I will happily sit down.
Mr Marcus Fysh (Yeovil) (Con)
I was hoping this evening that we might begin to get past some of the old arguments and debates over whether to leave the EU that we have been having ad nauseam over the past year and more, but it seems as though some people cannot understand that if we do not leave the single market and the customs union, we simply have not left the EU. It is by virtue of being a member of the EU that we are in the customs union, and we automatically leave it on the day we leave the EU.
The opportunities that are there for this country as a result of leaving the EU simply will not be there if we stay in the single market. The behind-the-border trade reforms that can give advantages to our service industries will not be possible if we do not have control of our own regulation, and being a member of the single market will obviate that entirely. Similarly, on the customs union or, indeed, a customs union, if we leave the control of our customs and trade policies with the EU, everybody would judge that to mean our not having left the EU. What we need, and what I have argued for consistently, is an advanced and modern form of customs co-operation that enables our trade to be as frictionless as possible. There will be frictions, however, and we should not shy away from talking about them. The Bill begins to allow us to have control over all the levers that enable us to put such things into place. This enabling legislation is vital so that we can have the systems that are required for things to operate properly on day one after we leave the EU.
I will certainly support the Bill’s Second Reading, which will give it this House’s support in principle. We have heard quite a lot of discussion about the different policy stances that the Bill will enable us to take up in future, and there will obviously be much more discussion about what our trade policies should be. It is entirely right that that should happen in this House in a constructive and, I hope, cross-party manner, because this is about our futures and those of our children and grandchildren, too.
I want to address a few of the things that have come up this evening. The point about VAT and cash flows is interesting and I have raised it before, and it is worth remembering that the EU is going through its own change process on VAT. It intends to impose a directive that would essentially mean that the country from which a good is being exported will collect the VAT at its own rate rather than have a good exported on a VAT-free basis and then get the receiving country to account for the difference after having collected VAT on receipt. That in itself will change a lot of the cash flows around intra-European trade, and it is worth examining more closely whether it makes sense in that context for us to think about having a system that enables us to collect VAT for each other in the future. I am not necessarily against being party to some sort of arrangement with the EU on VAT to enable that smooth process at the border to continue, but we need to look at it much more closely. I hope Ministers will give some thought to that and inform the House of their thinking.
We have also heard today about rules of origin, and it is right to raise that—I have previously raised rules of origin both in the International Trade Committee and in the Chamber. The hon. Member for Aberdeen North (Kirsty Blackman) made the excellent point that the cumulation of rules of origin is very important in any trade deal. We will have to think about those things anyway, and we absolutely have to think about them in the context of rolling over the trade agreements we already have by virtue of being in the EU. There is a lot of good will on the part of foreign nations that are party to those deals, but rules of origin will definitely have to be addressed in our negotiations with the EU.
As my colleague on the International Trade Committee, the hon. Member for Hornchurch and Upminster (Julia Lopez), said earlier, tariff-free quotas are also important in that context, and the EU has to think about that. When it comes to rules of origin, we also have to remember that our supply chains are highly integrated, and it is not as simple as saying that we just cannot trade with the EU anymore. It would also be very damaging for the EU, as having to find suppliers that are not part of our supply chain would create a lot of pressure on EU businesses, and it would create a lot of pressure on the EU to find resource from within its own economies to meet those supply chain needs. That is not something the EU would want.
Christine Jardine (Edinburgh West) (LD)
The hon. Gentleman is talking about European suppliers needing to find someone to supply, and about companies in this country needing to use such supplies. Is there not a danger that, particularly in the car industry where companies from other parts of the EU are currently in this country, we will lose viable industries? They will simply go where the supply chain is easier and where they will not be tied up in the red tape proposed in this Bill.
Mr Fysh
The hon. Lady is right that, particularly in the car industry, rules of origin are an issue across the world. In the North American Free Trade Agreement, for example, the ability of US and Canadian car manufacturers to integrate their supply chains makes a big difference. Under the Trans-Pacific Partnership, which the Canadians are considering re-entering in a modified form, rules of origin on cars are probably one of the main determining issues. The degree to which local content needs to be demonstrated is a major factor.
Among other things I hope that, through this process, car manufacturers will look at sourcing more UK content in order to raise the proportion sourced in the UK, or indeed in the EU. It is all to play for, and there are lots of different ways of organising it. I would not necessarily say it is impossible or too hard but, yes, it needs to be thought about.
In that context—I have also said this before—the Customs Declaration Service that HMRC is working on has to be flexible enough to change the values that are put into the system. Whether on VAT, import duty or the cumulation of rules of origin, we need to make sure the system is able to be changed flexibly and easily at a later date. If that is not the case, this will be a nightmare and we will have a computer system that fails. I hope HMRC is well aware of that fact and of the need for that flexibility.
We have also heard about trade remedies, and it is right to say that the Trade Remedies Authority needs to be put in place very soon. The sooner it can get on with doing the work of analysing what the competitive position in various of these industries where existing or potential future remedies are going to be needed, the better; that has to be done with a good lead time in order for us to be able to argue at the WTO that we should potentially think about renewing trade remedies or putting new ones in different industries in place.
We also heard a little about lesser duty. It is fair to say that the lesser duty provisions in the WTO agreements are there for a reason: to try to prevent an arbitrary and egregious application of trade remedies. However, we need to make sure that we use our opportunities arising from coming out of the EU to make these arguments for how the global trade system should work in a non-egregious and non-arbitrary way, one where we can have rational dispute resolution mechanisms for our trade.
Having said those things and having said how necessary this Bill is, I must say that I have some concerns about the text, which I would like to discuss with Ministers and think about during the later stages of the Bill. I am concerned about clause 42, which deals with the EU law relating to VAT, and the potential for statutory instruments to be brought forward to alter the rights, remedies and procedures which have been imported by virtue of the European Union (Withdrawal) Bill. Similarly, I would like more clarity on clause 47, which deals with EU law relating to excise duty. We need to think a bit more about it, because it seems to give the Treasury and Treasury Ministers the power to alter fundamental concepts of EU law and the application of it in the future.
We also heard about clause 31, which relates to the potential implementation of a customs union, with fairly draconian Henry VIII powers. Admittedly they are subject to an affirmative procedure in the House of Commons, but it would be worth knowing a bit more about what the intent of this is and exactly how it would operate. Overall, we need to make sure we use this opportunity and this Bill to get a positive new customs co-operation system in place with our EU friends and allies. What we want is a good relationship with the EU, and it does not have to be at the expense of the rest of the world. This is not an either/or situation. I have heard many commentators say that if we are not part of the EU, we cannot do anything with the EU and that all the other deals we might do around the rest of the world cannot replace that. That is a false argument because we are looking to build on what can be as near as possible to our current relationship with the EU, and if we can do that really well and are smart about it, we can make a great success of leaving the EU.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
Ga’i ddymuno blwyddyn newydd dda i chi—may I wish you a happy new year, Mr Speaker?
I wish to confine my remarks to three key points. First, I wish to add my voice to those calling for our continued membership of the largest trading bloc in the world. Secondly, I wish to outline the concerns from Welsh ports, which would face immediate challenges to their existing position as a result of changes to our customs arrangements. Thirdly, the weakness of this Bill’s ability to protect our vital industries will form the final part of my speech, and we have heard many interesting contributions on that point already.
As promised, I wish first to reiterate to the British Government the illogicality of, and harm they will cause by, ripping us out of the customs union. A student of GCSE economics could explain the foundations of international trade as laid out by David Ricardo. His theory of comparative advantage is not complex to grasp. By specialising in particular industries, combined with free international trade, all nations will see positive results. The premise is simple: rather than creating a range of mediocre products, the highly specialised industries of each nation produce better goods, which are then traded internationally, satisfying domestic demand for the products made in other nations. Whether we agree that this commercial international order should be our goal or not, it has underpinned our economic approach to trade for centuries.
International marketplaces have moved on from Ricardo’s time. Instead of cloth and wine, the modern economy trades aeroplane wings, specialised steel products and microchips. To account for this complexity, policy makers have created institutions to manage commerce.
The European customs union is the greatest example of one such institution. By removing physical and financial barriers to trade, it has created the largest, richest, most powerful network of free-trading states in the world. As a result of our membership of the customs union, Welsh businesses can trade on a completely unfettered basis within the bloc, gaining access to 600 million consumers.
As a trading bloc, the EU customs union also applies a common external tariff on entering the bloc, and we should remind ourselves of the extra costs that will hit our exporters if we are no longer members and have no agreement on future tariffs. Carmarthenshire is known for its agricultural produce, so it is worth putting it on the record that the tariff for animal products can be more than 138%, with an average of 20%; the maximum tariff on dairy products can be as much as 134%, with an average of 45%.
I could also point to other major employers in Carmarthenshire who manufacture component parts for export and will obviously follow the upcoming negotiations with great interest. We should not be under any illusion: if it becomes burdensome, financially or through regulation, for those companies to move their goods, they will relocate. Our membership of the single market and the customs union has been invaluable in securing valuable foreign direct investment in areas such as my home communities in the Amman valley.
Before I am accused of scaremongering, today’s shambolic reshuffle was trailed in the press over the weekend as a reorganisation to prepare for a no-deal scenario. The 27 members of the EU are not the only ones with whom we will lose our existing free-trade arrangements. Sixty-seven countries have agreements with EU customs union members which must be grandfathered, although there continues to be some dispute about whether that is possible. The issue will be discussed in greater detail tomorrow when we deliberate on the Trade Bill.
By pulling my nation out of the European customs union in search of some false free-trade, low-tariff Brexit nirvana, the British Government risk the jobs and wages of my constituents. The Minister will undoubtedly claim that this is the will of the people. We can of course engage in a tit-for-tat argument over whether that is the case. However, that denies him the opportunity to outline the purported benefits of the British Government’s approach. For that reason, I ask him the following: if certainty is his aim, and the status quo is certainty, why is rolling the dice on more than half our imports and exports a good idea? Why is he gambling away my constituents’ jobs and wages? Why is he pulling us out of the customs union at all?
I also implore Labour Front Benchers to come to their senses. The constructive ambiguity of the Labour party’s Brexit position may offer marginal electoral advantage, but it provides the silver platter on which the Tories can serve up an extreme and damaging Brexit. Rather than playing hokey cokey with the single market and customs union, I ask Opposition Members to join us and take a clear stand to say we are better off in these great European economic institutions. Let there be no mistake: the Tories can deliver their current policy of an extreme Brexit only because the position of the Labour leadership is to leave the single market and the customs union after the transition phase.
Kirsty Blackman
Does my colleague agree that Opposition Front Benchers are not supporting a jobs-first Brexit? If they wanted a jobs-first Brexit, they would keep us in the single market and the customs union.
Jonathan Edwards
I am grateful for the intervention, and am aware that during the debate many honourable colleagues on the Labour Back Benches have made that exact point and implored Front Benchers to change their position. Some very interesting reports are coming out of the parliamentary Labour party meeting this evening.
Before the recess, the tangible and immediate chaos created by pulling us out of the customs union was vividly illustrated. The Prime Minister’s attempts to conclude phase 1 of the negotiations were almost scuppered by the issue of customs borders on the island of Ireland. Others will be able to expound with greater invested passion why no such border should exist. However, I would like to raise my concerns about the sea border that my nation shares with Ireland and thus the EU.
Wales and its ports are intimately linked with Ireland. Holyhead, Fishguard, and Pembroke Dock are vital trading links between Wales and the Republic of Ireland. Holyhead is the UK’s second largest port. In excess of 400,000 trucks pass through it every year. A hard maritime border between Wales and the Republic of Ireland will inevitably hit Holyhead hard, and I ask Ministers to read the excellent article of 4 January by my former university lecturer, Professor Richard Wyn Jones, on this specific issue facing Holyhead and his native isle of Ynys Môn, or Anglesey. In Holyhead there is simply no space in or around the port for the kind of infrastructure that will be required to process the number of lorries and trailers that currently pass through it. A hard border in Holyhead can yield only chaos. The same problems apply to Pembroke Dock and Fishguard.
The inevitable consequence of physical constraints in and around the ports is that freight will need to find ways to bypass Holyhead and Wales, especially if there is a soft border between the British state and the European Union in Northern Ireland. Without trade arrangements that mirror the outcomes of what we already have, Welsh ports will be in danger of becoming uncompetitive. With the intention of pulling us out of the customs union, the Bill and the actions of the Minister make it clear to the people of Holyhead that the Government consider their livelihoods to be dispensable.
Finally, I would like to highlight the concerns of an industry central to and symbolic of the Welsh economy—the steel sector. Primarily its concerns centre on trade defence provisions. These are found in clauses 13 and 14 and schedules 4 and 5. I am sure the Minister will have seen last week’s letter in the Financial Times from almost a dozen industry and union representatives highlighting the fact that these clauses
“set up a lighter-touch approach to illegal dumping by China and others than in the remaining EU and any other major economy.”
In the lead-up to the referendum, the exact opposite was promised by the leave side. In an ITV Cymru debate I took part in, Mr Nathan Gill from UKIP, speaking on behalf of the leave side, promised that a British Government freed from the shackles of Brussels would be able to impose prohibitive anti-dumping duties on China. I am sure that that clear promise influenced votes in some communities in south Wales. When he uttered those words, we know the British Government were selling the Welsh steel sector down the river. In March 2016, the British Government blocked attempts to strengthen EU trade defences against imports of cheap Chinese steel that devastated Port Talbot steelworks and took it to the brink of collapse—as we heard from the hon. Member for Aberavon (Stephen Kinnock) earlier. Yet again, it seems that the Government have little concern for steelworkers, preferring to seek dodgy deals with Trump’s America and cosying up to Beijing to protecting Welsh jobs and wages.
Fundamentally, the Bill would be wholly unnecessary, and its deficiencies of no concern, if the policy of the British Government followed the sensible path of remaining a member of the European customs union. For this reason and other reasons I have outlined, my Plaid Cymru colleagues and I will refuse to give the Bill a Second Reading and will vote against it tonight.
Bill Grant (Ayr, Carrick and Cumnock) (Con)
I am delighted to speak in favour of the Bill as it provides the next pillar to support the UK’s exit from the European Union. Free and fair trade is fundamental to the growth and prosperity of the United Kingdom and the world economy. Trade with our neighbours near and far is intrinsically linked with jobs, wage growth, productivity and innovation. Trade ensures that more people can access a wider choice of goods and services, hopefully at a lower and competitive cost, and can make household incomes go that bit further.
As we prepare to leave the EU, we are beginning to chart our new course, remaining—as we have always been proud to be—an outward-looking, internationalist nation, and identifying new opportunities with potential trading partners around the world. The UK’s trade with the world is equivalent to over half our GDP. We must therefore do everything that we can to ensure that trade can continue and that all the necessary arrangements are in place after we have left the EU. We need customs, VAT and excise arrangements to support us in both our existing and future trading missions.
Let us be absolutely clear: the decision by the British people in 2016 to leave the EU was one to remove us from all aspects of the EU, not to cherry-pick the ones we want. Indeed, 27 other countries would have a say about any cherry-picking we indulged in. Our departure from the EU includes leaving the customs union. Opposition Members would ignore or put aside the decision by the people of the UK and claim that the country could somehow magically retain its membership of the customs union. This Government have made it crystal clear that the UK will leave the customs union. Anything less would be viewed as a betrayal of the millions of people across the country who voted leave—I am not one of them; I voted to remain—and now expect us in this place to carry out that decision. I hope that those voters will be encouraged by the Government’s steps to implement our own independent arrangements, including on trade, and will feel that real progress is being made towards our exit from the EU.
I would like to deal briefly with an issue of huge importance to businesses in Ayr, Carrick and Cumnock, and indeed beyond—throughout the whole United Kingdom. Business after business in my constituency stresses the same thing: the need for clarity and certainty so that they can begin the process of planning for their futures, and the futures of their staff, suppliers and customers. This Bill takes steps to address their concerns.
Customs and excise are complex issues, and I am not an expert in them, but I understand that more than 17,000 types of goods must be classified, and I am sure there will be sub-classifications as well. It will take time for businesses—and, I dare say, the Government—to adapt to any new changes. I therefore welcome the provisions that facilitate an interim customs arrangement with the EU, remaining true to the Prime Minister’s promise of an implementation period. During such a period, I would like close association with the EU customs union, in much the same manner as we proceed currently, so that we avoid a cliff edge for businesses, which no one wants.
Stephen Kerr
My hon. Friend talks about cliff edges. Does he, like me, find it ironic that the Opposition parties that will vote against the Bill’s Second Reading are creating the very cliff edge that our constituents—business operators, directors and entrepreneurs—do not want? That is exactly what Labour and the SNP will be doing by voting against Second Reading.
Bill Grant
I share my hon. Friend’s view about the pessimism of some Opposition Members, albeit not all. The last thing that we need is to talk down the United Kingdom and our business communities. At this time, they need our support. We do not need a cliff edge for business in the UK, as well as those in the EU with which we trade.
The next few months will be crucial, and I am sure that the UK’s negotiating team in Brussels will do all it can to agree to the principle of an implementation period. The one thing this Bill must not do is limit our ability to negotiate a future trade agreement with the EU. All options must be on the table for our negotiating team to secure a future trade agreement.
Whatever the future arrangements—we do not know what they are; no deal has been struck and the die has not been cast—at the heart of the UK’s trade policy must be a continued commitment to rules-based free trade. The UK has long led the world in this area, from early trading days with sailing ships such as cutters—[Interruption.] I was thinking more of the Cutty Sark.
We have played a leading role in organisations such as the International Monetary Fund and the World Bank. We in Scotland have made an immense contribution to the UK’s trade across the world, for instance with our shipbuilding. We have done very well. We have sailed the world—I shall never forget it—and our most successful days are ahead as we remain part of the United Kingdom.
Our future trading arrangements with Europe have immense possibility. The UK starts from an unprecedented point of alignment, and I would like both sides to take this opportunity to design a customs arrangement that is both ambitious and innovative. This is not a one-way street; it is a two-way street with many movements on it. Let us imagine the Prosecco producer in Italy, the wine producers in France and Spain, the flower growers in Holland—[Interruption.] Yes, there is whisky, but we are leaving; I am thinking of the ones who remain, such as the car manufacturers in Germany and Spain. They will want a frictionless, seamless arrangement. Let us never forget that the United Kingdom is a good country to do business with. These people, among many others I could mention, will want to continue to do good business with us.
Wera Hobhouse
Does the hon. Gentleman not understand that the most important thing for the EU is to maintain its integrity? If everybody would get a better deal by leaving the EU, as the UK thinks it will, everybody would leave. That is exactly why the EU wants to protect its union. Does the hon. Gentleman agree that that is the first thing the EU will have in mind?
Bill Grant
I thank the hon. Lady for that intervention, but I think she missed the point of what I was trying to say. This is a two-way street. In fact, the trade deficit is in favour of the EU. I think that we will wish to work together as nations. Although we are leaving the EU, we are not falling out with the EU. We have made a choice. We are leaving, but we want to be friends. Basically, I was saying that the EU will wish to remain our friend for a whole range of reasons.
Above all else, the needs of businesses throughout the UK must be prioritised, which means that we must have a customs arrangement that is both highly streamlined and compatible with our colleagues in European nations. We should not create differences. We have decided to leave—[Interruption.] We can replicate and mimic, but Opposition Members forget to tell us the baggage that comes with membership of the customs union. We cannot cherry-pick; European colleagues—friends of Opposition Members and friends of mine—will not allow that.
The Bill will ensure that the UK can continue to operate as an outward-looking nation after we exit the EU, leaving open options for the Government’s implementation of an effective future trade policy. I have heard repeatedly the pessimism of some Opposition Members, although not all. They are so pessimistic and willing to talk down our businesses, capabilities and competences, and our willingness to innovate and to succeed. We will succeed and we will honour the referendum. The world truly is our oyster and we shall succeed. For that reason, I am delighted to support the Bill.
Stephen Kinnock (Aberavon) (Lab)
It is a pleasure to follow the hon. Member for Ayr, Carrick and Cumnock (Bill Grant), even though large parts of his speech were based on magical thinking.
I rise to address schedules 4 and 5, which propose the introduction of a new post-Brexit trade defence regime. Trade remedies enable countries to defend themselves against underpriced and state-subsidised goods, so they play a pivotal role in the rules-based WTO system. Governments would never have agreed to the radical trade liberalisation of the past half century were they not reassured that they could act to step in and defend their industries, if necessary. Trade defence remedies have therefore played a central role in tearing down the walls that prevent free and fair trade. How ironic, then, that this Bill is the work of a Conservative Government. The party that claims to be the voice of enterprise, free trade, business and industrial strategy has produced a Bill that, if passed in its current form, would fatally undermine the British manufacturing sector.
To illustrate my point, I wish to focus on what the Bill, in its current form, would mean for the British steel industry, which is centred on the Port Talbot steelworks in my Aberavon constituency. Over a third of the EU’s 92 trade defence instruments relate to steel, and over the years those 30-odd measures have played a vital part in stemming the flow of the dumped Chinese steel that almost led to the total collapse of the British steel industry. The Chinese Communist party owns 80% of that country’s steel industry. The party subsidises the industry to the hilt and sells the steel at well below cost on the global market. It is a well-established strategy that the Chinese state pursues relentlessly and ruthlessly in its bid to extinguish all competition and establish monopoly status.
The all-party group on steel’s “Steel 2020” report, which was supported and signed by Members who now serve in government, concluded that trade defence instruments exist not to unfairly protect certain sectors of the economy, but rather
“to support the free, fair and efficient functioning of the market.”
I will certainly not stand here and claim that the EU’s trade remedies regime works perfectly; it does not. It has often been too slow and bureaucratic, and it has unfortunately been hamstrung by the lesser duty rule. The fact of the matter is that the European Commission acts on behalf of 28 member states and 500 million consumers, so when it threatens action, even behemoths such as China sit up and take notice. It is therefore no exaggeration to say that were it not for the anti-dumping measures taken by the Commission at the height of the steel crisis, our precious steel industry would probably have gone under.
I speak today not only to raise concerns about the Bill’s implications for our steel industry, but to highlight the fact that this is about the future of our entire manufacturing sector. Indeed, the chief executive officers of the British steel, paper, ceramics, minerals and chemicals associations, along with their trade union counterparts, put it very well in their letter of 5 January to the Financial Times. They said:
“Without a robust approach to trade remedies the UK government will be unable to achieve its international trade or industrial strategy ambitions. The UK’s manufacturing base and tens of thousands of jobs around the country…will be at risk if parliament gets the bill wrong.”
I say to hon. Members on both sides of the House that if they have any form of manufacturing in their constituency, the Bill really matters to them.
As an MP who represents a constituency whose local economy relies almost entirely on manufacturing, I desperately want the Government’s industrial strategy to succeed, but the fact is that it will not be worth the paper it is written on if it is not underpinned by a robust trade remedies regime. It is in that constructive spirit that I urge the Government to undertake a radical rethink of schedules 4 and 5, with particular reference to five issues. First, the Bill contains very little detail about how the post-Brexit trade remedies regime will operate in practice. Instead it enables the Secretary of State to legislate for all-important details through statutory instruments. That really matters not only because it is yet another example of Ministers attempting to sideline Parliament, which has become a recurring theme of this whole Brexit process, but because there will be deep and widespread industry uncertainty until the secondary legislation is in place. Labour Members have raised the issue of steel in this place more than 300 times since 2015, but if this Bill passes in its current form, steelworkers and their families can kiss goodbye to the idea that they will have a voice in Parliament standing up for their interests and fighting their corner. We will not be able to do so because all the key decisions will be taken behind closed doors and implemented by statutory instruments.
Secondly, it is imperative that the Bill includes a cast-iron commitment to scrapping the lesser duty rule. This Government have been the ringleader of attempts to block EU moves to reform the rule, which means that we have only been able to impose tariffs of 13% to 16%, whereas the Americans, for example, can impose import duties of over 200% on dumped Chinese steel. An unreformed lesser duty rule must not be retained in UK law. We therefore call on the Government to state precisely how they intend to calculate the margin of injury to ensure that the process is at least as robust as the reformed EU system, and to lay out all that detail in the Bill.
Thirdly, the economic and public interest tests would create an unnecessarily high barrier to introducing any form of trade defence. None of those tests is required under WTO rules, so why are the Government intent on placing multiple obstacles in the path of an industry that wishes to file a complaint?
Fourthly, we need changes to the proposed remit and composition of the Trade Remedies Authority, bringing it in line with global norms and ensuring proper representation of trade unions and industry. Fifthly, the Bill must be amended to ensure that British courts are able to correct decisions made by the Government that deny British industry WTO-complainant rights that our competitors across the world enjoy. Without those changes, the Bill will fail in its essential task of establishing a fit and proper trade defence regime.
Once we have decoupled ourselves from the EU’s trade defence regime, it is simply beyond debate that we will have less leverage. Therefore, if anything, the post-Brexit regime that we create must be far tougher and more robust than the one that we have left. That is why we simply cannot allow schedules 4 and 5 to pass unamended. Unless the Bill is amended, it will deny us even those scant protections. For that reason, I urge hon. and right hon. Members to join me in the Lobby to amend and fix this broken Bill.
Jack Brereton (Stoke-on-Trent South) (Con)
I agree with a number of the comments about trade remedies in relation to the ceramics industry, but I will touch on that later.
It is essential in leaving the EU and the EU customs union that we develop our own customs regime. It will put in place the foundations for the negotiations on leaving the EU but does not predetermine them, allowing the flexibility needed as with any negotiating process. I hope that we secure the best possible Brexit deal. But whatever the outcome may be from those negotiations on future customs—deal or not—it is essential to have legislation in place on the UK statute book when we leave. It is important that we have the strongest hand possible in the negotiations, with the powers in place as required to adapt the UK system to fit with the outcomes from the negotiations.
It is clear that we need to maintain certainty for our businesses, ensuring initially that there can be parity as far as possible between the existing EU customs union and the new regime developed for the UK, creating a smooth transitional period. This must be based on the continued strong support for rules-based free trade and the structures of international institutions set out particularly through the World Trade Organisation. An independent customs policy will allow us to pursue policies that are in the best interests of UK trade and our own economy, and in the interests of my constituents in Stoke-on-Trent South. We are clear on these Benches about our policy on trade and leaving the customs union. This is in stark contrast to the concoction of views from the Opposition Benches.
This is what my constituents voted for when they voted 70% to leave. They wanted to see a change—not just in leaving the EU, but in pursing our interests more effectively around the world and supporting all our communities to become more prosperous. Businesses in Stoke-on-Trent South, where we have a significant manufacturing base, see huge opportunities for developing new trade links outside the EU, and leaving the customs union will enable this. There is significant potential to grow our export markets in order to sell some of the fantastic products that we produce to countries such as the United States, Japan and other developed market economies around the world.
For manufacturing and specific industries such as ceramics in Stoke-on-Trent, it is critical that we have the right trade policies in place that support a robust trade remedies regime. This is about ensuring a level playing field for these industries, continuing the anti-dumping measures already put in place by the EU that have allowed industries such as ceramics to stabilise. I was pleased by the assurances given to me by the Secretary of State for International Trade when he visited my constituency that the current measures in place within the EU will continue post-Brexit.
Where we face unfair competition from state subsidisation in non-market economies such as China and others, resulting in huge overproduction, we need to ensure that it is not possible for below-value products to be dumped into the British market. Just to reflect on the vast scale of these distortions, there is currently an overproduction of tiles in China that is six times the entire EU annual demand. This puts at risk jobs in Stoke-on-Trent and other manufacturing industries across constituencies such as ours. To ensure that there can be real free trade, we must ensure that in leaving the EU there continues to be an effective trade remedies framework that aligns well with other WTO members.
In all, it is essential that the Bill is accepted by the House today to ensure that we have the necessary legislation in place when we leave the EU, with the flexibility to support our negotiations and a new tariffs regime that is in the national interest.
Angela Smith (Penistone and Stocksbridge) (Lab)
It is a pleasure to follow the hon. Member for Stoke-on-Trent South (Jack Brereton) and, preceding him, my hon. Friend the Member for Aberavon (Stephen Kinnock), both of whom represent industries that are also very important to my constituency—steel and ceramics. I join them in pursuing a robust trade remedies mechanism, and in agreeing particularly with my hon. Friend that there is much work still to do to make sure that we get this right. I also join my hon. Friend in being very clear that we are talking about a level playing field and not protectionism. I think that on the Labour Benches there is considerable support—I hope universal support—for genuine free trade. Protectionism is not the way forward if we want to grow economically and play our part on the global stage.
This Bill, if passed, will fundamentally change our relationships, whether for good or bad, not just with our closest trading partners but with countries across the world. The EU customs union is without question one of the key pillars supporting the largest free trading bloc in the global economy—a bloc that in 2016 accounted for 43% of our exports and 54% of our imports. Yet we are debating a Bill that, in effect, confirms the Government’s intention to take us out of the customs union—a mechanism that is, or has been, integral to delivering our current trading profile. The Government are doing this despite the fact that leaving the customs union could cost the UK an estimated £25 billion every year until at least 2030.
Leaving the union will also further complicate our key trading relationships by necessitating customs declarations for EU trade. The National Audit Office estimates that the number of declarations per year will increase from 55 million to 255 million if the UK leaves the customs union. Sometimes one has to lay down the statistics as barely as that, because this is what it all means. We have to see the global impact of the decisions that we are taking here in this Chamber.
To put into perspective what is at stake, it is worth looking in a little detail at the food and drink sector, which is the largest manufacturing sector in the UK economy. It is an industry worth more than £100 billion to the UK economy. In 2015, UK food exports to the EU were worth £11 billion, while food imports from the EU were worth £28 billion. The British Retail Consortium has established that the average tariff on food products imported from the EU could be in the order of 22%, with tariffs on Irish cheddar, for instance, being as high as 44%. I will not go into the detail of the Environment Secretary’s view on what we should do about that; one is reminded of “Wallace and Gromit” as much as anything else. The overall impact of that tariff—the Environment Secretary could not answer this point at the Select Committee—could be an increase in cheese prices of between 6% and 32% for consumers in this country. This is about workers’ rights but it is also about consumers. It is about the impact on the prices of everyday food staples, and on consumer choice.
The food and drink sector relies on the efficient, just-in-time movement of goods between EU countries in the context both of finished goods and the industry’s complex supply chain arrangements, which my hon. Friend the Member for Nottingham East (Mr Leslie) mentioned. This is not just a “nice to have” arrangement; it is an essential part of modern manufacturing processes. Just-in-time delivery not only ensures high quality, especially of perishable goods—the freshness and quality of the products on the shelf—but is very important for customer service. It is the same in the steel industry: in my constituency, just-in-time delivery of supply chain components and of products out of the plant is just as important for customer service as the quality and standards of the goods.
The next-day delivery of highly perishable produce—this is particularly pertinent to the food industry—is currently possible, yet the Bill threatens to put up barriers to this remarkable aspect of modern-day European Union trade. It is therefore imperative that the frictionless movement of goods across our borders remains in place, especially as far as the land border with Ireland is concerned. Anything else will have a seriously detrimental effect on the food and drink industry.
Equally, the lack of a commitment in the Bill to remain in the EU VAT area may mean that UK businesses face cash-flow issues, as well as customs delays, at the border. Many other Members have mentioned that today, but the point cannot be reiterated frequently enough, because it is so important. UK businesses are incredibly worried about the impact on cash flow if we get this wrong.
This is the wrong Bill. There is no doubt in my mind that this should have been a Bill that confirmed an intention to keep us in the customs union to secure our economic future. While the country may have voted to sever its political union with the European Union, it did not vote to leave the customs union. I know that view has frequently been challenged by Government Members today, but I repeat the point that membership of the customs union and the single market was not on the ballot paper, and this country certainly did not vote to be poorer.
I recall the words of the Chair of the Treasury Committee, the right hon. Member for Loughborough (Nicky Morgan), who made the point in a debate in Committee on the European Union (Withdrawal) Bill that one of the responsibilities of this House is to deploy its judgment and to bear in mind that future generations will judge us on the judgments that we make. Many Members of the House believe that if we get this wrong—if we get this Bill wrong—future generations will pay the price, and that is not a risk that many of us are prepared to take.
Such is the importance of the Bill that it is absolutely imperative for it to have thorough scrutiny in both Houses, but the Government seem determined to avoid proper scrutiny by using the Ways and Means procedure to determine that this is a money Bill. I have no intention, Mr Speaker, of dictating what your decision should be. All I am attempting to do is to make the argument that this Bill is so important and so far-reaching in its implications that it would be a disservice to democracy for it to be characterised as a mere money Bill. This legislation is far from that: it is global in importance and profound in its potential impact on the UK’s economic future. On those grounds, I hope you will give serious consideration to ensuring that members of the other place get their chance to scrutinise the Bill meaningfully.
Mr Simon Clarke (Middlesbrough South and East Cleveland) (Con)
After the successful conclusion of the first phase of our Brexit negotiations last month, it is great to see Ministers pressing forward to build our future trading relationship with Europe and the rest of the world. This Bill, as Opposition and Government Members have identified, will be critical in establishing the framework within which that trade is conducted. It is of huge significance to my constituents in Middlesbrough South and East Cleveland and for the people of Teesside as a whole. I never forget that the north-east is the only net exporting region of England. In that regard, there are two main elements that I want to address tonight. The first is trade remedies, which are vital for the UK and Teesside steel industries, and the second is the special customs procedures that will be central in allowing Teesside to fulfil our ambition to host the first free port in the UK after Brexit.
Turning first to steel, as we know, the past two decades have been extremely challenging for the industry. Most recently, a combination of a surplus of global production, shamelessly exploited by the Chinese to dump steel, and our high domestic industrial energy costs led to the crisis experienced by the industry in 2015, but the steel sector remains a cornerstone and an enabling sector of our wider economy. The Government’s own study of the future of the industry estimates a massive £3.8 billion opportunity in steel demand by 2030. That progress, however, depends in large part on having a strong trade remedies regime, which brings me back to the Bill.
I am a passionate advocate of free trade, but free trade does not mean trade without rules. State-subsidised exports and those dumped at artificially low rates are a distortion of the free market. Steel producers, as people in Redcar and Cleveland know only too well, are particularly vulnerable to unacceptable trade practices. As the hon. Member for Aberavon (Stephen Kinnock) identified, more than one third of the 92 EU trade remedy measures currently in place appertain to steel. It is therefore critical that our post-Brexit trade remedies framework is robust and firm. On the whole, I am confident that the Bill will deliver that, but there are three areas where I believe improvements could be made.
Given that the Financial Secretary has already been generous enough to meet me before Christmas and that the Minister for Trade Policy has agreed to meet me later in the week, I will limit myself to touching on those areas in outline. First, there is the broad lack of detail. For example, there is currently very little detail of how investigations by the Trade Remedies Authority will be conducted and remedies applied. There is also uncertainty about how injury to producers will be calculated and quantified. Finally, the Bill enables the Secretary of State to overturn TRA recommendations on the grounds of public interest, but it is not yet clear how that public interest will be defined. I urge Ministers to put more detail into the Bill where possible. Where such technical details would be inappropriate, I encourage them to publish secondary legislation as soon as possible, even if only in draft. Although I appreciate that some of the finer details may depend on the outcome of the negotiations, some clearly do not.
Secondly, although it is entirely reasonable that an economic interest test is conducted by the TRA prior to the recommendation of definitive measures, it is not clear why such a test is required before the recommendation of provisional measures. My concern here is time. The reason provisions measures exist at all is that trade investigations can necessarily be lengthy and it may take some time before the authority reaches a definitive decision. It is possible that a great deal of damage could be inflicted on our domestic producers before a definitive investigation could be completed. Will the Minister therefore agree to review the extent to which the economic interest test may delay provisional measures, especially those safeguarding against a flood of exports?
Finally, the Bill states that the TRA will be unable to open an investigation if the UK market share of a domestic industry filing a complaint is below a certain threshold, which is as yet unspecified. That provision will leave many producers uncertain whether or not they fall within the scope of the Bill’s protections. In addition, while I understand the rationale for requiring a threshold in theory, I am concerned that a too onerous threshold could serve to undermine the World Trade Organisation right for infant industries to seek protection and also to prevent industries that mainly export from seeking relief.
The special customs procedures outlined in the Bill will be central to allowing Teesport to fulfil its ambition of being the first major free port in the UK. A free port, for Members who are not aware of the concept, is an area that is physically within a country but legally outside it for customs purposes. Goods that enter a free port do not incur import duty. Instead, import duty is paid only when goods pass from the free port into the domestic economy. The hon. Member for Redcar (Anna Turley), who is not in her place but it is so good to see her back in the House today, made a very good case for why Redcar and, by extension, Teesside are so well qualified to host the first free port in the UK after Brexit.
Worldwide, there are approximately 3,500 free ports located in 135 countries. We do not have any. Our membership of the customs union and the stringent state aid regime have acted as a block on their creation. Brexit therefore presents a fantastic opportunity to introduce free ports in the UK.
Teesport handles more than 5,000 vessels each year and about 40 million tonnes of cargo on an estate covering almost 800 acres. Situated immediately adjacent to the mayoral development corporation, Teesport is undergoing huge investment to prepare it to rival the largest ports in Europe. It has all the qualities that will allow it to prosper as an international hub for trade and supply chain processing. A free port at Teesport would aid the Government’s wider objectives of rebalancing the economy from south to north and from the service sector to manufacturing.
To that end, I am pleased that the Bill makes express reference to free ports and sets out the regulatory framework under which a free port would operate. My only request to the Minister is to provide additional clarity on paragraph 9 in part 4 of schedule 2, which states that processing in a free port could take place only if
“the processing of the…imported goods…results in the production or manufacture of other goods in which the imported goods can be identified”.
I would be grateful if the Minister gave examples of which manufacturing processes would and would not be permitted under that definition. That is important because it will mould the future shape of free ports in this country by determining the extent of the economic activity that may take place within them. To my mind, it is important that at this early stage, we maximise flexibility so as not to unduly hinder the new and unique opportunities that an independent trade and customs regime will bring.
Phil Wilson (Sedgefield) (Lab)
Any changes to taxation on cross-border trade between the UK and the European Union after Brexit will inevitably lead to some friction for companies exporting to or importing from the rest of the EU. Whatever scheme is negotiated—if, indeed, any is—it will inevitably lead to greater costs and more bureaucracy.
As an EU member state, we are part of the customs union and the common external tariff, because of which goods produced in the EU are not liable for further duties as they cross either way over the border between the UK and the EU. After Brexit, businesses will be required to make customs declarations on trade between the UK and the EU. HMRC estimates that the number of customs declarations will increase fivefold from the current 55 million to 255 million when we leave the EU and that the number of businesses going through the customs process will increase from 170,000 to 300,000.
The existing declarations system is 25 years old and is to be replaced. The new system, known as the customs declaration system, which was originally designed to accommodate changes to EU customs legislation that take effect in 2020, will be available only two months before the Government’s proposed Brexit date of 29 March 2019 if there is no transitional period. The customs declarations system is part of changes to more than 250 existing projects—a crazy amount of work to overcome in such a short period of time. That presents a strong argument for remaining part of the customs union, at least for a transitional period. In my view, we should do so not only for a transitional period, but beyond it.
My hon. Friend the Member for Nottingham East (Mr Leslie) pointed out the importance of the EU VAT area, of which we are part. When we trade within the EU, it is effectively VAT free. If we leave the EU VAT area, companies will pay VAT up front at the borders, adding to bureaucratic costs and hitting the cash flow of many companies, especially those that are small or medium-sized. That will be exacerbated further, given that many in industry believe that whole swathes of the SME sector are not prepared for what is coming down the road with Brexit. Large companies and multinationals are more likely to have the capacity to plan ahead and compensate, as difficult as that will turn out to be for many of them. They have the space to think strategically. Small companies think tactically about the next few months—about getting the next order out of the door.
For the 130,000 companies that will be dealing with customs formalities for the first time, not being part of the customs union will come as a shock to the system. In oral evidence to the Treasury Committee, Martin McTague, the policy director for the Federation of Small Businesses, said that small companies will be less likely to be prepared:
“If the past is anything to go by, it will probably be the back end of 2018 before some people wake up to what is going to happen. If we are about to drop off a cliff in April 2019, they will be completely ill-prepared for that and it will almost certainly result in business failures.”
In my view, if that were to happen, it would undermine the SME sector, which is the engine room of the economy.
Nationally, 8% of all jobs are in manufacturing. In Sedgefield, it is almost 26%—one in four. Durham and the Tees Valley is a major location for business and science research and development. I want that to continue. That is probably one of the reasons why, according to a recent North East England chamber of commerce survey, 52% of north-east businesses want to remain in the single market and the customs union and 60% want to see at least a transitional period of three years; why 53% believe that the UK’s Brexit objectives should be revisited following the general election result; and why 54% disagree or strongly disagree with the statement that the best interests of business are being prioritised by the Government ahead of Brexit negotiations.
The customs union and access to the single market are important to the economy, especially in the north-east. Latest figures show that 61.6% of the region’s exports are to the EU. Some 75% of businesses in the north-east either sold or sourced goods from the European single market. This is obviously not an insignificant number. What bureaucratic and financial burdens are we placing on our industry with changes to our relationship with the EU? We must consider also that the UK has over 60 trading agreements with the rest of the world because of our membership of the customs union.
Some people say there are potential alternatives, but all will harden our borders, make them more difficult to navigate commercially and will not be as frictionless as they are now. We may do all we can to reinvent the wheel, but I believe we will find that whatever reinvention we come up with will not be as round as the original. I want to congratulate my right hon. and learned Friend the Member for Holborn and St Pancras (Keir Starmer) on restating Labour’s position to remain as part of the customs union and single market for a transitional period, but it should not just be for the transitional period; it needs to be for good. If we want to end austerity, invest in our public services and protect and create jobs, we need to be in the customs union and the single market. For me, not to be in both and to have an anti-austerity strategy is dishonest and fantasy economics.
Sedgefield is home to the largest business park in the north-east. It is my duty to explain to my constituents what could be the repercussions of leaving the customs union, since many of their livelihoods depend on the consequences of Brexit, and I will continue to do so.
Colin Clark (Gordon) (Con)
It gives me great pleasure to follow the hon. Member for Sedgefield (Phil Wilson). To the relief of all Members, I will be mercifully brief.
The UK is an international hub for foreign direct investment and seeks to encourage international trade. Recent FDI figures show that the UK has had a record number of inward investment projects and created the second-highest number of jobs ever in 2015-16. The UK remains the No. 1 investment destination in Europe. Leaving the EU does not see the end of this attitude. On the contrary, it is the Government’s aim to continue moving forward with securing deals that will boost our trade relationships with our friends and allies.
The Bill seeks to create a lasting framework for the UK customs regime. It is therefore vital to businesses and jobs in all our constituencies. Many will know that the oil industry is very important to the north-east of Scotland. The importance of securing the best customs deal possible after leaving the EU is pivotal. Many of these businesses depend on international trade, and their future prosperity will rely on what trade deal we can secure moving forward. I think of companies such as Flowline in Oldmeldrum, where 60% of turnover is from exports, the STATS Group in Kintore, and the Hydro Group in the Bridge of Don, which exports umbilicals around the world. The narrative should focus not on the fear and uncertainty around Brexit but on the potential opportunities. Aker Solution, in Dyce, a Norwegian company, which sees the opportunities in the middle east, is investing in the United Kingdom. It probably does not give two hoots about the detail but expects us to be ready.
There is a multitude of opportunities for trade in a post-Brexit world, and the Government will ensure that our relationship with the EU in future is stronger than ever. They will seek to protect that relationship. It would appear, however, that those on the Opposition Benches are entrenched in their traditional positions. In opposing all things Brexit, Liberal Democrat Members are at least consistent: they want to ignore the vote, although, some 10 years ago, their former leader Nick Clegg called for an in/out referendum on the EU. They are, at least, open about their objectives.
The Scottish National party is very interested in any tax Bill. It likes raising taxes, saddling Scotland with the highest taxes in the United Kingdom, which, I fear, is not so good for business. SNP Members’ opposition to the Bill is based on the fact that the Government cannot give cast-iron guarantees, although they know that there are unanswered questions. That amazes me. Who would think that the SNP were so conservative as to hanker after the known rather than ploughing an independent furrow?
I listened with interest to what the hon. Member for Aberdeen North (Kirsty Blackman) said about the software required for the customs systems. As a recipient of the single farm payment from the Scottish rural payments service, I understand why she is concerned. The computer system has cost £178 million to date, which is double what it should have cost. It still does not work after four years, and it has caused hardship. Perhaps the hon. Lady could have a word with Her Majesty’s Revenue and Customs to ensure that it does not buy its software system from the same company.
Meanwhile, Labour Members have myriad reasons for opposing the Bill, the main one being that we are not ready. They wish to block the legislation that will prepare us, although, as many Members have pointed out, it seeks to protect home producers against dumping, prepares ro-ro ports to be ready, lodging declarations at sea or before embarkation, and gives us the tools to deal with customs unions. Businesses want us to be prepared and employees want us to be prepared, so I ask Members to support the Bill tonight.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
Last July, the North East England chamber of commerce—which represents about 3,000 businesses of all sizes across the region, and therefore several thousand more jobs—set out its five key priorities for the Brexit negotiations. Back then, it said:
“Uncertainty has been a condition that the business community and wider economy has had to deal with since the EU referendum. We need a positive and consultative approach to Brexit that causes minimum disruption to our businesses across the region throughout these negotiations and further.
This is particularly important for our invaluable international traders who are having to deal with fluctuations in sterling and potential changes to the way they may have to trade in the future.”
It went on to set out two of its five key Brexit priorities:
“A new trading relationship with the EU that gives our exporters frictionless and un-bureaucratic access to European markets”,
and
“A positive and consultative approach to Brexit that causes minimum disruption to business interests, particularly for those who trade overseas.”
It is difficult to emphasise enough just how critical achieving those priorities is for the economy of the north-east, which, as we heard from my hon. Friend the Member for Sedgefield (Phil Wilson), is the only part of the UK that consistently exports more than it imports. Some 61% of the region’s exports currently go to the EU, which makes it our largest market by some measure. As the House of Commons Library has previously stated, the proportion in the north-east, along with that in Wales, is higher than in any other country or region in the UK. The north-east is therefore significantly exposed to the effects of a bad deal, and to the frankly unthinkable prospect of no deal at all.
What does the Bill actually offer to the north-east’s businesses, and, indeed, to businesses throughout the country, in terms of the ability to plan for the future? How will it help to deliver the frictionless and unbureaucratic two-way access to European markets and the minimum disruption which are needed by the north-east’s firms and the hundreds of thousands of jobs that they support, with many of the region’s exporters having EU-based firms as part of their supply chain? I do not know the answer to that, but what it does provide is a very real prospect of endless red tape and customs duties on goods traded with the EU, which may or may not be levied after Brexit, and for which those firms may or may not need to prepare and budget. That depends entirely on the Prime Minister’s ability to deliver a Brexit deal to British businesses and consumers.
As a result of the Bill, some 130,000 UK firms face the possibility of paying VAT upfront for the first time on all goods imported from the EU, with all the bureaucratic nightmares and cash-flow crises that that will create. Indeed, one of the north-east international trade advisers has told me:
“This will be a huge concern to all importers, but in particular to those who won’t yet know the consequences because they only currently import from the EU. The issue of managing cashflow will become a major problem because businesses will have to pay out VAT, and then claim it back through their VAT return three or six months down the line.”
Understandably, they want to know what support the Government will provide to help the region’s firms through a significant period of adjustment, and so do I and my colleagues.
What impact assessment have the Government carried out of the proposals for the stand-alone UK customs regime contained in the Bill, and of its effects and costs for businesses of all sizes up and down the country? Given that a recent Federation of Small Businesses survey found that small businesses already spend one working week every year complying with their existing VAT obligations, is it not crystal clear that the Bill will have serious implications for UK productivity rates, projections for which have already been seriously downgraded in the autumn Budget? What effect do Ministers think the Bill’s proposals will have on the many ports, airports and rail terminals across the UK, including Newcastle international airport and the Port of Tyne in the north-east? Who will foot the bill for any necessary infrastructure changes?
Perhaps equally importantly, what evidence is there that Her Majesty’s Revenue and Customs will be able to cope with what is being proposed, after years of staff reductions, office closures and the loss of senior experience? Indeed, when I asked the Institute of Chartered Accountants in England and Wales during a Treasury Select Committee session last month whether it thought that HMRC had the capacity to manage the myriad challenges thrown up by Brexit, I was told:
“We all saw the evidence session where HMRC’s CEO was up before the Public Accounts Committee, and indeed he has been in front of this Committee as well. The clear message there is that HMRC has the largest change-management project currently in Europe in terms of its regionalisation of its computer systems, and their CEO was clearly worried that adding Brexit on top of that is potentially going to push HMRC over the edge. That was the clear message.”
The ICAEW went on to comment:
“It is quite clear that the CEO of HMRC is worried about Brexit, if you like, being the straw that broke the camel’s back. If the CEO of HMRC is worried, it is fair to say that it clearly worries us as well...We need to have an honest and realistic assessment of the capabilities of HMRC in this climate, and what is going to be needed in terms of Brexit, and an honest assessment of whether they can do it all.”
This does not exactly inspire confidence, and I am sure that it will make concerning reading for firms up and down the country.
Finally, I want to touch on the concerns being expressed by a number of international development non-governmental organisations in relation to this legislation. It is a matter of particular concern that the Bill refers to the set of criteria to which the Treasury must have regard when considering the rate of import and export duty to impose under the proposed new regime, but that no reference is made in the legislation to the principle of sustainable development or to the UK’s commitment to the sustainable development goals. I therefore join organisations such as Traidcraft and the Fairtrade Foundation in urging the Government to rectify this by making the principle of sustainable development and the SDGs a core consideration. In an article published during last year’s Fairtrade fortnight, I wrote:
“As part of its proud history of leading the way on international development, the UK has long championed the hugely important role that trade can play in improving living standards around the world. So, just as nobody wants to see Brexit weaken the countless EU-derived protections we all benefit from in the UK—whether employment rights, environmental legislation or consumer standards—nor must it result in making life even harder for some of the poorest producers in the world.”
Vicky Ford (Chelmsford) (Con)
It has been a great pleasure to listen to the debate tonight. I have always said that when it comes to EU negotiations, the devil is in the detail. It has been good to hear many Members discussing real detail tonight, because that will give us more confidence that we will be able to address the specifics in the negotiations ahead.
Some colleagues have suggested that we should try to maintain the status quo and stay in the customs union permanently, but I do not believe that that is practicable. I speak not only as a former Member of the European Parliament but as the person who chaired the European Parliament’s Committee responsible for the customs union. Staying in the customs union might help to sort out our trade with Europe, but what would it do for our trade with the rest of the world? Perhaps we would be able to negotiate to continue the existing free trade agreements that Europe has with other parts of the world, but the EU does not stand still. It will be negotiating new trade agreements. Trade negotiations are always controversial and always involve trade-offs. British interests are not always directly aligned with the rest of the EU, and having to accept future trade deals without any say over the terms is not a practicable solution, so a new relationship with the EU is needed.
It is also not practicable simply to do nothing and to try to cut and paste the relationships that we have with other parts of the world on to our trade with the EU. That particularly applies to our trade across the channel, because the journey times are too short for paperwork to be processed and the trade volumes are too high. There would be delays, which would push up costs and raise prices, hitting the interests of consumers and businesses on both sides of the channel. It is therefore good that both the UK Government and Governments across Europe are looking at bespoke solutions, and the Bill keeps our options open, including the potential for a customs union with the customs union, which may be the exact sort of deep partnership we look for in the future.
It is important to look at the detail. Import VAT and when it falls due is really important for small businesses in all our constituencies, but the Government have recognised the issue and do not want small businesses to face more costs. The Manufacturers’ Alliance has pointed to concerns about the detailed methodology on calculating remedies, the supremacy of the lesser duty rule, and the timing and nature of the economic interest test, but all those issues can be dealt with in Committee and are not good reasons to vote against the Government tonight. There is the really important issue of the cumulative rules of origin, which are vital for advanced manufacturing and the car sector, but Ministers have again made it clear that they are aware of the issue, which affects manufacturers on both sides of the channel.
In an ideal world, we would want our future customs relationship to be agreed before we agree the legislation here, but we are not in a position to do that. Any future trade deal with Europe needs all 27 other countries to agree to it, and we need to be ready to act with whatever the solution is. I am particularly pleased that Ministers have said that they are committed to delivering either the streamlined customs arrangement or a new customs partnership, and I urge Ministers and Governments on both sides of the channel not to give up on an innovative solution yet, because it is in the interests of businesses and consumers on both sides of the channel to find and deliver such solutions.
Mr Leslie
On a point of order, Mr Speaker. The Bill that we are discussing has been designated as an aids and supplies Bill, and potentially as a money Bill, which I understand is in your gift at the end of the Commons proceedings. Could you confirm that no decision is imminent on your part on the designation of the legislation as a money Bill? I am not seeking a ruling from you this evening, but perhaps you could reflect on whether it is fair use of procedure for the Government to have unilaterally designated the Bill as an aids and supplies Bill, because there are measures in the Bill, particularly in relation to the customs union, that the other place might have a great appetite for amending. Obviously it is not for us to determine the procedures that take place in the House of Lords, and while that is not a matter for you, will you confirm that you have not yet made a decision on the designation of this Bill as a money Bill and that, as far as you are concerned, the House of Lords can do what it will with the Bill, should it pass to the other end of the building?
Mr Speaker
I am grateful to the hon. Gentleman for his point of order. The short answer is that I am making no decision at all at present about the certification of a money Bill. Such decisions do fall to the Chair from time to time, but they tend to be made at a slightly later stage in the process, and I will not be making a decision tonight. More widely, the hon. Gentleman advances an argument about what he thinks are appropriate arrangements in respect of the Bill, given its contents and implications, and I will reflect carefully upon what he and other Members have said. I hope that that is hopeful to Members and to the House.
Anneliese Dodds (Oxford East) (Lab/Co-op)
A happy new year to you, Mr Speaker, and to all hon. Members in the Chamber.
This Bill and the Trade Bill, which we will consider tomorrow, could have a significant impact on Britain’s future prosperity. By determining arrangements for governing cross-border trade, customs duty and tariffs, they will decide how our country governs its commerce with the rest of the world. Sadly, as the Bills reveal, rather than proceeding with the task in a transparent way, the Government are again using Brexit as an excuse to allocate themselves more powers, which is incredibly dangerous. Decisions about trade can create jobs, but can also, of course, destroy jobs.
We have heard powerful contributions from Opposition Members. My hon. Friend the Member for Hornsey and Wood Green (Catherine West) talked about the beef and dairy sectors, and my hon. Friend the Member for Coventry South (Mr Cunningham) talked about vehicle manufacturing. My hon. Friend the Member for Sedgefield (Phil Wilson) talked generally about manufacturing and the danger of an ill thought through approach, given the impact it could have on jobs.
It is surely a fundamental principle that there should not be taxation without representation. As is recognised in the very name of the Bill, customs charges and duties, as well as import and export quotas, are effectively forms of taxation. Rather than enabling proper scrutiny and debate on decision making in this area, we see here the same trick that has repeatedly been evident with the European Union (Withdrawal) Bill and the last two Finance Bills: more power to the centre and less power for Parliament. Many concerns about that point were eloquently expressed by Opposition Members, particularly by my hon. Friend the Member for Nottingham East (Mr Leslie) and my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper).
Labour has four core objections to the Bill that motivate our reasoned amendment, and I will run through them briefly in turn. First, there must be much more parliamentary oversight of our future customs and tariff regimes. We will table amendments in Committee to set out workable arrangements to ensure that governmental decisions are subject to appropriate parliamentary scrutiny and, in particular, why the Government should use amendable resolutions, not ministerial fiat, when deciding important issues such as changing customs tariffs, preferential rates for different countries and remedies for different international trade disputes. Only in that way can Parliament exercise its voice so that parliamentarians whose constituencies could be significantly affected by ill thought through measures can challenge those measures in this place.
I underline that only Labour’s reasoned amendment stresses the need for this, our British Parliament, to prevent yet another wholesale land grab by the Government, in this case on customs duties, charges and quotas—I hope that answers the point made by my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith). It is only Labour’s reasoned amendment that concisely and clearly underlines this democratic deficit. In that regard, we heard prescient points from the hon. Member for Amber Valley (Nigel Mills), who indicated how some of these measures might be overreaching in their scope. He also made important points about Northern Ireland and Ireland that were echoed by many other colleagues.
Labour’s second problem with the Bill is that it fails to offer businesses and manufacturers the certainty that they desperately need about the UK’s future customs regime. That was pithily expressed by my hon. Friend the Member for Wirral South (Alison McGovern), who set out how, despite some of the perhaps ill thought through noises off from Conservative Members, the reality for many British businesses is that the vast majority of their trade is going to be with the rest of the EU. We therefore need a serious debate about our future customs arrangements. Of course, as was underlined by my hon. Friend the Member for Ilford North (Wes Streeting), our relationship with other countries is often governed by our relationship with the EU, because trade and customs arrangements are currently set through the EU.
On the problem about the lack of certainty for industry under the Government’s proposals, my hon. Friend the Member for Bootle (Peter Dowd) hit the nail on the head when he said that this Government’s current approach is simply to pat Parliament on the head and say, “Everything will be all right. Don’t worry, it will be all right on the night.” I often enjoy the Minister’s contributions, which tend to be detailed, but he used a strange formulation when he spoke about this point earlier. He said that the Bill—I hope I am quoting him word for word—will “facilitate whatever the will of Parliament ends up being”. The point is that in these negotiations, unfortunately, we are not talking about the will of Parliament, because the Government have in many cases ignored our will. Instead we are talking about what the will of the Government happens to be, and it seems to be one that they want to exercise as freely and unaccountably as possible.
I felt that we got a bit of a reality check from some of the Minister’s other comments. When he was talking about VAT, we heard something that contradicted that previous statement. He said that after the passage of this Bill, it will be up to the Government to decide exactly where we end up on what VAT arrangements will be for British businesses. We are therefore talking about the Government determining taxation arrangements without a proper parliamentary process. On VAT, I was pleased to hear my hon. Friend the Member for Walthamstow (Stella Creasy) again doggedly pursuing the issues she has raised many times about the lack of certainty for small businesses on VAT, given the Government’s current approach.
The Minister said it would be “possible” to have continued engagement with the EU on VAT, but we are not talking about possible or potential businesses; we are talking about real businesses that could have real cash-flow problems. As my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) said clearly, businesses need certainty and they are not currently getting it.
Labour is also concerned about the burden of these new approaches on customs arrangements for HMRC, which, as we know, is already struggling to deal with its existing tasks, even without the upheaval caused by a potential new customs arrangement. Since 2010, one in six HMRC staff has been lost, and we urgently need the Government to recognise the need for a better resourced HMRC in their proposals. That point was forcefully made by my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty).
Finally, Labour is of course deeply concerned about the Government’s untried, untested and undemocratic approach to trade remedies. As a former MEP, I have seen for myself how the British Government seem keen to push for EU markets, including the UK’s, to be opened up to unfair competition from countries unwilling to hold to trading and human rights rules as part of the debate on most favoured nation status for China. My hon. Friend the Member for Aberavon (Stephen Kinnock) expressed his legitimate concerns about the Government’s approach, given the importance of the steel industry to his constituency. That industry has already suffered substantially because of dumping. Similar points were made eloquently by my hon. Friends the Members for Stockton North (Alex Cunningham) and for Stoke-on-Trent Central (Gareth Snell). Again, we see the Conservative Government trying to push through new measures that would disadvantage our industries.
The new authority will be debated in more detail tomorrow, but this Bill gives it its powers. It is essential that the body is truly independent and representative of our economy, and that it is staffed not by chums and ideological bedfellows, but by those who know how trade really works: British businesses; our trade unionists, representing workers; and those from the devolved Administrations who can reflect the specific challenges they face. The Trade Remedies Authority cannot be a creature solely of the International Trade Secretary. It should be accountable to Parliament so that parliamentarians can reflect the concerns of our constituents. Disturbingly, we already see that the parameters for the new trade remedies regime set out in this Bill are far weaker than those that even the EU itself is moving towards, and certainly than those exercised already by comparable countries.
We have heard many excellent speeches from Members on both sides of the House, but I particularly want to say how welcome it was to see my hon. Friend the Member for Redcar (Anna Turley), with her typical energy, advocating the interests of her constituents in this debate. Many of us, particularly Labour Members, have tried hard to say how we really need a customs regime that is accountable and workable, and that favours the interests of not only consumers, but producers—Great British producers. The Government’s proposals do not remotely measure up to that mark, so I hope that hon. Members will support Labour’s reasoned amendment.
The Parliamentary Under-Secretary of State for International Trade (Mark Garnier)
I thank hon. Members for their contributions to today’s debate. It is a great pleasure and an honour as a trade Minister to close the debate on the Taxation (Cross-border Trade) Bill, on which my colleagues in the Treasury lead. However, the fact that a trade Minister is closing the debate is not only indicative of the unity of purpose across our Government to deliver critical legislation, but demonstrates how important our future trading relationship will be after we leave the European Union. As a country, we need to create the structures and legislation that will form the framework of our new, home-grown, global trading relationships, which will embrace the entire world.
Before turning to the specifics, I remind the House of the context of our discussion today. As the Prime Minister and the Chancellor of the Exchequer have made clear, when Britain leaves the European Union in March 2019, it will also leave the customs union and the single market. Many hon. Members, particularly Opposition Members, have claimed that during the referendum campaign, people were not told that we would leave the customs union and the single market. However, I was proud to stand as a remainer with Opposition Members, and I certainly said that we would leave the customs union and the single market if we left the European Union. The British public were well informed about what was happening with Brexit.
The key issue now is what kind of relationship we will have with the European Union from 29 March 2019. On customs, the Government have been clear that they will be guided by what delivers the greatest economic advantage to the UK. They have set out their objectives for any future relationship: an independent trade policy; trade with the EU that is as frictionless as possible; and avoiding a hard border on the island of Ireland.
The progression of the negotiations to the next phase means that we can now look forward to discussing our future customs arrangements with the EU. In that context, the Bill is especially vital to the UK’s preparations for EU withdrawal. Just as it allows the Government to establish a stand-alone customs regime and ensure that VAT and excise legislation operates as required on EU exit, it also gives the UK the ability to respond to a range of outcomes to the EU negotiations.
Several issues have been raised, particularly on VAT. The hon. Members for Nottingham East (Mr Leslie), for Aberavon (Stephen Kinnock) and for Newcastle upon Tyne North (Catherine McKinnell) mentioned an impact assessment on the effect of the VAT regime. I make two points on that. First, we cannot do an impact assessment of any meaningful depth until we know exactly what deal has been achieved with the EU. Until we reach that point, any impact assessment will be merely a random guess. Secondly, the Chancellor in his autumn statement made the incredibly important point that he will do everything he can to mitigate the effects of the changes to the VAT regime as we change it under the Bill.
The hon. Member for Redcar (Anna Turley), supported by my hon. Friend the Member for Middlesbrough South and East Cleveland (Mr Clarke), made an impassioned speech about free trade ports in her constituency. She asked a couple of important questions. The first was whether the Government were supportive of free trade zones. The simple answer is yes, but with a caveat that we need to understand them a great deal more. Her second question was whether the Government would advocate Teesport as a free trade port. She made a strong case for that—she speaks very well on behalf of her constituents. The Government will be very happy to engage with her and hear her case for that.
It is incredibly important that we understand how ports will work. My hon. Friends the Members for Morecambe and Lunesdale (David Morris), and for Folkestone and Hythe (Damian Collins) and the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) all appealed for the ability for ports to work efficiently. The Government well understand that roll-on roll-off ports working efficiently is one of the most important things we can achieve in the negotiations. We fully understand the problems that would arise if there were a hold-up in port.
The hon. Members for Aberdeen North (Kirsty Blackman), for Nottingham East and for Sedgefield (Phil Wilson) asked about the CDS. HMRC will start migrating traders to the CDS in August 2018 to allow a six-month period for transition to all users by 2019. To reduce the risk at the point of exit, HMRC will continue to operate the current CHIEF system in tandem.
I do not want to go on too long, but I will quickly make a point about trade remedies. The framework will provide UK industry with a safety net against injury caused by unfair trading practices and by unforeseen surges of imports. It will be a key part of ensuring an effective rules-based system for a fully functioning independent trade policy. It is important that the lesser duty rule provides for proportionate protections which remove injury to UK industry without unnecessary costs, and the economic interest test will provide a sensor check to ensure that measures are not imposed where they might have a disproportionate impact on the wider economy. The UK market is a relatively small but complex market, and the effect on competition and consumers of duties that are too high could be significant. Both the economic interest test and the lesser duty rule have been designed with that in mind.
In conclusion, the UK has set out our ideas for how future customs relationships with the EU can work. As our negotiations with the EU progress to the next phase, it is only right that the Government take whatever steps they can to ensure that they can effectively implement a new regime. On customs, VAT and excise, and indeed in relation to some aspects of our future trade policy, that is precisely what the Bill will do, by taking the sensible step of providing the Government with the ability to put in place responses to a range of possible outcomes from the negotiations. I hope that right hon. and hon. Members will support this crucial legislation, as the Government continue to put into action the decision of the British people to leave the European Union. I commend the Bill to the House.
Question put, That the amendment be made.
Business without Debate
Delegated Legislation
Mr Speaker
I am grateful to the Chair of the Selection Committee, who is ahead of himself, as usual—eager, perched, poised like a panther ready to pounce. [Interruption.] For whom? Indeed.
Welsh Affairs
Insurance and Genetic Conditions
(6 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Gavin Newlands (Paisley and Renfrewshire North) (SNP)
May I wish you a happy new year, Mr Speaker? I hope you had a restful festive period. I know that, like me, you will have spent the time wondering why Paisley did not win the city of culture in 2021, and why Coventry still has not won it. I am grateful that you are in the Chair this evening.
I am delighted finally to fulfil a promise that I made to John Eden, the chief executive of the Scottish Huntington’s Association, to bring to the Floor of the House a debate on the difficulties that both individuals currently suffering from genetic conditions and those with a high likelihood of developing such a condition in the future have in securing insurance. Those with complex neurological conditions, such as Huntington’s in particular, have real trouble in trying to access affordable and fair insurance that allows them to secure a range of services that the rest of us, quite frankly, take for granted.
From the outset, I readily admit that this is not an easy issue: there is no easy fix. It is not a black-and-white issue, but the barriers facing those affected remain deeply unfair. In highlighting this problem, I intend to look at some of the problems that exist with genetic testing, as well as at how many insurance companies are able to bypass the voluntary concordat and moratorium on genetics and insurance by demanding that any applicant provides their full family history before they decide whether to insure someone.
This issue was brought to my attention by the Scottish Huntington’s Association, which is based in my constituency. The SHA is the only charity in Scotland that is exclusively dedicated to supporting families affected by Huntington’s disease. As well as providing a range of specialist support services for those who suffer from this condition, including a world-leading team of specialist youth advisers and a financial wellbeing service, the SHA campaigns to help improve the life chances of those who suffer from this complex neurological condition.
Across the UK, Huntington’s affects between five to 10 people per 100,000, but Scotland has one of the highest rates of prevalence, with about 20 in every 100,000 in Scotland having HD, and 5% to 10% of cases develop before the age of 20. Huntington’s is one of life’s most devastating illnesses. People with it can suffer from repetitive involuntary movements resulting in mobility, balance and co-ordination problems, as well as difficulties with speech and swallowing. Huntington’s can also develop a type of early-onset dementia that affects an individual’s ability to process information, make decisions, solve problems, plan and organise. Those affected by HD can also experience a decline in their mental health and may eventually lose the ability to walk, talk, eat, drink, make decisions or care for themselves, requiring support for most or all of their activities on a 24-hour basis.
Despite the challenges that those with Huntington’s have to live through each and every day, they still need to live their lives, and that requires access to insurance. That particular issue is not new to this House, as it has been debated and discussed in the past, although it has not been raised as often as it should have been. The use of genetic testing in insurance can be traced back to debates held in this House in 2000. Unfortunately, as I will discuss later, it appears that not enough has been done by the UK Government or the insurance bodies to help rectify the matter properly.
Individuals need to secure insurance on many different aspects of their lives. We need insurance to be able to drive a car. Most of us will require home insurance if we want to secure a mortgage, and families who want to go on holiday will need to secure travel insurance before setting off. Many of us will take out life insurance to protect us and our family and cover any tragic or unplanned event.
Securing insurance is the responsible thing to do, but many individuals and families are prevented from doing so, as they are either unfairly refused outright or priced out of the market. Trying to find the right insurance is never fun, but it has never been easier. With the advent of comparison websites, five minutes is all it takes for most of us to access the most suitable and cheapest insurance. However, there are thousands of people out there who dread the thought of even trying to access insurance, because for them it is not the simple and straightforward task that it is for most of us. It is an extremely time-consuming experience, often fruitless and always very expensive.
A survey completed late last year by Genetic Alliance UK found that 65% of respondents had problems accessing insurance. I am certain that that figure would have been higher had the survey asked questions only of Huntington’s sufferers.
Jim Shannon (Strangford) (DUP)
I congratulate the hon. Gentleman on securing this debate. I asked him for permission to intervene. I am a member of the Northern Ireland Rare Disease Partnership, an organisation that focuses on many rare diseases including Huntington’s. As the number of those with rare diseases and genetic conditions continues to increase and insurance cover becomes a greater problem for a greater number of people, does the hon. Gentleman agree that it is time for the Government to review the insurance situation and ensure that the problem he has outlined, which I know about in my constituency, is addressed urgently?
Gavin Newlands
I thank the hon. Gentleman for his intervention, and I wholeheartedly agree with him. I will come on to discuss the particular review relating to Huntington’s, but I totally agree with him.
The reasons cited by survey respondents for not being able to access insurance included affordability, lack of understanding of the condition and the length of time the process takes to complete. Insurance policies by their very nature are designed to assess the level of risk before they choose to insure someone. We all know and accept that. If someone has previously crashed their car or had a bad credit rating, the chances are that they will either be denied insurance or face paying higher premiums for accessing insurance. It has always been thus. However, we should not equate having a bad credit rating to having a certain health condition, but that is exactly what is happening at the moment. Individuals with certain health conditions are experiencing great challenges to be able to access affordable insurance.
Genetic testing will be one of the ways in which insurance companies try to determine whether someone is destined to develop Huntington’s.
Dr Philippa Whitford (Central Ayrshire) (SNP)
Does my hon. Friend feel that we will require legislation? Here, people with Huntington’s chorea are picked out because of a family history, but as we move into the era of genomics, if we allow insurance companies to force Huntington’s people to take genetics tests, we could all be forced to take genomic tests to see our risk of heart attack, cancer and so on. We need to deal with this now.
Gavin Newlands
I wholeheartedly agree with my hon. Friend. This is only the tip of the iceberg. We will have to come back to the issue under discussion and address the much wider issue in years to come.
Insurance companies believe that information derived from genetic testing is of relevance to assessing risks, and they argue that it provides
“a reliable indication of increased susceptibility to medical conditions which require expensive care.”
However, individuals who face the brunt of these tests and are either denied insurance or face ridiculously high premiums believe that they are being discriminated against.
An individual with a positive predictive genetic test for Huntington’s will find it extremely difficult to receive insurance, and I have received numerous emails from people throughout the UK sharing their experience of trying to secure insurance. Indeed, one contributor to the Huntington’s Disease Association Facebook page stated that they had tested negative but were still quoted over the odds because they had been tested.
Those obstacles also affect the family members of those with Huntington’s. Another sad aspect of the disease is that it is hereditary, so it impacts on entire families over generations. People with HD often have children before developing symptoms of the disease. If someone carries the defective HD gene, each child they have has a 50% chance of having Huntington’s.
An individual with a diagnosis of Huntington’s is not ordinarily able to obtain life, critical illness or income protection insurance, so families are unable to protect themselves from the future financial impact of this horrible disease. Not being able to access insurance compounds the huge negative economic impact of the disease. Those with HD almost always have to give up their employment, as do many of their family members, who have to act as carers for their loved ones. They also incur greater expenses arising from the health condition and many have to live on benefits—something that is proving impossible due to Tory austerity. If people are lucky enough to find insurance, they are very unlikely to be able to afford it, given the impact I have just described.
One of the emails I spoke of earlier came from a family who have struggled to access basic holiday insurance. The Kitching family have two young children, one of whom has a rare genetic condition. Before their son was born, the family had no problem acquiring insurance and were able to cherry-pick the insurer they used. These days, it is a very different story. Last summer, they had to navigate numerous hurdles and obstacles, including spending nearly eight hours on the phone, to finally secure a basic travel insurance policy. Despite their best efforts, the Kitchings’ insurance bill increased by 900%, which is surely beyond what any of us would deem acceptable. Unsurprisingly, for a number of reasons, the Kitchings did not have a wide selection of providers to choose from. Not only were they met with a brick wall and a refusal to even discuss the possibility of insuring them, but they found that many companies lacked the necessary basic knowledge to assess the risks posed by certain health conditions.
Those were the obstacles the Kitchings had to navigate to go on a simple family holiday to France. I am sure that hon. Members can only begin to imagine what that family and the many others like them would have to go through if they wanted to acquire life insurance.
The experience of the Kitchings is not unique. According to Genetic Alliance UK, a national charity working to improve the lives of patients and families affected by all types of genetic conditions, 59% of people who responded to its 2017 survey said that they decided to change or cancel their holiday plans altogether because they would not be able to access basic holiday insurance. The Kitchings believe that the current system lacks any transparency and that greater clarity is required for them and families like them. They want the system to be much more closely regulated to ensure that individuals and families are not discriminated against by insurance companies because they lack the necessary medical knowledge to understand genetic conditions such as Huntington’s.
Insurance companies recognise to some degree that individuals and families experience financial distress when trying to access the correct level of insurance. The UK Government and the Association of British Insurers therefore believe that the relationship between medical data and insurance underwriting should be proportionate and based on sound evidence. However, their definition of proportionate is, to say the least, at odds with what the families affected would consider to be fair and affordable.
There are several reasons why many individuals are reluctant to take a genetic test, such as the financial black hole that can be caused by restricted access to affordable insurance or not wanting to live their lives under the cloud of diagnosis. According to Genetic Alliance UK, less than one in five people at risk of Huntington’s disease choose to have the predictive genetic test. To try to combat that, the concordat with insurance companies who are members of the ABI states that insurers will not seek the results of genetic testing for insurance with a value less than £500,000. In practice, that would mean that individuals and families had a far greater chance of accessing affordable insurance to go on holiday, buy a car or purchase a house.
In reality, the moratorium provides little protection people for people with Huntington’s or similar neurological conditions because instead of the insurance companies mandating that someone complete a genetic test, they will get around it by demanding that any individual hoping to secure insurance provides other forms of information, including a full family history. As I mentioned, each child of a Huntington’s disease sufferer has a 50% chance of inheriting the condition. Therefore, the information that is gathered by bypassing the genetic testing can lead to an individual’s access to affordable insurance being restricted. As such, the current moratorium does not provide enough protection for individuals and makes securing insurance a near-impossible task to accomplish.
The SHA believes that the business model that many insurance companies use to calculate risk is limited and does not collect all the genetic information available to calculate more precisely an individual’s health conditions. In other words, if we must use genetics, let us use them properly. This point is reinforced by an email that I received from Trish Dainton, whose husband sadly passed away from Huntington’s. She highlighted the unfairness of a system that can increase an individual’s premiums to ridiculously high levels on the assumption that they might have the HD gene but might not start developing the symptoms for 40-plus years.
It is no surprise, then, that so many people are avoiding being tested for HD, given that it could force them to pay a lifetime of sky-high insurance premiums. In addition, according to the 2017 survey by Genetic Alliance UK, 50% of respondents have avoided applying for insurance altogether, stating that concerns over premiums would prohibit them from accessing insurance. It should concern us all—certainly the Government—that too many people do not feel they can access any form of insurance. After hearing the stories from those who have lived with Huntington’s disease and how it affects their everyday lives, I think that it is clear that the insurance companies and the Government have to do a lot more to understand conditions such as HD.
In preparing for tonight’s debate, I have been sent numerous emails from individuals affected who say that most people do not truly understand the disease. The insurance companies state that the development of genomics is crucial to helping to guide the industry, as mentioned by my hon. Friend the Member for Central Ayrshire (Dr Whitford), but the system should be guided by medical knowledge and not by what a pre-programmed computer screen tells the operator to do.
As I have said, it has never been easier for most of us to quickly secure the insurance we need, and the insurance free market caters for the vast majority. For those with HD, however, shopping around means not a 30-second comparison website search but hours and hours of phone calls and being asked probing questions by someone who does not actually understand the condition. The Genetic Alliance UK report confirmed that the length of the process is one of the common complaints made by people and that there is a real desire for more action to be taken to reduce the time it takes to try to acquire insurance. That seems to be one way the insurance companies, whether at the Government’s behest or voluntarily, could work with stakeholders to design a process that prevents them from having to repeat the same information over and again.
If we do not develop a system that better understands neurological conditions, we risk creating a genetic underclass of people excluded from accessing affordable insurance due to misleading and inaccurate information gathered by insurance companies. The UK Government have a key role in changing this system to help make life that bit easier for those who have HD. The insurance companies self-regulate who they will and will not provide coverage to. That is not fair, and it is not good enough.
The current arrangements for insuring people who have or might have HD have not been reviewed since 2012, despite the fact that they should have been reviewed in 2014 and again in 2016. Indeed, the UK is out of step internationally in the way it treats those with genetic conditions. In 2000, the UK became the first nation to approve the commercial use of gene technology to allow insurers to refuse insurance cover or to push up premiums for those born with genes that could lead to fatal conditions later in life. Furthermore, unlike many other developed countries, such as Canada, the USA, Sweden, Luxembourg, Belgium, Denmark and the Netherlands, the UK does not have specific legislation that prevents genetic discrimination. Let us be clear: despite the fact that equalities legislation supposedly provides this protection, those affected believe that they are being discriminated against by the insurance companies.
The Government have a duty to respond to the thousands of people across the UK who have been waiting for action to be taken against the insurance companies. There is plenty that can be done on this issue, but I would start with the HD insurance review that is now nearly four years overdue. The Government could get tougher on the insurance companies, offer to help with a Government-backed insurance scheme for those with Huntington’s or put a realistic cap on premiums. I am not asking the Minister to commit to any specific actions this evening beyond urging him to confirm a new review and requesting a meeting with me, the Scottish Huntington’s Association and others so that he can hear at first hand of the very real and systemic problems.
In conclusion, I cannot—I am sure that none of us can—begin to understand how tough life is for those suffering from Huntington’s and the huge impact it has on the families caring for them. These families are not asking to change the world; all they want is to be able to access affordable insurance to allow them to go on holiday, buy a house, purchase that new car and protect them from the worst of the financial impact resulting from the condition. In short, they want to live their lives as best they can. We, as a society, should be doing all that we can to make life easier for those with genetic conditions, not putting further barriers in their way. I hope that the Minister can join me, and thousands of families up and down the country, in helping to create a fairer, more accessible and more affordable system for the individuals and their families who are currently in this invidious position.
The Economic Secretary to the Treasury (Stephen Barclay)
Let me begin by thanking the hon. Member for Paisley and Renfrewshire North (Gavin Newlands) for securing this important debate. As he set out so eloquently, rare genetic conditions such as Huntingdon’s disease have a significant impact on the people and families who are affected by them. The Government are focusing on ensuring that the insurance industry functions well for everyone, including those with genetic conditions. Let me deal with the hon. Gentleman’s final point first by saying that I am of course always happy to meet him to discuss more fully the points that he has aired tonight.
I have listened to what the hon. Gentleman has said, and also to wider representations. Broadly speaking, I can identify three key issues. First, people with rare genetic conditions such as Huntington’s disease can find it harder to access some insurance products. Secondly, when they find an insurance product, it is sometimes not affordable. Thirdly, people with rare genetic conditions are often discouraged from having a predictive genetic test for fear that it would make it harder or more expensive for them to obtain insurance in the future.
It is clear that factors such as age, postcode, occupation and health can all have an impact on the availability, pricing and terms of insurance policies. For example, a pre-existing medical condition, such as Huntington’s disease, can be an indicator that someone is more likely to make a claim. For that reason, insurers will use medical history as a rating factor for some products, which may mean that someone with a genetic condition has to pay a higher premium than someone without such a condition. We must acknowledge, however, that the respective capabilities of insurers to assess risk legitimately, and to price their products accordingly, are a key element on which they compete. I think the hon. Gentleman recognised that at the outset when he said that it was often not easy for insurers to strike the right note in this context.
It would not be right for the Government to intervene in individual firms’ pricing decisions in a way that would damage the competition on which the compulsory competitive tendering relies. I am sure the hon. Gentleman agrees that effective competition is the best way to ensure that the insurance market functions well. While, as he has made clear, it can be harder for people to find cover for rare genetic conditions, it is important to note that there is nothing to suggest widespread exclusion from the insurance market. Furthermore, representatives of the insurance industry have given assurances that, as with all pre-existing medical conditions, insurers will try to offer insurance coverage where they can, based on evidence and backed by medical research.
The Government have made it clear that they consider it important for everyone to have access to suitable insurance. To that end, in 2014 a landmark agreement was established by the Government and entered into with the insurance sector, which led to the expansion of the British Insurance Brokers’ Association’s Find a Broker service. The service was set up specifically to help those who were struggling to find insurance, and last year it was used by more than half a million people.
The Financial Conduct Authority, as the organisation responsible for regulating the insurance industry, has rules requiring firms to treat all customers fairly. The FCA also frequently monitors the sector to track and tackle discriminative practices. It recently closed a consultation seeking feedback from people with pre-existing medical conditions, including cancer. As I am sure many Members will know, people with cancer may find it particularly difficult to obtain insurance cover. The FCA plans to announce its next steps early this year.
It is vital that families living with rare genetic conditions, such as Huntington’s disease, are not discouraged from taking predictive genetic tests for fear of subsequently having problems with getting insurance. That was one of the hon. Gentleman’s key concerns. To that end, in 2014 we extended the concordat and moratorium on genetics and insurance, an agreement between the Association of British Insurers, representing more than 90% of the insurance market, and the Government. That agreement gives clarity and confidence to those taking predictive genetic tests on how insurers treat genetic information. Under the rules of that scheme, insurers are not allowed to ask anyone for the result of a predictive genetic test for any condition, including Huntington’s disease, when they apply for life insurance with a value of less than £500,000. It is important to note that more than 95% of life insurance policies sold in the UK would fall within the protection of that £500,000 cap. That gives confidence to those who wish to take a predictive genetic test, because they can be sure that the results will not negatively influence the price or availability of life insurance.
Dr Whitford
Does the Minister not recognise the fact that people end up in the same situation that we had with HIV testing, whereby simply by being tested for HIV—not asked for the results—they were classed as high risk? They had exactly the same issues with mortgages and insurance.
Stephen Barclay
The hon. Lady’s point would be a legitimate one if that were indeed the case. However, that is not what the evidence shows. As I have just said, 95% of life insurance policies fall within the cap. Also, we should bear it in mind that the genetic test is often prayed in aid because, although there is a 50% chance of a condition materialising, there is also a 50% chance of it not materialising. The genetic test is therefore often prayed in aid to reduce the risk, rather than having a solely negative use. I think the situation is therefore more nuanced than the hon. Lady’s intervention suggests.
The ABI also provided a report to the Department of Health on its members’ compliance with the concordat and moratorium. I understand that in the last year there was only one complaint, which was subsequently resolved. However, if the hon. Gentleman or any other Member has further evidence of concerns, I would be happy to follow up on any evidence that might be forthcoming.
As a final point, I would like to mention that the Government are also committed to a wider financial inclusion agenda. This will ensure that everyone has access to suitable financial services products. As part of this agenda, we will soon be launching the financial inclusion policy forum. This initiative will address the problem of financial exclusion by driving better co-ordination and engagement across Government and the financial services sector. It has received unanimous support, including from the Financial Inclusion Commission and the Money Advice Trust, and it will be chaired by me and the Minister for Pensions and Financial Inclusion, the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Hexham (Guy Opperman). I hope that the meeting between me and the hon. Member for Paisley and Renfrewshire North following this debate will enable us to—
Gavin Newlands
I think that that meeting will prove worthwhile. The Minister seems to be taking assurances from the FCA and the ABI, while the reality of the situation being relayed to me by those who are suffering from Huntington’s is very different from the picture being portrayed by the Minister. I therefore very much look forward to that meeting, and I hope that it takes place at the earliest opportunity.
Stephen Barclay
I think we need to differentiate two different points. The first is when the family history is indeed taken into account by insurers, but it is not related to a specific condition. I know when members of my family have had a medical condition that that can affect not only life insurance but a whole range of things, such as travel insurance. Family history is taken into account and that was, to a degree, the substance of the hon. Gentleman’s remarks. That is different from whether those with concerns can have a predictive test, which can cap cover at £500,000, but 95% of life insurance falls within the cap. This is about whether the predictive test is being fettered by the restriction on insurance, and the concordat is there to give comfort to people that they can go ahead and have a genetic test. However, we are happy to discuss that further.
To conclude, I thank the hon. Member for Paisley and Renfrewshire North for securing this debate. Rare genetic conditions, such as Huntington’s disease, have profound impacts on those affected by them. I hope I have been able to provide some assurance this evening that the Government are committed to ensuring that the insurance industry functions well for all consumers, and I look forward to our further discussions as we try to address any further concerns.
Question put and agreed to.
Ministerial Correction
(6 years, 10 months ago)
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Business, Energy and Industrial Strategy
(6 years, 10 months ago)
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Bill Esterson (Sefton Central) (Lab)
Despite having the fifth biggest economy in the world—soon to be the sixth—the UK is ranked only 48th in the global enterprise league; 48th out of five really takes some doing. But this is not just about the lack of support for start-ups. Among small and medium-sized enterprises business confidence is falling and costs are rising, and, as the Bank of England’s figures show, access to finance is still at its lowest level since 2010. Do the Government have any excuse for their woeful failure to support our smallest businesses?
Margot James
The hon. Gentleman really should stop talking small businesses down, and he is absolutely wrong in his estimate. The UK is No. 4 in the world for being the best place to start a business, and the OECD figures show that we score highly on enterprise. He does raise a valid point about growth, and we need to improve our record in supporting small businesses to grow, which is precisely why the Chancellor has made available a vast amount of money in this year’s Budget to support the growth of small businesses. [Official Report, 12 December 2017, Vol. 633, c. 166.]
Letter of correction from Margot James.
An error has been identified in the response I gave to the hon. Member for Sefton Central (Bill Esterson). The correct response should have been:
Margot James
The hon. Gentleman really should stop talking small businesses down, and he is absolutely wrong in his estimate. The UK is No. 4 in the EU for ease of starting a business and No. 14 in the world, and the OECD figures show that we score highly on enterprise. He does raise a valid point about growth, and we need to improve our record in supporting small businesses to grow, which is precisely why the Chancellor has made available a vast amount of money in this year’s Budget to support the growth of small businesses.
Petitions
Funding for young people in Devon
Women against state pension inequality
Written Statements
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Waste
(6 years, 10 months ago)
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The Secretary of State for Environment, Food and Rural Affairs (Michael Gove)
On 1 January 2018 China imposed a ban on the import of certain types of waste including mixed paper and post-consumer plastics (plastics thrown away by consumers). In addition, some other types of waste, including all other paper and plastics exports, will have to meet a reduced acceptable contamination level of 0.5% from March 2018.
China’s decision has a global impact, including in the UK. 3.7 million tonnes of plastic waste are created in the UK in a single year. Of that total, the UK exports 0.8 million tonnes to countries around the world, of which 0.4 million tonnes is sent to China (including Hong Kong). In comparison, other countries including Germany (0.6 million tonnes), Japan and the US (both 1.5 million tonnes) export more plastic to China for reprocessing than the UK. The UK also exports 3.7 million tonnes of paper waste to China (including Hong Kong), out of 9.1 million tonnes of paper waste in total. In comparison, the US exports 12.8 million tonnes of paper waste to China.
Since China announced its intentions on 18 July 2017, Ministers have worked with industry, the Environment Agency, WRAP, the devolved Administrations and representatives from local government to understand the potential impact of the ban and the action that needs to be taken. We have engaged internationally to understand the scale and scope of China’s waste restrictions. The UK Government raised the issue with the EU in September. Alongside four other members, the EU subsequently questioned the proposals at the WTO in October.
Domestically, the Government and the Environment Agency took steps last year to ensure that operators were clear on their duties to handle waste in the light of China’s proposals. The Environment Agency issued fresh guidance to exporters, stating that any waste which does not meet China’s new criteria will be stopped, in the same way as banned waste going to any other country. There is evidence that some operators have already been finding alternative export markets in response to the Chinese restrictions. Data for the third quarter of last year showed increases in exports of plastics to Turkey, Taiwan, Vietnam and Malaysia and increases in exports of paper to Turkey, Taiwan and Vietnam.
Operators must continue to manage waste on their sites in accordance with the permit conditions issued by the Environment Agency. Where export markets or domestic reprocessing are not available, the process chosen to manage waste must be the one that minimises the environmental impact of treatment as fully as possible and follows the waste hierarchy. This requires operators to ensure that where waste cannot be prevented or reused it is recycled where practicable, before considering energy recovery through incineration or the last resort of disposal to landfill.
I recognise that China’s decision will cause some issues in the short term for recycling in the UK. We will continue to work closely with industry, the Environment Agency, local authorities and all interested parties to manage those issues. The Government remain committed to maximising the value we get from our resources, and is already assessing how we handle our waste in the UK in the longer term.
Tackling waste has been a top priority for the Government. In July, I announced in my speech at the World Wildlife Fund our intention to publish a new Resources and Waste Strategy later this year. The Clean Growth Strategy, published on 12 October 2017, set out our ambition for zero avoidable waste by 2050 and announced we are exploring changes to the producer responsibility scheme. In December I chaired an industry roundtable on plastics and outlined my four point plan for tackling plastic waste: cutting the total amount of plastic in circulation; reducing the number of different plastics in use; improving the rate of recycling; supporting comprehensive and frequent rubbish and recycling collections, and making it easier for individuals to know what goes into the recycling bin and what goes into general rubbish.
This builds on action the Government have already taken to reduce waste. Our 5p charge on plastic bags has taken 9 billion bags out of circulation, reducing usage by 83%. On Tuesday 9 January, our world-leading ban on the manufacture of personal care products containing plastic microbeads comes into force. In October 2017 we announced a call for evidence on managing single use drinks containers and our working group will report to Ministers early this year. We are working with HMT on a call for evidence in 2018 seeking views on how the tax system or charges could reduce the amount of single use plastics waste. And under the Waste Infrastructure Delivery Programme the Government will have committed £3 billion by 2042, supporting investment in a range of facilities to keep waste out of landfill and increase recycling levels.
China’s decision underlines the need for progress in all these areas. In particular, we must reduce the amount of waste we produce overall and in particular the amount we export to be dealt with elsewhere. We will set out further steps in the coming weeks and months to achieve these goals, including in our forthcoming 25 Year Environment Plan.
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Employment, Social Policy, Health and Consumer Affairs (Health) Council
(6 years, 10 months ago)
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The Minister of State, Department of Health (Mr Philip Dunne)
My hon. Friend the Parliamentary Under-Secretary of State for Health (Lord O’Shaughnessy) has made the following statement:
The Employment, Social Policy, Health and Consumer Affairs (Health) Council met on 8 December 2017 in Brussels. The UK was represented at the Health Council by Lord O’Shaughnessy, Parliamentary Under-Secretary of State for Health.
There were three main agenda items; the draft Council conclusions on health in digital society; the draft Council conclusions on the cross border aspects in alcohol policy; and pharmaceutical policy in the EU. There were a number of ‘any other business’ items.
The Council conclusions on both digital health and tackling the harmful use of alcohol were formally agreed and adopted at the Ministerial Health Council. On digital health the Commission welcomed the rapid implementation of the EU’s e-health infrastructure and clear public support for the sharing of health data. On cross border aspects of alcohol policy, the Commission highlighted their commitment to supporting member states’ efforts in tackling the harmful use of alcohol, acknowledging most powers are held at national level but emphasising commitment to deal with issues in a proportionate manner at EU level. The presidency and Commission acknowledged the recent ruling on Scotland’s minimum unit pricing policy and the UK Government stated they would closely watch implementation in Scotland and keep the policy in England under review. The UK welcomed the presidency’s work on alcohol policy, which needed to respect differences between circumstances in member states.
Under the ‘pharmaceutical policy in the EU’ agenda item, the Commission provided an update on current work including an evaluation of pharmaceutical incentives and proposals planned for 2018 on Health Technology Assessment (HTA). A number of member states outlined problems resulting in medicines shortages and the high prices of pharmaceuticals. The Netherlands and Belgium both outlined the benefits of the current BeNeLuxA initiative where member states could opt to work together on pharmaceutical pricing or on joint horizon scanning work.
As part of the AOBs, the UK thanked the Estonians for hosting the event in Brussels on AMR attended by Dame Sally Davies, UK Chief Medical Officer. Belgium spoke about medicinal products including Valproate and risks for pregnant women and whether pictograms should be used. There were also brief discussions on the state of health in the EU, the annual growth survey 2018, and the steering group on health promotion, disease prevention and management of non-communicable diseases.
Finally, Bulgaria outlined their priorities for their upcoming presidency in the area of health including healthy eating particularly for children and tackling challenges in pharmaceutical policy such as medicine shortages.
[HCWS393]
Surveillance Camera Commissioner: Annual Report
(6 years, 10 months ago)
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The Minister for Policing and the Fire Service (Mr Nick Hurd)
My right hon. Friend the Home Secretary has today laid before the House a copy of the 2016-17 annual report of the Surveillance Camera Commissioner, as required by section 35 of the Protection of Freedoms Act 2012. The report is available from the Vote Office and will also be published on the Commissioner’s website.
The Surveillance Camera Commissioner is an independent role appointed under section 34 of the Protection of Freedoms Act 2012 to encourage compliance with the surveillance camera code of practice, review the operation of the code, and provide advice about the code (including changes to it or breaches of it).
The current Commissioner is Tony Porter, whose term of appointment is set until 10 March 2020.
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House of Lords
Retirements of Members
The Lord Speaker (Lord Fowler)
My Lords, I should like to notify the House of the retirement, with effect from 22 December 2017, of the noble Lord, Lord MacLaurin of Knebworth, and of the retirement, with effect from 1 January this year, of the noble Lord, Lord Blyth of Rowington, pursuant to Section 1 of the House of Lords Reform Act 2014. On behalf of the House, I should like to thank both noble Lords for their much-valued service to the House.
Brexit: Reports to Parliament
(6 years, 10 months ago)
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Lord Spicer
To ask Her Majesty’s Government when they next plan to report to Parliament on Brexit.
The Minister of State, Department for Exiting the European Union (Lord Callanan) (Con)
My Lords, we are committed to keeping Parliament informed on the UK’s exit from the EU. The Government have provided regular Statements to update Parliament, which have been repeated in this House. There have also been 23 occasions when DExEU Ministers have given evidence to a wide range of committees in both Houses. We will continue to uphold this commitment and will update Parliament at the next appropriate moment.
Lord Spicer (Con)
Is my noble friend aware that the British people are now much tougher in their attitude to the negotiations going on in Brussels? They are tired of seeing arrogant and rude officials speaking on behalf of the EU. They want full details of what is now proposed from Europe, as opposed to what they are getting at the moment.
Lord Callanan
They are certainly getting full details from us. The noble Lord makes a point that I am not sure I necessarily agree with. All our dealings with our interlocutors in the European Commission have been courteous and civil.
Lord Watts (Lab)
My Lords, it has been widely reported that the Prime Minister is going to appoint someone as a “no deal” Brexit Minister. Will that person have the same responsibility to report back to both Houses as other Ministers?
Lord Callanan
My Lords, I am always suspicious of a question that starts off, “It has been widely reported”. The noble Lord will know that ministerial appointments are a matter for the Prime Minister; I am sure he will be the first to know if she decides to make such an appointment.
Baroness Smith of Newnham (LD)
My Lords, in light of the speculation about a “no deal” Minister, what calculation are the Government making about the likelihood of a no-deal scenario? Have they—in the form of any new Minister or the Secretary of State for DExEU—thought about writing a report on the impact of no deal; or is that just to be left to your Lordships’ excellent EU Select Committee?
Lord Callanan
I totally agree with the noble Baroness that the EU Select Committee is an excellent grouping. We report to it regularly and I am sure we will be doing so in future. There has been a wide range of discussions with all sorts of parties about what might happen. We already have a Minister in the department—Steve Baker—who is planning for a no-deal scenario, but we hope that will not be the case. We want a full, fruitful and special partnership with the EU and we are continuing negotiations to that effect.
Lord Hamilton of Epsom (Con)
My Lords, following my noble friend’s intervention, does the Minister agree that if we have no deal on the table, we are much more likely to get a good deal?
Lord Callanan
It is important to bear in mind any possible outcome. We plan for all eventualities, but of course we are planning for a full and special partnership and we hope that will be the outcome.
Baroness Hayter of Kentish Town (Lab)
My Lords, discussions are meant to be taking place within the UK as well as with the EU 27. Indeed, the Government promised back in March that there would be “intensive discussions” with the devolved Administrations, but at the moment we know that they are not minded to pass the consent Motions on the withdrawal Bill. Can the Minister undertake to update the House on those discussions before we get to the withdrawal Bill, when, obviously, we will want to know whether consent is likely to be given or withheld?
Lord Callanan
As the noble Baroness correctly observed, we have regular discussions with the devolved Administrations; I myself chaired a meeting with the devolved Ministers from Scotland and Wales and officials from the Northern Ireland Office in December, when we discussed ongoing EU business. Separate discussions take place with them on the withdrawal Bill and its implications. Those discussions are detailed, and I am sure that we will want to update the House as soon as we have a conclusion.
Lord Cormack (Con)
My Lords, as we begin a new year, which we hope can be slightly more harmonious than the last, is it not important that, while we all recognise that the verdict of the referendum was that we should leave, it was decided by a very narrow majority? It is therefore important that those who were on the winning side demonstrate a degree of understanding and magnanimity, so that we get a proper deal and a real compromise that preserves the stature and economic prosperity of this country.
Lord Callanan
My noble friend makes a good point. We want a Brexit that will command the maximum possible level of support across this House and—I am not sure that the two things are related—across the country as well. We will want to involve as many people as possible, and of course we want to try to make that process as harmonious as possible, involving all different shades of political opinion.
Baroness Ludford (LD)
My Lords, instead of planning for no deal, should not the Government be trying to get a coherent, unified position on the kind of deal they are aiming for? Once they have reached that coherent, unified position, will they report back to Parliament to allow us to debate that proposition before it is put to Brussels?
Lord Callanan
We will want to do both things. We want of course to plan for the—hopefully small—likelihood of there being no deal, but we also want a unified government position going forward. The Brexit Bill will shortly arrive in this House and I am sure we will have many hours of debate on the important issues contained in it. I am sure the noble Baroness will make lots of contributions to that.
Lord Hain (Lab)
My Lords, given that the Government were forced to accept regulatory alignment in December to resolve the impasse on the Northern Ireland border and to keep it open, which everybody says they want, how does that differ from staying in the single market, and is that possible unless membership of the single market is retained?
Lord Callanan
It is perfectly possible and we have made statements to that effect. We are leaving the customs union and the single market. At the moment, of course, our regulations are identical to those of the European Union. In the future we will need to manage the process of divergence if we want to go our own separate way. Those issues will need to be discussed fully.
Lord Foulkes of Cumnock (Lab)
My Lords, has the Minister noticed that Mr Nigel Farage is meeting Mr Barnier, purporting to represent the views of the British people? Will the Minister make it absolutely clear that even though some of us do not have much faith in the Conservative Ministers who are negotiating on our behalf, at least they were elected to the House of Commons, unlike Mr Farage?
Lord Callanan
I see that this week Mr Barnier is having meetings with a wide range of people, one of whom is Mr Farage. I do not think that Nigel would ever say that he represents the people—
Lord Callanan
Okay—the noble Lord has an advantage over me; I have not seen the interviews. However, Mr Farage is the leader of a group in the European Parliament and I suspect that that is the basis on which Michel Barnier is meeting him. Mr Barnier has met Peers from this House and Opposition and Back-Bench MPs from the House of Commons, but he is very clear that he will negotiate with only one party.
MV “Empire Windrush”
(6 years, 10 months ago)
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Baroness Benjamin
To ask Her Majesty's Government what plans they have to commemorate the 70th anniversary of the arrival of the MV Empire Windrush at Tilbury Docks in June 1948 carrying Caribbean people who had been encouraged to emigrate to the United Kingdom by the Government.
Baroness Benjamin (LD)
My Lords, I beg leave to ask the Question standing in my name on the Order Paper and declare an interest as a patron of the Windrush Foundation.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government and Wales Office (Lord Bourne of Aberystwyth) (Con)
My Lords, the United Kingdom has long been a country of inward and outward migration. Post-war immigration, including via MV “Empire Windrush”, which was in many ways at the forefront of this migration, means that we are now a richly diverse society. I will be meeting key figures from community groups over the coming weeks to decide how best to celebrate this anniversary. I would also welcome input from the noble Baroness and from noble Lords throughout the House.
Baroness Benjamin
I thank the noble Lord for that Answer. “No coloureds welcome” was the sign that the Windrush pioneers faced in 1948 because the Government did not make it absolutely clear that the Caribbean people were invited to come to the UK to rescue the NHS, the transport system and factories after the war. Today, many descendants of those pioneers do not know that part of their history, as it is not generally taught in schools. As the Prime Minister wants everyone to feel included in our society, will the Government create a Windrush Day, recognising the outstanding contribution that the Windrush generation has made to Britain?
Lord Bourne of Aberystwyth
My Lords, the noble Baroness makes powerful points. Of course, there is a Windrush Day—on 22 June. This year, as she will know, we unveiled a monument in Windrush Square in Brixton as a tribute to the role played by troops from the Caribbean and Africa. Educationally, particularly in Black History Month, we also pay more than reference to what was done by that community. However, as I have said, it is important that we recognise the 70th anniversary, as we are intending to do. Heritage Lottery Fund money has already been forthcoming for the year from November 2017 to November 2018 to help mark the Windrush landing, but, as I said, I am very willing to talk to the noble Baroness and others. I think that we have a forthcoming debate on how to commemorate this anniversary.
Lord Tomlinson (Lab)
Will the Minister pay tribute to the early views of Enoch Powell in encouraging immigration to this country, even if, later, he was somewhat aberrant in his views when he no longer had ministerial responsibilities?
Lord Bourne of Aberystwyth
My Lords, the noble Lord will understand that I and indeed the Government are keen to look forward. We recognise that there is a world of difference between 1948 and the 1960s and even the 1970s, in that we are now a much more cohesive and diverse society. We must look forward and, in that spirit, it is important that we recognise the changes and the progress that have been made, celebrating Windrush Day, as the noble Baroness, Lady Benjamin, has been urging us to do.
Baroness Berridge (Con)
My Lords, I am grateful to hear from the Minister that there will be meetings and consultations, but celebrations cost money. Can he guarantee that, in addition to the Heritage Lottery Fund sum, funds will come from central government to ensure that the celebrations are of a fitting nature?
Lord Bourne of Aberystwyth
My Lords, I thank my noble friend. She is right: these things always come with a bill. She will understand that I do not have the cheque book with me and at the moment I do not intend to say how much will be spent. It is important that we do this in a meaningful way, although it is not just about the money; it is a case of ensuring that we have community involvement in this regard up and down the country.
Baroness Burt of Solihull (LD)
My Lords, my noble friend Lady Benjamin talked about some of the initial attitudes towards the people who came on the “Windrush”, as well as indeed towards their descendants. I wonder whether the Minister thinks that, despite changes to the law, attitudes such as those have fundamentally changed in this country. What are the Government doing to create an inclusive country, where the contributions of all are recognised and celebrated?
Lord Bourne of Aberystwyth
My Lords, I think that there have been fundamental changes in this country and the views of most people. Are we yet there with everybody? No, of course not; there are still challenges out there. As the noble Baroness will know, the Prime Minister initiated the race disparity audit, for example, which most people in the House and the country would welcome. We are now entering the next phase, in which departments are being asked to respond to the data and come up with policies and actions as to how we are going to tackle that. So we are not there yet, but most fair-minded people would say that there has been significant progress and continues to be so. However, we must press forward, and there are still challenges ahead.
Brexit: Environmental Enforcement Agency
(6 years, 10 months ago)
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Baroness Jones of Moulsecoomb
To ask Her Majesty’s Government whether they intend to establish an independent environmental enforcement agency before the United Kingdom leaves the European Union.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Gardiner of Kimble) (Con)
My Lords, on 12 November last year, the Secretary of State set out plans to consult on a new independent and statutory body to hold government, and potentially public authorities, to account on environmental commitments. We will carry out a consultation early this year on its remit and functions. I do not want to pre-empt the result of the consultation, and so at this stage cannot be definitive about timescales for establishing the new body.
Baroness Jones of Moulsecoomb (GP)
I thank the Minister for his reply, but I am curious about the consultation. Will it be made public so that we have a chance to examine it in this House before the withdrawal Bill comes through, so that we are well informed about exactly what we are voting on?
Lord Gardiner of Kimble
My Lords, I assure your Lordships that it will be a full and proper consultation. We want to have detailed consideration with stakeholders and your Lordships so that we get the right decision because we recognise that something needs to be done to fill what we acknowledge is a governance gap. I am not sure about the precise timings, but the whole purpose of an early consultation is so that we can move this forward.
Lord Whitty (Lab)
My Lords, this will be a powerful new organisation, which I understand will have the ability to fine or otherwise sanction other public bodies. In that case, is it the Government’s intention to produce primary legislation for the introduction of this body or are they still assuming that it will be dealt with in delegated legislation? My other question is: will this body have some jurisdiction in the remaining seven years of the present system of farm support in fulfilling the role of making sure that environmental standards are met by agricultural practitioners?
Lord Gardiner of Kimble
My Lords, the whole purpose of the detailed consideration and our consultation is to decide, and to have reflection from stakeholders, on the best way forward. That is why, at this stage, we have not made a firm decision as to the route because we think we should not pre-empt what is a serious consultation. As to the matter of agriculture, we have been very clear that we wish there to be a transitional phase. However, the arrangements in the withdrawal Bill are that existing EU law will be brought on to the UK statute book. What we are looking at is how we deal with the situation after we have left the European Union and, potentially, after an implementation period.
Baroness McIntosh of Pickering (Con)
My Lords, will my noble friend explain to the House what the situation will be for EU directives that are currently being revised but which will be approved by the European Union before the point of departure? Will he also explain what the relationship will be between this statutory independent body and the existing Environment Agency?
Lord Gardiner of Kimble
My Lords, we will continue to implement EU legislation that is on the statute book. The whole purpose is to have certainty on the statute book. What we want with this new environmental body is to ensure that there is not a governance gap and that in our wish to enhance the environment, government and, potentially, other public bodies can be held to account. We think that that is very important indeed.
Baroness Hayter of Kentish Town (Lab)
My Lords, will the Minister tell us what discussions are taking place with the devolved Administrations, such that the new body can be co-designed and owned by all four Governments, given the importance of these areas to devolved responsibilities?
Lord Gardiner of Kimble
My Lords, we are already working with devolved Administrations on which powers coming back from the EU should be devolved further. We want to explore whether Scotland, Wales and Northern Ireland wish to take a different or a similar approach on this matter. If they wish to join what will be an English body, we would be pleased. On the other hand, they may decide to take a somewhat different approach. Our thrust in this is to collaborate so that if they wish to be part of this body, we would welcome that.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, the Government have said that the new environmental body must have teeth. Will the Minister say how the Government will ensure that this happens and what teeth they envisage it will need?
Lord Gardiner of Kimble
My Lords, again, I do not want to pre-empt the consultation. We want a wide consultation and stakeholders, your Lordships and others to participate in it. We need to fill the governance gap, particularly as we wish to enhance the environment. I hope that before too long we will publish the 25-year environment plan. We want to enhance the environment, and that is a step forward. I assure the noble Baroness that we wish to have a rigorous environmental body.
Baroness Young of Old Scone (Lab)
My Lords, the Minister pointed out that this measure is aimed at closing the governance gap. One of the major benefits of the EU enforcement mechanism was that it could enforce fines against the Government in infraction proceedings. I have not been able to find another UK independent regulator which has that power at the moment. Can the Minister tell us whether the new independent regulator will be able to enforce environment standards not only on public bodies but on the Government?
Lord Gardiner of Kimble
My Lords, I will be straightforward. We want to proceed with this because we think government and public bodies should be held to account. We have existing frameworks, regulators, judicial review processes and Parliament ensuring that the Executive are accountable to them and, ultimately, to the electorate. This is an important matter, and we are going to consult widely. We have not ruled anything in or out. We want a full consultation so that we can understand what stakeholders and other interested groups think is the best way forward in holding government and public bodies to account.
Lord Campbell-Savours (Lab)
My Lords, Mr Gove, in his general approach to amendments in the law, has suggested that there will be a tightening up of slaughterhouse regulations through the use of CCTV cameras. Will the Minister comment on what is being proposed and when we might see legislation?
Lord Gardiner of Kimble
My Lords, it was in the Conservative manifesto that we wish to have CCTV in all slaughterhouses for all parts of their operations involving live animals. We will bring forward proposals for that because it is an important part of enhancing animal welfare. It will also assure consumers that animals are being treated in a humane manner at the point of dispatch. I look forward to introducing those legislative proposals.
Lord Harris of Haringey (Lab)
My Lords, can the Minister tell the House to whom this new agency will be accountable? Will it be accountable to government Ministers, whom it might criticise, or will it be accountable to Parliament?
Lord Gardiner of Kimble
My Lords, the whole basis of having a consultation is not to prejudge anything. I assure your Lordships that this is serious work on a serious subject in which, yes, government and public bodies need to be held to account. There could be a range of ways in which that can be secured. A number of your Lordships have mentioned fines, but it could be through the provision of advice or annual reports to Parliament. I do not want to rule anything in or out because we are having a genuine consultation.
Baroness Jones of Moulsecoomb
My Lords, may I recommend to the Government that they devise principles on which to base this new body? You cannot have a new body that is entirely designed by the public. You need to have principles—for example, that the polluter pays—through which the Government can be held to account. You cannot devise a new, strong enforcement body without any principles underlying it.
Lord Gardiner of Kimble
My Lords, I am most grateful to the noble Baroness because part of my script is that we will be setting out plans to consult on a new policy statement precisely on the environmental principles that will apply post our exit. It is absolutely right that one principle in the current system of environmental legislation is that the polluter pays. In the proposed consultation we will explore the scope and content of a new statement on environmental principles.
Brexit: Child Refugees
(6 years, 10 months ago)
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Lord Roberts of Llandudno
To ask Her Majesty’s Government what new arrangements they propose to introduce to support child refugees following the United Kingdom’s withdrawal from the European Union.
The Minister of State, Home Office (Baroness Williams of Trafford) (Con)
My Lords, the UK has a proud history of providing international protection for those who need it, including child refugees. The UK resettles more refugees than any other EU member state. Our commitment to supporting refugees will not change when we leave the EU. In addition to our comprehensive national asylum framework, we expect co-operation with our European partners to continue. The exact nature of our co-operation will be a matter for negotiation.
Lord Roberts of Llandudno (LD)
I thank the Minister for those comments. She will remember the day when this Government opposed the admission of 3,000 refugee children into the United Kingdom and the whole situation then. I have received letters from 254 refugee organisations saying how sad they were about that. Are the Government intent on pursuing—if it happens—our distancing from the European Union, which will of course mean the end of the Dublin III agreement? What do they have in mind to replace that agreement, which has given hope to so many vulnerable people?
Baroness Williams of Trafford
My Lords, as I outlined in my first Answer, our commitment to supporting refugees will not change when we leave the EU. The noble Lord has referred to 3,000 children. I do not know if he said he was happy or sad about that, but of course we are committed to resettling 3,000 vulnerable children under the vulnerable children’s resettlement scheme, and, in addition, some 20,000 UNHCR-recognised refugees by 2020, 9,000 of whom have already arrived.
Lord Dubs (Lab)
My Lords, will the Minister confirm that several hundred unaccompanied child refugees are in the Calais area at the moment, along with perhaps a couple of thousand on the islands in Greece, many of them sleeping rough without any accommodation? Will she also confirm that we still have an obligation under the Dublin treaty and under Section 67 of the Immigration Act to take action? Surely what is holding things up is a lack of political will on the part of the Government.
Baroness Williams of Trafford
I cannot confirm how many hundreds of unaccompanied children are in Calais, but what I can absolutely confirm is that this country, upon request, will take children referred to us, and we continue to work to do that. It is not lack of will on the part of the Government. As I have said, since 2010 around 42,000 children have been given some sort of leave to come to this country.
Lord Laming (CB)
My Lords, can the Minister tell the House what steps the Government have taken to prevent some of these very vulnerable children going missing once they are in this country?
Baroness Williams of Trafford
I think that the noble Lord was pleased when we set out our safeguarding strategy for such children in this country because we have an absolute obligation not just to get them across here, but of course then to look after them when they are here. I am very pleased that the safeguarding strategy is up and running and is being implemented.
The Lord Bishop of Gloucester
Can the Minister confirm that any new provision will be at least as generous as under the Dublin III regulations and that there will be even wider scope for child refugees to join not only parents in the UK but also other relatives such as uncles, aunts, grandparents and adult siblings? Will they also be given the support they need to live safely and in decent conditions?
Baroness Williams of Trafford
I said in my first Answer that we will not change our commitment to supporting refugees when we leave the EU, so I fully expect that the UK will remain the generous country it has been for decades. On children joining wider family here, there are already provisions within the Immigration Rules to allow for that, and we expect those to continue.
The Lord Privy Seal (Baroness Evans of Bowes Park) (Con)
Order. We will hear a short question from the Liberal Democrats and then from the Labour Benches.
Baroness Garden of Frognal
Will the Government introduce a system of reconsideration before formally rejecting applications? Currently, rejections can be made on the basis of something as simple as a spelling mistake, which would involve the child starting all over again from scratch. A system of reconsideration would involve a great shortening of delays, as well as avoiding stress and distress for vulnerable children.
Baroness Williams of Trafford
I understand the point the noble Baroness makes, and I will certainly look into it. We have tried to make the process less bureaucratic. I agree that something as simple as a spelling mistake should not debar someone from coming to this country.
Baroness Massey of Darwen
My Lords, to follow up the question from my noble friend Lord Dubs, would the Minister agree that children in refugee camps and hot spots are suffering the most degrading conditions? They are living without separate toilets. They are living in dirt, without education or legal advice. Would she also agree that this problem is partly to do with lack of co-ordination between the nations of Europe to help these children to a better life? What are the British Government doing to help that co-ordination?
Baroness Williams of Trafford
I certainly agree that the situation of children in camps is most undesirable. Children should be placed in a safe location where their welfare is met. We work with the French Government and other Governments to ensure that we meet any obligations that we have. During the Calais clearance we worked very closely with the authorities there to ensure children’s requests were processed.
Baroness Afshar (CB)
My Lords, are the Government aware that it is not only the brightest and best who manage to survive the experience of migration? Also, for many of us the moral economy of kin demands that we not only look after our immediate family, but have a moral duty to look after our extended family. Therefore, many of these children rely on aunts, cousins and people who are not their immediate family. Perhaps the Government should consider and celebrate differences and allow them to join their extended family.
Baroness Williams of Trafford
My Lords, there are provisions within the Immigration Rules for people to join their extended family. I totally agree with the noble Baroness that we have an obligation not just to our immediate children, but to other countries’ as well. This country has a very long and proud history of that.
Industrial Strategy
(6 years, 10 months ago)
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Lord Henley
That this House takes note of Her Majesty’s Government’s Industrial Strategy and of the case for boosting earning power and productivity across the United Kingdom with investment in the skills, businesses and infrastructure of the future.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, we are at a critical moment for the United Kingdom. The world is changing and we have to ensure that we are building the type of economy that gives us a global competitive edge. New technology is creating new industries, changing existing ones and transforming the way we live our lives. We need to ensure that we are well prepared to prosper in this future. The decision to leave the European Union makes that even more important.
The United Kingdom has significant economic strengths on which we will build, but we also need to make the most of our untapped potential right across the country. In the Industrial Strategy White Paper, we have set out a long-term plan to help boost the productivity and earning power of people throughout the UK by focusing on five foundations of productivity.
Our first foundation is “Ideas”. Innovation and ideas are at the heart of increasing productivity. Our ability to come up with new ideas and to develop and deploy them is one of the United Kingdom’s historic strengths. We are building on these strengths and taking action to ensure that we are generating, and making the most of, new ideas, new ways of doing things, new goods and services, and new technologies. We want to be the world’s most innovative economy and we have announced a major step towards achieving this: increasing investment in research and development to 2.4% of GDP—an extra £80 billion over 10 years.
Our second foundation is “People”: ensuring access to good jobs and greater earning power for all, with a strong focus on technical skills, maths and engineering, and retraining throughout careers. An effectively skilled population is pivotal to a modern and productive economy. We will deliver a dynamic country that has high levels of skills in science, technology, engineering, mathematics, digital and social sciences. Our strategy also takes action to address regional disparities in education and skill levels so that we build on local strengths and deliver opportunities for people wherever they live. Creating a balanced economy that boosts the earning power of everyone means reaching out to underrepresented groups in the labour market: older workers, women, disabled people and black and minority ethnic workers. It is vital not just for them and for our communities but for the productivity of the United Kingdom economy as a whole that everyone has the opportunity to realise their full potential.
Our third foundation is “Infrastructure”. We have committed to a major upgrade to our digital and physical infrastructure, including increasing the national productivity investment fund to £31 billion. High-quality infrastructure is vital for economic growth and prosperity across all regions of the United Kingdom. We are ensuring that our infrastructure investments actively support our long-term productivity as well as providing greater certainty and clear strategic direction to investors and businesses. We will ensure that our country is one of the best in the world in terms of digital connectivity, with high-speed fixed and mobile access available in all areas. Trials in road and rail digital connectivity will prepare us for the future and the potential for the adoption and deployment of autonomous vehicles.
Our fourth foundation is supporting our “Business Environment”, by driving more than £20 billion of investment in innovative and high-potential businesses. The United Kingdom has an excellent reputation in the business world. Our industrial strategy aims to build on this and make it the very best place to start and grow a business and a real draw for the most innovative and successful companies. We have world-class companies and we will do more to support them, spreading their best practice and creating a more balanced and thriving economy.
Our fifth foundation is “Places”, in which our ideas, people, infrastructure and business environment happen. The United Kingdom has a rich heritage, with world-leading businesses located in every region. Our cities, towns and rural areas are essential to shaping our economic future. We will ensure that the entire country is in a position to fulfil its potential. We have created a £1.7 billion transforming cities fund to improve transport between city centres and suburbs. We are investing in innovation, including through our £115 million a year strength in places fund. We are investing in skills, including through our investment in teachers’ professional development in parts of the country where education attainment is lower. Local areas know their own strengths and weaknesses best. That is why we have also committed to developing local industrial strategies, with Greater Manchester and the West Midlands already developing early versions. We need to create a nation where every region is thriving.
Transforming these five foundations of productivity is vital, but we know that, on its own, it is not sufficient, so we have also identified four grand challenges, based on the advice of our leading scientists and technologists, to put the United Kingdom at the forefront of the industries of the future. These areas represent long-term, complex trends which will shape the global economy, creating both opportunities and challenges for the United Kingdom. If we act now we can lead from the front, but if we wait and see other countries will seize the initiative.
For each of these challenges, our industrial strategy sets out how we can seize the opportunity. These grand challenges will be supported by investment from the industrial strategy challenge fund, matched by commercial investment. The four grand challenges are: first, artificial intelligence and the data-driven economy; secondly, clean growth; thirdly, the future of mobility; and, fourthly, meeting the needs of an ageing society. I shall speak on each of these challenges in more detail, and set out, based on our analysis of current evidence and future trends, our priority areas for each grand challenge.
Artificial intelligence and machine learning are general purpose technologies .They can be seen as new industries in their own right. By one estimate, artificial intelligence could add £232 billion to the United Kingdom economy by 2030. To ensure our success in this area, we will make the United Kingdom a global centre for artificial intelligence and data-driven innovation. We will support sectors to boost their productivity through AI and data analytic technologies. We will lead the world in the safe and ethical use of data and AI and help people develop the skills needed for those jobs of the future.
The move to cleaner economic growth is another of the greatest industrial opportunities of our time. The Paris Agreement of 2015 commits countries to revolutionising power, transport, heating and cooling, industrial processes and agriculture. The effect of these changes will be felt across the economy and will involve the reallocation of trillions of pounds of public and private finance towards the pursuit of cleaner growth. We will take advantage of these trends by developing smart systems for cheap and clean energy across power, heating and transport; by transforming construction to dramatically improve efficiency; by making our energy-intensive industries competitive in the clean economy; by putting the United Kingdom at the forefront of high-efficiency agriculture; by making the United Kingdom the global standard setter for green finance; and, finally, by developing United Kingdom leadership in low-carbon transport across road, rail, aviation and maritime.
Mobility and transport are on the cusp of a profound change in how people, goods and services are moved around our towns, cities and countryside. This is driven by extraordinary innovation in engineering, technology and business models. Our mobility grand challenge will establish a flexible regulatory framework to encourage new modes of transport and business models; seize the opportunities and address the challenges of moving from hydrocarbon to zero-emission vehicles; prepare for a future of new mobility services, increased autonomy, journey sharing and a blurring of the distinctions between private and public transport; and explore ways to use data to accelerate development of new mobility services and enable the more effective operation of our transport system.
Finally, our grand challenge on ageing recognises our obligation to help older citizens lead independent, fulfilled lives. Our population is ageing, creating new demands for technologies, products and services, including new care technologies, new housing models and savings products for retirement. It is important that we get this right. To do so, we will encourage new products and services for the growing global population of older people, meeting important social needs and realising the business opportunity for the United Kingdom; we will support care providers to adapt their business models to changing demands, encouraging new models of care to develop and flourish; we will support sectors to adapt to a changing and ageing workforce; and, finally, we will explore the application of our health data to improve health outcomes and UK leadership in life sciences.
In addition to the work we are doing on the foundations of our productivity and our grand challenges, we are finding new ways of partnering with businesses. In the Green Paper we asked businesses if they would like to agree sector deals—strategic, long-term partnerships between industry and the Government, backed by sizeable private sector co-investment. The answer was an emphatic yes. We have already published deals in construction and life sciences, and in the coming weeks we will publish deals with the artificial intelligence and automotive industries. We set out our criteria for future deals in the White Paper and look forward to continuing our conversations with different sectors about their proposals.
The scale of ambition in our industrial strategy is clear and we can deliver on this only if we work in partnership. We will use the framework set out in the strategy to work with industry, academia and civil society in the years ahead to build on the United Kingdom’s strengths, make more of our untapped potential, and create a more productive economy that works for everyone across the UK. We believe that by acting now, the United Kingdom can lead from the front. Our strategy is all about seizing opportunities to put the United Kingdom at the forefront of the industries of the future. Our vision is that the United Kingdom will have good jobs and greater earning power for all, make a major upgrade to our infrastructure, be the best place in which to start and grow a business, and have prosperous communities across the country.
As I said, in the next month we hope to be concluding sector deals with the automotive, artificial intelligence and construction sectors. Alongside this, we are in ongoing negotiations to create nuclear, industrial digitalisation and creative industries sector deals. We will also be making progress in other areas, including setting up the industrial strategy council; developing our four grand challenges and appointing business champions for each of those challenges; and making further allocations of the industrial strategy challenge fund. Other departments—I emphasise that this is a government-wide White Paper—will also be setting out strategies designed to support the industrial strategy, such as Defra’s upcoming 25-year environment plan.
This is a strategy for the long term, involving all of government, which will evolve and adapt to respond to the challenges of the future. But, as set out, it is also taking action now to ensure that we make the most of our strengths, opportunities and untapped potential. I beg to move.
Lord Mandelson (Lab)
My Lords, I am very glad to follow the Minister, who set out the vision of the White Paper rather well. I hope noble Lords will forgive me if I do not dwell at any length on Brexit. That will at least allow me to agree with the Prime Minister on one thing—that the UK is facing much deeper economic challenges than simply its poor cyclical economic growth or squeezed living standards, bad as these are.
In the Prime Minister’s words—and, incidentally, Jeremy Corbyn’s—we need,
“an economy that works for everyone, not just the privileged few”.
We do not have that at the moment in our country.
For me, progressive politics is about demonstrating that we can advance as a country by mobilising the strengths and disciplines of the market, and by using the unique capacity of the Government in tandem. Those things go together, stimulating enterprise with a sense of responsibility and having rewards with fairness. Industrial strategy, in my view, has an important part to play in achieving these things by helping ensure that all parts of the country are able to benefit from economic growth. We need industrial policy working hand in hand with actions to achieve more fairness in society including, importantly, across the generations so that, for example, owning your own home again becomes a real prospect for most people in their 30s. At the top, we need a lot fewer pay awards being given that are out of line with the rest of society and with business performance. A tweak of the policy dial will simply not be enough to address these challenges. We really have to adapt our economy, our whole economic model, so as to restore faith in it. That is why industrial strategy is important.
The White Paper we are debating today is a good start and I come here to praise Greg Clark, not to bury him. I very much hope that the Prime Minister feels similarly. Greg Clark and his officials have actually produced a very thorough piece of work. He is right to focus on the Government’s role in promoting investment, in business fundamentals, in ideas, place and people and in infrastructure, as the Minister said. But we also have to get other fundamentals right, such as the free flow of talent into and out of our country and having high-quality vocational as well as higher education—including, I might say, pioneering design education. It is the design of how we use and apply technology to how we live that is central to what we will produce and market in the future, and to our whole competitive advantage as a country.
Your Lordships can see the global industrial trends which Britain has to make a national mission to participate in. As the Minister said, they include artificial intelligence and data analytics, clean growth, medical science in the context of the ageing society and the transformation of mobility. Britain is present in these trends but it is not present enough. In the FTSE 100, oil, mining, finance and retail companies dominate; few advanced technology companies and businesses are emerging to scale. Yet we have huge opportunities all around us. The National Health Service, for example, will eventually be transformed by the use of artificial intelligence and data. We should be market leaders in this, investing now in the businesses that will drive it and then exporting their knowledge, expertise and success in the rest of the world.
The point is that it is the Government’s job to use their unique power in the economy—as they do in relation to the NHS, for example—to help create such new markets, making it worth while to commercialise and to grow our know-how here in Britain rather than seeing it transfer abroad when it reaches a certain point of development. That is what our industrial future depends on in this country. It is not about substituting business decisions for those made by Ministers, but about Ministers helping to make a reality of those business decisions, including occasionally by facilitating long-term commercial finance. Government has to think of itself, in other words, as literally a partner with business, networked into the country’s science and technology base, spotting potential for market development and growth, leveraging the Government’s role as purchaser, as customer, as regulator, as market maker.
In this context, the Government’s commitment to raise spending on research and innovation is highly desirable in order to raise productivity and move on from an old economy to an advanced-technology one. But spending in itself is not a panacea. Innovation does not in itself create business growth, regardless of what else is going on in the economy. You need businesses to be sufficiently confident of new market growth and opportunities in Britain, and of their ability to cross borders easily in supply and value chains and to trade freely in the large markets nearby.
It is no accident that the biggest sustained post-war growth in Britain’s productivity came from our joining the then European Community in the 1970s, followed of course by the single market in the 1990s and thereafter. The liberalisation of our trade with Europe brought huge market opportunities and a tremendous spur to competition after decades of relative protection and sluggish reliance on Commonwealth markets. As a result, flows of cross-border investment and international R&D spending in Britain were greatly stimulated, bringing with them innovation and higher productivity, buoyed by confidence among businesses about their ability to supply both our own and our largest, closest market. That is why, if we leave the European Union, our highest priority should be to remain in the European Economic Area.
This year is the 20th anniversary of the publication of my first industrial strategy White Paper at the DTI, Building the Knowledge Driven Economy—I have form. It will be 24 years since the publication of the first competitiveness White Paper, published by the grandfather of modern industrial strategy—by whom of course I mean not Tony Benn but the noble Lord, Lord Heseltine. More recently, I pursued five drivers of productivity in my second White Paper, New Industry, New Jobs, and this was followed by the industrial sectors approach of Vince Cable.
One central thing that has not been properly resolved in any of this litany of strategies is the tension between a national, centrally planned approach and doing the job instead through devolution of power and resources to regions and communities, notably but not only in respect of skills and mobility.
In my view, the northern powerhouse initiative was an attempt to combine industrial strategy with devolution, but it was an incomplete one and it now seems to have been discarded in a fit of vindictiveness towards the previous Chancellor, George Osborne. I think that is a great mistake. We cannot rely on Whitehall knowing best or policy being revised on the basis of every Whitehall-based ministerial fad, fashion or passing reshuffle, as I hope the Prime Minister is bearing in mind as we debate.
This leads me to three concluding remarks based on my experience of industrial strategy. First, it is vital that Ministers collectively—not just in the business department—take ownership of the strategy. When Michael Gove talks about the future of food and farming, that industrial future is the responsibility of his department, not of BEIS. The research budgets, procurement plans and regulatory frameworks of all departments need to be used to build the markets and competitive advantages of businesses based in Britain. The Prime Minister needs to take some responsibility in driving this, otherwise it will not happen.
Secondly, publishing a White Paper is not a job done. It requires painstaking, practical and detailed follow-up; that is when the real slog begins. Let us face it, most Ministers are not natural business people or entrepreneurs, so they must use actual hard evidence, not wishful thinking, in implementation. The chief economist that I had in the business department, the inimitable Vicky Pryce, would ask at some point in almost every policy discussion that I had: “What is the evidence base for this proposal, Secretary of State?”. I must say that this got rather irritating, but you have to be careful that through either ignorance or naivety you do not end up with a lot of industrial losers finding the Government rather than the Government finding winners.
My third remark is about continuity of policy. To be effective, industrial policy has to be sustained through political cycles, not just through one Government. It is one thing having a long time horizon—this White Paper’s horizon is 2030—but quite another to develop a genuinely long-term approach, one that will take us well beyond 2030, which is not actually very far away. Look at Germany and France. There is continuity in their systems when it comes to business and investment policies, which permits long-term planning and the development of competitive advantage over many decades.
Theresa May and Jeremy Corbyn may sometimes use different language but there are clearly points of agreement between the contents of this White Paper and Labour’s plans drawn up by Rebecca Long Bailey, Greg Clark’s shadow. I have read both and am struck by the overlap between them, which is rather encouraging. There needs to be mutual understanding and convergence of policy wherever we can achieve it.
I realise that this flies in the face of adversarial, zero-sum-game modern politics, but I hope that the Government will work hard, as I believe has already been started, to take the Opposition with them on the White Paper, and I hope that my party fully reciprocates. In these very troubled and divisive times, frankly, we need to take any consensus where we can find it, however difficult Brexit makes that.
Baroness Randerson (LD)
My Lords, when I heard that we were to have an industrial strategy, I very much welcomed the news because I felt that it built on foundations laid during the coalition, not least by Vince Cable in his work at the Department for Business, Innovation and Skills, and because industrial strategies—for example, the one produced by the noble Lord, Lord Heseltine—have a good name among business. It was a hint of long-termism in the Government’s view at a time when inevitably, because of the Brexit challenges, the Government were taken up with fighting day-to-day issues.
However, when I came to read the Industrial Strategy, although it was very thorough in the number of words used to cover it, I felt that it lacked that sense of purpose and unique commitment that Governments must have if a strategy is to be workable in practice—if it is to turn out to be more than, yes, another document.
The Minister referred in his introduction to the Government’s commitment to new transport technology and to transport and future technology in general, but I am firmly of the view that if we are to heal our broken economy, we need, first, to tackle the problems of today. I make no apology for concentrating in my speech on transport and transport technology, because if we do not get transport infrastructure right, the rest will not follow.
When I travel abroad, I get an immediate impression when I arrive back on these shores of the intense traffic congestion, outdated infrastructure and sheer unreliability of travelling long distances in the UK, whether by road or rail. My sense chimes with that of other people who have talked to me about this issue—the contrast between Britain and neighbouring countries in the stage we are at in solving these problems. All this fundamentally undermines our economy. To put it right, there are no quick fixes: it requires long-term investment and farsighted political commitment.
We could argue that we would not be in this Brexit mess if successive Governments had not paid too little attention to areas outside the south-east of England. That lack of attention has gone on for many decades. When you analyse the anti-EU vote of the year before last, you see that the heaviest vote to leave the EU was in those areas where the economy had declined furthest and where people were poorest. That is fundamentally linked with the issue of transport infrastructure. Putting this right depends to a large extent on improving those transport links. Tackling economic imbalances and driving growth more evenly across the whole country will not be simple, and I see nothing in the Government’s industrial strategy to convince me that they accept the radical challenge that they face or the amount of money that it will cost to fix it. It is important to remember that our transport infrastructure has relied over many decades on EU regeneration funding. It is important that the Government urgently reassure local authorities and businesses that there will be a firm and reliable replacement for that funding, and how it will be provided.
I would argue that there is a need for a number of things. First, we need close working relationships with local authorities, which have too often been seen by the Government almost as competitors, with a lack of trust. They obviously hold a key role in terms of planning and infrastructure development. The issue of devolution, which I welcomed strongly, has been linked by the Government to the existence of mayoral authorities. I have never understood why elected mayors are regarded as the key to all political problems and why other authorities cannot be treated on a par. There is a key role on these issues for universities and, of course, business. The Government have to develop real and trusted partnerships with universities as a source of inspiration and research that provides skills for the future and a real partnership with business.
Then, of course, there is the unsolved problem of how to deal with the free movement of people in the future, on which our economy has relied for hundreds of years. The Local Government Association calculated that by 2024 we will have 4 million too few highly skilled workers in comparison with our needs. That is equivalent to affecting 4% of economic growth. That skills gap must be dealt with in one way or another. I welcome the Government’s commitment to increasing the national productivity investment fund to £31 billion, but I fear that even that will not be adequate. I welcome the Government’s commitment to new technologies in transport as I am an enthusiast for new technologies. I welcome their comments on developing electric vehicles and their take-up, but I looked in vain for the clarity that we need on the long-term issues in relation to this. For example, how will the recharging of electric vehicles be provided in a way that works within the market? It is one thing to say that all local authorities will set up charging points but another to ensure that they are maintained properly. The devil is in the detail.
I fear that if too much funding is going into local infrastructure projects that are reliant on short-term competitive funding, we will not get certainty for the future of transport investment. In England, 97% of roads are classified as local roads, so the Government deal with a very small percentage of the total. Local roads suffer from terrible congestion as much as the long-distance links.
There is a massive maintenance backlog on our roads in general, but it amounts to £12 billion worth on our local roads. We need a much more coherent, co-ordinated and cohesive approach to maintaining and developing our roads. There is, of course, an urgent need for investment in public transport infrastructure to reduce air pollution. The Liberal Democrats always prefer rail and road public transport to be developed rather than private transport because of air pollution. However, the Government have not yet produced any adequate detailed plans on how to tackle the air pollution problems.
As a Liberal Democrat, I looked for something very ambitious in the Secretary of State’s railways strategy; instead, I saw a miserable lack of ambition. The decision to abandon the electrification of the Great Western line beyond Cardiff and the trans-Pennine line sends the wrong message if we are to solve the problem of overcrowded railways. Last week’s 3.4% increase in rail fares did not send out the message that the Government are committed to improving the country’s transport and linking up our cities. We need HS2 but it should not soak up all the investment; it should be just one part of the jigsaw. We need a much more ambitious approach to bus services. There is a dwindling number of bus services, especially in rural areas, which leads to increased congestion. There is the danger that the Government’s announcement on clean air zones might drive buses off the road as local authorities choose to impose much higher standards on buses than on cars in this respect. However, buses are the solution to the transport problem.
Finally, the challenge the Government face is that the industrial strategy, if it is to work, needs to face up to the fact that after Brexit we will need more than fine ambitions. We need to look at the reality—namely, we cannot lead the world in new technologies by tinkering at the edges and spraying around a handful of pilot projects, sprinkled with a little seed corn money. We cannot be a world leader in this field simply by constantly claiming that we are already, as we hear so often from this Government. We cannot be a world leader by cutting ourselves off from our main market within the EU and discouraging the skills and the immigrants who bring them, on whom we have relied for so long. I do not see in this industrial strategy the answers to those serious challenges that our country faces at this time.
Lord Kakkar (CB)
My Lords, I thank the Minister for the thoughtful way in which he introduced the debate and Her Majesty’s Government’s industrial strategy. I remind noble Lords of my interests as professor of surgery at University College London, chair of University College London Partners, business ambassador for healthcare and life sciences, and a member of your Lordships’ Science and Technology Committee, which is undertaking an inquiry on the life sciences industrial strategy.
It is quite right that there is a very acute focus on the question of life sciences, because they have played, and will continue to play in future, a vital role for our country and its economy. After financial services, the life sciences sector is one of the most important, and it is built on a substantial and impressive ecosystem that has been developed over many decades. We have four of the top 10 biomedical universities in the world; the published output from the research activity in those universities accounts annually for some 10% of citations globally and some 15% of the most highly cited papers published. Much of that research is undertaken with impressive collaboration with institutions in the United States, the European Union and the rest of the world.
We have two of the top 10 pharmaceutical companies based here in the United Kingdom. They represent a vital part of our economy, providing some £21 billion a year in exports. Consistently over the last 15 years, every year, they have contributed more than £1 billion in surpluses to the economy. The impressive large pharma sector is supported by more than 3,500 small and medium-sized enterprises in the medtech and biotech spheres; of those 3,500 companies, some 500 are actively exporting. They have seen substantial growth in the period 2009-14. For the medtech sector it is a 5.8% growth in revenue per annum; in the biotechnology sector it is 4% per annum in that period.
All that demonstrates that we have a fundamental and strong base but, in addition, we have something quite unique—the National Health Service, which provides care free at the point of delivery to all our citizens, and a wide range of care, and which has provided a unique opportunity over many decades to develop the base for our medical research, which in many areas leads the world.
What is striking is how the opportunities and the needs will grow, needs that will have to be addressed by the life sciences sector. The global value of the life sciences industries is some $1.6 trillion; by 2023, that will grow to over $2 trillion. With regard to healthcare expenditure and revenue, in the period between 2014 and 2027 it is estimated that expenditure on healthcare globally will grow by 5.8% per annum, but in certain markets, where we already have a very strong relationship and affinity, it will grow at an even greater rate—in India by some 15% per annum over that period, in China by 12% and in the Middle East and the Gulf by 8% per annum. So there are very big opportunities for the life sciences industrial base to make important contributions to our own economy. At the moment, some 300,000 people are employed in the science and technology sectors, in highly skilled jobs. The potential for that to grow over time to provide economic benefit and employment is quite obvious.
It is for that reason that there is so much focus on the life sciences strategy authored by Sir John Bell and presented along with its first set of sector deals before the Christmas Recess. In that strategy there is a focus on five important areas: to ensure that the science base in our country, to drive the innovation and discovery essential for life sciences, is properly invested in and maintained, not only in the public sector but through private sector investment through the sector deals; to ensure that the innovative companies that result from that discovery can grow in our country; and to ensure that the patient capital essential to allow them to grow over time to become substantial entities is provided in our own country, rather than those small enterprises having to look abroad and, potentially, move abroad, when they require greater investment. We need to provide the opportunity for an appropriate manufacturing base, with the skills required for those highly innovative industries to prosper and succeed in our country.
There are two elements that are vitally dependent on the National Health Service. The first is the adoption of these innovations at scale and pace within the NHS. This is critically important for a number of reasons. First, the delivery of healthcare in our country is not going to be sustainable unless we are able not only to adopt innovation to make the delivery of healthcare more effective in improving clinical outcomes but to use in the most efficient fashion the vital and valuable resource that the state makes available for the delivery of healthcare, providing true value for each of the health economies and institutions where that delivery takes place. Secondly, as we have heard from the noble Lord, Lord Mandelson, there is the need to harness the ability to use the unique data generated in the National Health Service through the care of countless millions of patients, day after day, month after month and year after year. This longitudinal database is unique in the delivery of healthcare anywhere in the world. It can inform research, development and innovation to develop new therapies and technologies and improve the way that we deliver care. All this has huge value in improving the health of our nation and in providing a remarkable opportunity to generate wealth. As the House has already heard, using the technologies that we develop, and the companies that have developed as a result of them, to export globally will transform healthcare throughout the world and, therefore, also ensure and enhance the standing of our country as a leader in healthcare and life sciences.
The life sciences industrial strategy makes a number of important proposals. One is the health advanced research programme, developed to mirror the very impressive programme established some decades ago by the Department of Defense in the United States to ensure that high-risk proposals—the so-called moonshot strategies—can be properly invested, developing transformational technologies and innovations that will have a profound impact, in this case on human health. It has worked so well in the area of defence in the United States because that department has such a huge expenditure budget. This brings me to the question of the vital role that the life sciences strategy envisages for the National Health Service. It must be able to adopt innovation at scale and pace and to provide confidence to those who are going to invest in high-risk strategies that if they are successful there is the opportunity for the home market—the remarkable National Health Service—to adopt those innovations for the benefit of patients and our fellow citizens.
In this regard, there is some concern. The strategy is excellent, but it is unclear how the Government are going to secure the role that the NHS must play in ensuring that the life sciences strategy can be a success. I have three questions for the Minister. First, how do the Government envisage securing the critical role which the National Health Service must play in the broader life sciences industrial strategy? How will funding be made available to ensure the adoption of innovation at a local level, which is vitally important to support the industries that are envisaged as part of the life sciences strategy? How can the Government aid in transforming the culture in the National Health Service, to ensure that what needs to be done by way of adoption of innovation, beyond its funding, will be practicable and possible in terms of developing the remarkable staff who work in the service, ensuring they have the skills to interact with the innovations that are going to be available and overcoming the culture which is sometimes resistant to adopting innovation?
Finally, how will they ensure that lessons are learned from previous attempts at a life sciences strategy? Will the important lessons from the 2011 announcement of a life sciences strategy by the Prime Minister of the time and the subsequent innovation, health and wealth strategy, announced by Sir David Nicholson when he was leading the NHS, be properly adopted to ensure the success of this strategy?
Lord Maude of Horsham (Con)
My Lords, I draw attention to my entry in the register of interests. It is a pleasure to follow the noble Lord, Lord Kakkar, who has a deep knowledge of life sciences and the medical world and gave a powerful exposition of the opportunities for Britain to be a world leader in this sphere. I am conscious that I am speaking before my noble friend Lord Heseltine, described by the noble Lord, Lord Mandelson, as the grandfather of the industrial strategy. If my noble friend is the grandfather, maybe the noble Lord, Lord Mandelson, is the godfather, so I am in an uncomfortable position.
It is good that we are having this debate, and I congratulate the Minister on his excellent exposition of the strategy. There is much in the industrial strategy to agree with and very little to disagree with. If I had a criticism, it would be that it has turned into something of a compendium of all the Government’s economic policies. There is always a temptation in government to try to wrap together as much as possible into one document. To pick up a point made by the noble Lord, Lord Kakkar, I would have preferred something a little more focused on action and what the Government will actually do. As a Minister, I became an advocate of what became known as the JFDI—“just do it”—school of government. While the strategy document contains much on digital that is welcome, the process that led to its publication felt somewhat analogue. There was a time-honoured process of creating a Green Paper, which was put out to consultation for many months. One knows from experience that much of that consultation—this is not a criticism; it is just the very nature of it—will have been with large companies because smaller ones are getting on with running their businesses rather than engaging with such exercises.
I will focus my remarks on the kind of intervention that would normally be regarded as part of an industrial strategy. Obviously, much of this document concerns an issue in which the Government, inevitably, have always had a central role: the provision of infrastructure. It is in the nature of things that the Government’s role is central to that. We can debate how and when it is done and how much is spent, but it is indisputable that the Government must be at the heart of it. Similarly, the Government’s role will always be pretty central to skills, as it obviously is to creating the right regulatory and taxation fiscal environment for business to flourish. However, today I will focus on more sectoral issues. That approach was developed in the coalition Government, looking at how the Government can use their ability as a convener of business interests, as a funder in some circumstances and as a customer in many circumstances to make different things happen in the business world, perhaps creating a new opportunity or building for the future on some specific skills and strengths in the economy.
I will focus on three areas, the first of which is digital and data. I wholly support what is set out in the industrial strategy about digital. Although the implementation of the fast broadband programme may be slow—certainly in my part of the world—that commitment is welcome; it needs to be implemented effectively and swiftly.
London has become a focal point in Europe for the whole world of digital and technology. Berlin is a competitor but London is a long way ahead. Tech City is now not just a cluster; it goes much wider. At the last count, there were 24 or 25 different tech clusters around the UK, which is enormously important. The role of government in supporting that is huge but its role as a customer barely appears in the industrial strategy. When I became Minister for the Cabinet Office in 2010, 87% of government spend on IT was with seven multinational providers.
Procurement at that stage looked as though it was deliberately intended to freeze out newer, younger, more innovative UK-based suppliers. There was an almost universal requirement, even to bid for a contract, to show three years’ audited accounts. That would have ruled out most of Tech City—most of Silicon Valley, in fact. There was a requirement for turnover thresholds, for performance bonds and for a bidder to show that it had insurance in place to cover the total value of a contract, even before bidding for it. Endlessly complicated pre-qualification questionnaires, which were standard practice but different in each example, simply made it impossible and unattractive for small and newer businesses to compete. Mainly culture rather than regulation led to that, and we struggled to open up procurement to many more businesses. BIS was a big support to the growth of the start-up tech sector in the UK. By the end of the coalition Government, the map of suppliers of IT and digital services consisted of dots sprinkled across the entire UK, instead of seven dots predominating in London or the south-east of England. So the role of government in promoting the development and vitality of this sector is absolutely crucial.
It is clear that start-ups—indeed, the whole world of development of technology—depend heavily on overseas talent, and in the new world we are entering, it is essential that we remain open to talent. Taking back control of immigration absolutely allows us to give access to the right talent at the right time, but my concern—the Government need to be very alert to this—is the tendency of the Home Office to coat a lot of the processes with a heavy dose of bureaucracy. The ability of companies to get consent quickly for people to come here and make the commitment to work in the UK will be hugely important; the Civil Service needs to be galvanised into dealing with that effectively and swiftly.
The Government’s role in the world of data is hugely important, because they own a lot of data. Historically, they have guarded it closely, but of course it is not the Government’s property but the public’s. This data has been accreted over the years through the spending of taxpayers’ money, and much of it has come directly from the citizenry and the world of business. In the first Industrial Revolution, the raw materials were coal, iron and steel; in this industrial revolution, the raw material is data, and government can make much more of it available.
By the end of the coalition, the UK Government were ranked top in the world for open government, and a big part of that was a very aggressive programme of releasing government datasets, particularly but not exclusively in the geospatial field. However, we started to lag behind—Ordnance Survey in particular was very reluctant to release data. The French Government were much more aggressive than us, and that is where some of the geospatial development talent and enterprise started to gravitate towards. I urge the Government, as the industrial strategy permits them to, to pursue aggressively a continuing programme of open data and releasing data as raw material for this new industrial revolution.
The second area I want to focus on is nuclear, which barely gets a reference in the industrial strategy. Historically, Britain has had a huge stake and capability in civil nuclear, but much of large nuclear has disappeared from the UK, and we have had the creaking, tortuous process of getting to the point at which Hinkley is contracted for. I urge the Government to look more enthusiastically at the world of small modular nuclear reactors, for which we do have capability in this country. The advanced nuclear research centre based around the University of Sheffield—which may have been set up under the coalition Government, or possibly before then—is one of the research centres developing that capability. However, intensive government intervention is required to make all this happen.
The Government have the power to convene the different nuclear industrial interests and to work with them to make this happen. This technology could be a serious export activity for this country. Small modular nuclear reactors that can be built in the factory rather than painstakingly constructed on site, as large nuclear requires, are exportable pieces of equipment and could become a commodity product. There is a huge opportunity in developing countries, such as large parts of Africa, where this technology is very useable. I again urge the Government to look at this issue, which requires intensive and co-ordinated activity across government.
The third area is one of the grand challenges rightly identified in the industrial strategy: an ageing population. We know that the population is ageing, and I suppose in this Chamber I am preaching to the converted when I say that that is a very good thing. However, it does have its challenges. It is a truism that probably the single most significant factor in deciding whether a society will succeed in the decades ahead is how successful it is at keeping people living well and independently at home. Technology such as distance monitoring is absolutely central to that.
I want to pick up a point that the noble Lord, Lord Kakkar, made in his excellent remarks about the culture of the NHS. The role of the NHS in this is central, but far too often I have found its culture to be innovation averse. There is a tendency to believe that anything new is simply a cost, but we know that what really costs money in the NHS is people going into hospital and staying there. Technology that enables people to be kept well independently, at home, is not a cost but a saving. It is an essential part of any industrial strategy building on our strengths.
I commend the Government for bringing forward the strategy and hope that it will be taken forward with a strong focus on action and implementation.
Lord Hollick (Lab)
My Lords, successive Governments have energetically committed themselves to boost growth by improving industrial performance. After all, growth secures and improves the public finances and promotes a feeling of well-being and confidence—two sentiments which have been notably in short supply since the 2008 financial crisis.
In the 1960s, Harold Macmillan created the National Economic Development Council to inaugurate indicative sectoral planning. Backed by Treasury funds to support a big infrastructure investment programme, the country then set off on a dash for growth to achieve 4% per annum. Harold Wilson went further and published a national plan to capitalise on the white heat of the scientific revolution. The target 4% growth rate was achieved, but not for long as the Government became distracted by the troublesome behaviour of the pound. Edward Heath concluded that the best way to help Britain recover from being the sick man of Europe was to join the European Economic Community, with its large addressable market and bracing competition from other nations with more successful manufacturing sectors.
And so to today, where many of these themes find an echo. The economy is in austerity mode, weighed down by the cost of the financial crisis. We are now on the brink of leaving the EU or contriving to find a semi-detached relationship. Wage levels, unless you are in the FTSE boardroom, are trending flat and confidence, as measured by the depressed state of corporate investment, is at a low ebb. George Osborne decided to double down on austerity and thus failed to take advantage of historic low interest rates to invest in fixed and human capital. He coined some snappy phrases, such as the march of the makers and the northern powerhouse, but failed to take steps to make them take root.
In contrast, Mrs May has brought planning back to centre stage and added industrial strategy to the title of her business department. The detailed industrial strategy that has been published is to be commended, but can it be delivered? The plan’s analysis of the UK’s shortcomings is wearily familiar, but no less important for that. Labour productivity has declined faster in the UK than in any other OECD country; total investment in science and innovation is 1.7% compared with the OECD average of 2.4%; our workforce is inadequately skilled; investment in our infrastructure is far too low; and we have a long tail of low productivity firms. Crucially, we fail to translate our brilliant research into successful businesses and, if we do—we do sometimes—they are often snapped up by overseas investors with funds which will help fill the trade deficit, which continues to deteriorate despite the strong growth in services. The industrial strategy unflinchingly acknowledges these deficiencies and offers a wide range of initiatives backed by a measure of funding too often deferred.
However, against the backdrop of the deteriorating macroeconomic outlook and the complete unknown of life outside the EU, I doubt that these sensible, but modest, initiatives and the level and timing of the funding will suffice. To work, a strategic plan must set clear, prioritised targets and ensure that all are adequately funded and resourced. Above all, the focus must be on outcome not on a long list of activities. This strategic plan has few measurable targets, and the funding is thinly spread across a frankly confusing blizzard of microinterventions. Crucially, there is insufficient thinking and planning to boost the demand side, where the UK’s economy is chronically deficient. Will the proposed governance structure, headed by an independent industrial strategy council comprising business people, investors, academics and economists, have the resources to evaluate the effectiveness of all the initiatives? Will its work be supported by an expanded OBR? I ask this because the Government have poor form on independent accountability. The National Infrastructure Commission was initially to be a statutory body to monitor and make independent reports to Parliament on all major projects, but after pushback from the departments whose projects would be exposed to the cold light of independent scrutiny, the Treasury quietly dropped the potentially inconvenient statutory status.
The commitment to devolve the implementation of the planned initiatives to the regions is welcome, but it must be backed up by hard cash transfers from Whitehall and must allow the regions to work out for themselves and select which of the policy initiatives they wish to implement. This will help to rebalance government funding away from London and the south-east and will introduce a necessary element of competition.
Housebuilding would be a major beneficiary of a move to devolved responsibility, but only if local authorities are allowed to borrow to build and, in particular, to build much-needed social housing. The Economic Affairs Committee of this House, which included two former Chancellors and three Treasury mandarins, last year recommended a target of 300,000 new homes a year. That target is included in the strategy. The committee also crucially called upon the Government to lift the limits on local authority borrowing for housebuilding. The UK should adopt the accounting convention of most OECD countries and exclude public loans to build houses, which are, after all, income generating, from the public sector borrowing calculation. This change would allow local authorities to fund themselves and to partner housing associations and private sector builders to deliver the homes which are so desperately needed.
The Budget promise to increase funding for housebuilding is helpful but is estimated to deliver only an additional 30,000 homes over the next five years. Bolder action is required, but finance is not the only constraint. The housebuilding industry estimates that an additional 500,000 workers are needed to build 300,000 homes each year. Where are they to be found? Surely it is time that the Government came clean and explained how immigration restrictions will be managed to ensure that the workforce will be available to build the homes the country needs and that other sectors of the economy are adequately staffed. A strategic plan without the provision of the skills to implement it is a sham.
The strategy is right to plan to capitalise on the UK’s strong position in artificial intelligence. To do this the tech sector needs to be able to continue to attract the best talent from around the world. The Government should use public sector procurement to boost the development of AI by ensuring that it is deployed throughout the public sector. Government funding for research and development should be provided on a partnership basis with industry so that the risks and rewards are shared proportionately and so that the Government receives a fair share of the profits on successful AI products. A vibrant AI sector can also promote digital adoption by companies large and small to the great benefit of national productivity—but there is a but. Our digital infrastructure is second rate. We rank 54th in the world for fibre connections to premises. The commitment to spend £1 billion to beef up mobile and broadband is wholly inadequate to build a universal fibre and 5G network. The Government’s response that the market will take care of it is dangerously complacent. They must produce a comprehensive and costed plan in partnership with industry to provide this crucial infrastructure if they are to achieve the objective set out in their plans. If they can find £70 billion for HS2 to make 19th century infrastructure go faster, surely they can find a lesser sum to fund the essential digital infrastructure of the 21st century which, unlike HS2, will pay its way.
An AI turbo-charged economy is expected to bring significant disruption to the workplace. Some roles will be enhanced and new roles will be created, but many will disappear. There is likely to be a prolonged period of turbulence and uncertainty which will call for far-reaching changes in education and training and, in particular, in retraining throughout a lifetime. This means an increase in funding and a rebalancing to boost skills and vocational training.
The overall macroeconomic outlook for the UK continues to be very challenging. Leaving the EU brings uncertainty, disruption and confusion, which are all enemies of growth. The industrial strategy sets out clearly the deep-seated and persistent problems the country faces. The combination of these three challenges demands a bold and radical response which can build on many of the proposals included in the strategy. Now is not the time for unfocused half-measures or for funding deferrals. To meet the challenge the strategy should be radically reworked to prioritise key elements, set clear and verifiable targets and ensure that the proper levels of funding are in place. Borrowing to invest in a long-term growth plan is now a national priority.
Lord Addington (LD)
My Lords, when you speak in a debate such as this it is quite odd to discover that you want to take a slight deviation in approach. So far all the speeches have, understandably, concentrated on the macro situation—the broader picture. In doing so they have covered the variety of subjects in the strategy’s structure. I think it was the noble Lord, Lord Maude, who suggested that it is a compendium of policies brought together. I will focus on the second—people—and on one specific area.
I have for many years—I thought about it and discovered that it has been over four Parliaments and three Governments—been talking about the role of apprenticeships and how they are, or are not, allowing those with certain disabilities to take advantage of them. This an appropriate point to remind the House of my declared interests, particularly in dyslexia and assisted technology. We have moved on from a situation where you had to pass an English test to get into the apprenticeship system, which I think the noble Lord, Lord Nash, eventually dealt with by saying that it was ridiculous to have this for somebody who was dyslexic or had one of the other hidden conditions. It means that you have problems with writing, or indeed doing an online test. Therefore, a change was made.
We have now moved on to doing something that is equally stupid. Indeed, the cock-up school of history seems to have come back to us in apprenticeships. In a component part of skilling up people’s skill set, we have found yet another little example of where, if you take your eye off the minutiae of what is going on, you will make a change. We have said that we will help only those with an education, health and care plan. For those who have not been immersed in the education system for quite as long as I have, the education, health and care plan identifies that you have a disability at a fairly high level. The problem is that it is at a fairly high level. Just under 3% of the school population are recognised as having this. Some 12% are regarded as having a disability. We have a nine percentage-point gap of people who may have problems that may mean they cannot access the written word very well.
In the modern world there is no reason why that should block you, for the simple reason that voice technology is now so common. Voice-to-text or voice-to-voice technology for taking and passing assessments is incredibly common. It is old technology. Dyslexics going through the education system would probably have been the first big group to use it. I have been using it for nearly 20 years. It was introduced to me by the computer department of the House of Lords, when we still had one. I met a group of RAF pilots for whom it was developed because they had run out of fingers when flying jets. It is a very practical form of technology. But if we help only the group with the highest level of identification, all those in the other group will not get the support they need to get a qualification.
We have moved to a world where we need qualified people and we expect to have them organised and structured. If we put artificial barriers in place, such as having to pass an English test if you have been identified as having a disability, while not allowing people to take it in the way they will probably access it in their lives, when you can write a note to somebody that appears on a screen by talking to a computer—every single computer has that capacity; your phone has that capacity—we are excluding a block of people from higher levels of training. I ask the Minister to go back and make sure that those in the skills sector start to address these problems correctly and deal with the absurdity of taking a group away and saying, “No, we’ll restrict our skills base; we’ll restrict your earning power and leave you there”.
This is a good example of one of the problems we have. When we looked at the Government’s recent Statement about health and disability, it became quite clear that they had not taken on board people in jobs who are often unidentified as having a disability. I cited that 12% figure. Everything shows that many people have been unidentified in the past and currently, particularly at the edges, those who are struggling or underachieving do not expand their jobs or take on further qualifications. When we try to get the best out of our workforce, can we make sure that we start to identify these groups and help get qualifications for them through?
It is often said that to be a successful disabled person in our society, you need one fundamental bit of luck and that is your parents. The “tiger” parent is the person who has that plan, the person who has the identification that allows you to go forward. I have not even talked about the university sector, where exactly the same principle applies. The problem is that many people in the apprenticeship sector are late-diagnosis or undiagnosed. Those training them are still undertrained. However, we have a far greater incentive to make sure that we find and identify these groups if we can get them through the qualifications—if there was incentive in the institutions they are in to identify them, train them and get them through. If the Government insist on setting such an incredibly high barrier for giving help, they will exclude most of the people who have been identified as needing it. They would be helping those who have the greatest problems in later life and not those who would probably succeed with a smaller degree of intervention. Even if we regard people only as economic units, it is idiocy. Will the Government make sure that the appropriate levels of support are available, meaning that you will be able to access the structure and with easier transfer of information and data analysis between bodies? If we do not do that, we will create a block and a drag factor on any structure and any plan for industrial development. Unless we can bring this group into the trained world and world of work generally at a high enough level, we will always have those who slow us down. It is not very difficult. I am talking only about using information that is already out there and the existing structure, and about the existing pattern of development whereby we are told, “You will now talk to your computer as opposed to tapping the keyboard”.
Can we please have some more development here and some indication that the Government are looking at how those in the disabilities sector will be helped and supported to make them productive members of society? I have not many met of them who do not want to join that group.
NHS Winter Crisis
(6 years, 10 months ago)
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The Parliamentary Under-Secretary of State, Department of Health (Lord O’Shaughnessy) (Con)
My Lords, with the permission of the House, I will repeat as a Statement the response to an Urgent Question given by my honourable friend the Minister of State for Health in the other place. The Statement is as follows:
“Thank you, Mr Speaker. I thank the right honourable gentleman for tabling this Question, as I agree with him that it is helpful for colleagues in this House to be updated on the current performance of the NHS during this challenging time.
We all know that winter is the most difficult time of year for the NHS, so I would like to start by saying a heartfelt thank you to all staff across the health and care system who work tirelessly through winter, routinely going above and beyond the call of duty to keep our patients safe. They give up their family celebrations over the holiday period to put the needs of patients first. It is these dedicated people that make the NHS truly great.
Winter does place additional pressure on the NHS, and this year is no exception. The NHS saw 59,000 A&E patients every day within four hours in November; that is 2,800 more each day compared with the year before. The figures for December will be published this coming Thursday. We have done more preparing and planning this year than ever before, with planning beginning earlier, meaning that the NHS is better able to respond to pressure when it does arise. In the words of Professor Sir Bruce Keogh, the national medical director:
‘I think it’s the one [winter] that we’re best prepared for. Historically, we begin preparing in July/August. This year we started preparing last winter. We have, I think, a good plan’.
Let me tell the House about some of the things that have been done differently this year. We have strengthened further the NHS’s ability to respond to risk, including the NHS setting up the clinically led national emergency pressures panel to advise on measures to reduce the level of clinical system risk. We are supporting hospital flow and discharge. We allocated £1 billion for social care this year, meaning local authorities have funded more care packages. Delayed transfers of care have been reduced, freeing up 1,100 hospital beds by the onset of winter. Additional capacity has been made possible through the extra £337 million invested at the Budget, helping 2,705 more acute beds to open since the end of November. We have also ensured that more people have better access to GPs.
We allocated £100 million to roll out GP streaming in A&Es, and I am pleased that 91% of hospitals with A&E departments had this in place by the end of November. For the first time people were able to access GPs nationally for urgent appointments from 8 am to 8 pm seven days a week over the holiday period. In the week of New Year’s Eve the number of 111 calls dealt with by a clinician more than doubled, compared to the equivalent week last year, to 39.5%, reducing additional pressures on A&E. We also further extended our flu vaccination programme, already the most comprehensive in Europe. Vaccination remains the best line of defence against flu, and this year an estimated 1,175,000 more people have been vaccinated, including the highest-ever uptake among healthcare workers, which by the end of November had reached 59.3%.
We all accept that winter is challenging for health services, not just in this country but worldwide. The preparations made by the NHS are among the most comprehensive, and we are lucky to be able to depend on the extraordinary dedication of front-line staff at this highly challenging time”.
Baroness Thornton (Lab)
I thank the Minister for that Answer, and I am pleased to see that he is still with us and in his place at this time. I wish him a very happy and prosperous new year. I question the idea that the Government and the NHS were prepared for this winter crisis. It seems to me that, if extra funding was made available in November and December, that does not smack of preparedness at all. I was very struck and somewhat chilled yesterday by what Andrew Marr said to the Prime Minister on his show. He said that had he experienced, when he had his stroke, the kind of five-hour delay experienced by Leah Butler-Smith and her mother, he would not have survived. I invite the Minister to have a stab at making a better job of answering that question today. What would he say to those whose lives have been put at risk by this winter crisis?
Will the Government be making available to us an analysis of the impact on patients, and the lives cost, of a combination of: 55,000 cancelled operations; 75,000 people held in ambulances; overstretched accident and emergency departments, with people on trolleys and even on the floor; up to 90% bed occupancy, which is very dangerous; a shortage of GPs; and inadequate social care due to the starving of funding to local authorities over a long period? When will we know what the impact of this has been on people? When will the Government properly fund and manage the winter stresses in our NHS?
Lord O’Shaughnessy
I thank the noble Baroness for her good wishes, and I wish her and all noble Lords a happy new year. She asked several questions, and I will try to deal with them all. Her first question was about being well prepared. Those were the words of Sir Bruce Keogh from NHS England, not mine. I should also point out that Keith Willett, the director for acute care for NHS England, said that the service is better prepared than ever. Of course, that does not mean that there are not challenges. We know that this happens every year.
One of the ways that we see challenges happen is that there are cancelled elective procedures. I have been looking back over the data for the past 20 years. In quarter 4 of each year—January to March—those cancellations do happen. In fact, I was looking back at 2000-01 and there were 24,000 cancelled or postponed operations that year, which is actually one of the highest over that period. These things do happen during winter, and that is one of the ways of coping. The Prime Minister has apologised for that, and I endorse that. Of course, it is not a state of affairs that we want to happen, but it is necessary to make sure that the most urgent cases are treated. It should be pointed out that the direction about elective procedures made it clear that time-critical procedures around cancer operations and others can go ahead. We will see over time what the impact of that was.
I will mention one other thing about preparedness. The noble Baroness talked about bed occupancy. Of course, we know that high levels of bed occupancy are a concern. Bed occupancy was below the target of 85% going into this period—on Christmas Eve it was 84.2%, I believe—so that was put in place. We know it is going to be challenging. We know that flu is going to continue to have an impact over the next few weeks, and we will see what we can do, but we know that the NHS has put in unprecedented levels of preparation to make sure that we can get through what is always a difficult period.
Lord Naseby (Con)
My Lords, is it not encouraging that at least this year there was preparation for winter? The fact that it was not an enormous success everywhere is a lesson that I hope Her Majesty’s Government will take on board. Against that background, will my noble friend be preparing a report on the experience this winter? Will he confirm that next year there will be a plan which takes on board the experience of this year? I can quote only from local experience but is it not a fact that Luton and Dunstable University Hospital, which has had a special A&E unit for some years, did not have difficulty, whereas other hospitals that were not prepared to that extent appear to have had difficulty? If that is the case, is it not time we brought the other hospitals up to a better standard—the sort of standard that Luton and Dunstable University Hospital gives to its community?
Lord O’Shaughnessy
I thank my noble friend. He is right to point out that there is variation across the country. He mentions Luton and Dunstable University Hospital. It has been a pioneer of how to make sure that people coming into A&E are properly dealt with. Indeed, the £100 million that was invested in A&E services to support better triaging was based on the Luton and Dunstable model. Obviously, we need to make sure that those high standards are replicated across the country.
I will give one further example of an area where that planning has taken place. We know that there has been pressure on ambulance services and that there has been a variability of performance there. There is now a national ambulance control centre which is keeping real-time data and looking at how to manage that performance so that we can get a proper national grip on this picture.
Lord Crisp (CB)
My Lords, does the Minister acknowledge that 59,000 people a day going into A&E is an indicator that there simply is not enough support in the community? Can he give us any indication of how many people he thinks could have been prevented from going into A&E and causing these sorts of problems in hospitals if there were more support in the community, which would mean, for example, that people with infections were caught early and would not need to be admitted? Does he also note that a recent survey showed that one-fifth of the people in adult mental health hospitals were there simply because there was no provision for them in the community? That does not mean just social services; it means housing.
Lord O’Shaughnessy
I thank the noble Lord for that point. He will have experienced a few of these difficult winters when he was running the NHS. It is difficult to say what number or proportion of those 58,000 or 59,000 people could have been treated in the community. We do know that the 111 service has been successful this year, with nearly 40% of calls involving a clinical opinion keeping people out of A&E, as has primary care. It is difficult to estimate, but we know that a number of people have been kept away. Of course, there is a growing and ageing population, and that is the underlying driver of demand. On mental health, the noble Lord is quite right. We have not done enough in mental health over many years, and that is one of the reasons that it has been a priority for the Prime Minister, with a big increase in the number of mental health staff in the years ahead.
Lord Campbell-Savours (Lab)
My Lords, I understand there is a new strain of flu in circulation this year, for which the flu jab was not designed. Does that mean that elderly people, who are particularly vulnerable to this new strain of flu, should have a second inoculation?
Lord O’Shaughnessy
There are of course at any one time a number of flu strains going around. There is particular concern about one of those strains affecting elderly people. Its circulation has come about quite late, as it were, and I would absolutely point out that the best way for elderly people and all at-risk groups to protect themselves is still to get that inoculation. For those who have not—
Lord O’Shaughnessy
I am not in a position to say whether they should have a second inoculation, but there are still a number of people who have not had that inoculation. Those vaccines are available in GPs, surgeries, and we absolutely encourage all groups to have at least a first one.
Baroness Jolly (LD)
My Lords, it seems as if a winter crisis, year on year, is totally predictable. I cannot remember a year when there was not one, but I echo the Minister in paying tribute to those NHS staff, right across the system, who have worked flat out 24/7. Part of the problem is that the social care system and health system are not properly integrated—although I note from Twitter just now that Secretary of State Hunt has responsibility for social care, with immediate effect. Can the Minister tell me whether there are hospital beds occupied by people who no longer need them but are unable to return home? Can he give me an indication of the shortfall in accommodation or beds in the public, private and not-for-profit sectors in nursing and care homes? What gives the Government confidence that the £335 million in the autumn Budget will help, and can he give us some clarification on how that money is to be distributed?
Lord O’Shaughnessy
First, I join the noble Baroness by reiterating on a personal basis a tribute to the staff who have worked so hard over this period. I think we all know many of those people, and they do an extraordinary job. Social care is clearly a really important part of the picture because it is not just the flows into hospitals but the flows out. A lot of that is to do with delayed transfers of care. That is one reason why additional funding has been going in—I think it is £1 billion this year. It is important to point out that all local authorities have now signed up to plans to reduce what are called DToCs, in the jargon. DToCs have been falling, which means that there is the opportunity to get people out of hospital. That could be into a care home or residential care or it could be to their own home.
Lord Framlingham (Con)
My Lords, the disastrous white elephant which is HS2 will cost a minimum of £60 billion. The NHS needs £5 billion to balance the books, and a fraction of HS2’s cost would provide finance for the NHS for years to come. I urge the Minister to please urge the Government to scrap HS2 and spend the money saved on sensible projects, with the NHS at the top of the list.
Lord O’Shaughnessy
My Lords, I am happy to endorse calls for more funding for the National Health Service. That is precisely what the Chancellor provided in the Budget.
Industrial Strategy
(6 years, 10 months ago)
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Lord Heseltine (Con)
My Lords, it is 25 years since I had the privilege of becoming President of the Board of Trade and my first question on arrival, unsurprisingly, was “What is our strategy?”, to which the very surprising reply was, “We’re not allowed to use those words here”. When I had the remarkable opportunity to produce my report No Stone Unturned about wealth creation, it took a week to negotiate an agreement with the Prime Minister and the Chancellor that the words “industrial strategy” should be included in the remit. That was possible only if I was prepared to say that it was with reference to other countries’ industrial strategy.
I say to the Minister how much I appreciate the fact that this debate is taking place and how important it is that there is now a broad agreement, led by the Government and the Prime Minister herself, that we need an industrial strategy. The fact of the matter is that every Government of whom I have had any knowledge over the last 60 years have wrestled with the complexities of what that actually means.
There have been many attempts to find a way to balance the conflicting arguments that go around this subject. I came from a small-business background. There were two of us, but I ended up presiding over some of the largest public expenditure programmes in some of the most advanced, sophisticated fields, of space, aerospace, housing and of course urban deprivation. Without any difficulty at all, one realised that the simplistic language of getting off one’s back, sacking a few civil servants and undoing the red tape is a million light years away from the responsibility of presiding over major technologically advanced programmes on which our industrial well-being depends.
The debate today has revealed, and will continue to reveal, the extraordinary complexity and the range of subjects involved. There is a tendency to talk about industrial strategy as though it was about industry—12% of our economy. That is nothing like sufficient as a concept. If you are really going to talk about wealth creation across the economy, you have to talk about the economy, which includes efficiency in the public sector just as prominently as excellence in the service sector.
I will concentrate on just three issues that run through the whole of this debate, starting with competitiveness. Anyone who has served in government knows that in this country the overarching responsibility of the Treasury hangs over all decisions. I have no complaints about that: if one is faced, as the Treasury is, with the voracious appetites of the public sector, it is very important that there is someone there to try to hold a degree of control. This problem is built into our system. In my lifetime, I have seen two PMs try to institutionalise change on a significant scale. The noble Lord, Lord Hollick, referred to both of them. First, Tory Prime Minister Harold Macmillan created Neddy and, perhaps even more importantly, the Nicys that supported it. Following on from that, a Labour Prime Minister, Harold Wilson, created the Department of Economic Affairs. They recognised, rightly, that in the monopolistic structure of our functional departments, when those departments discuss their industrial strategy in collective fora such as a Cabinet committee, there is a need for a third voice to apprise the committee and the Government of the competitive position of this country on a world scale.
One sees this pre-eminently in the situation of, say, the Secretary of State for Health. It is the most stretching of jobs: every day there is a headline. I will not trespass in any way on the validity of many of the accusations or exaggerations that are made but if you are a politician—as we all are—seeking to do a decent job and to pursue a career, you cannot divorce yourself from the realities of the headlines that besiege you every day. To suggest that that particular person is going to divert away from the urgency of those controversies into wondering about a five-year, 10-year or 20-year industrial strategy is to miss the essence of what human beings are all about.
I believe that each government department has a responsibility to explain what its industrial strategy is—as indeed is recognised, because they all sponsor industries in different ways. The noble Lord, Lord Kakkar, was very eloquent on the subject of the medical opportunities. My noble friend Lord Maude was eloquent on the subject of the nuclear opportunities. The noble Lord, Lord Mandelson, who followed me into the Board of Trade and was a conspicuous holder of that office, was eloquent about the complexity and range of these matters.
If a department sponsors an industry, and the sponsorships are all set out clearly in public, one has to ask oneself how it carries that out. I believe it should have to answer to a collective forum of Ministers as to what it sees its opportunities are in furthering wealth creation, often incidental to the main function that it may have of running a health service or whatever it is responsible for. The problem with this analysis is that there is no capability in government to monitor or question that particular assessment. The monitoring that takes place is by the Treasury, which, quite rightly and properly, is trying to contain public expenditure. There is a need for a competitiveness unit under the control of the Prime Minister and based in the Cabinet Office.
My noble friend, in a very eloquent introduction to today’s debate, explained about Britain’s position in leadership possibilities in one field or another. Let us be frank: we are fighting for our economic survival against ruthless, highly motivated, highly disciplined, highly skilled and competitive nations, and there is no remorse. That will go on. So when we use language about “being ahead”, “winning” and “leadership”, someone needs, if only in private, to tap us on the shoulder and say, “Look, it’s not quite that easy”. The reality is that we are up against extraordinary, clever and energetic communities, using all the resources of modern government to win for them. We need to know what they are doing and how they are doing it. We need to know reality—where we stand in international competitiveness. We need a unit in government drawn not just from Whitehall, although Whitehall must be there, but from academia and the private wealth-creating sector as well, in order to be part of that Cabinet analysis of Britain’s competitive standing and the industrial strategy that should flow as a consequence of that analysis.
That is the first issue that I want to raise. I recognise at once that the Minister can say to me, “Yes, but we’ve covered this in the White Paper”. So they have but, with respect, in a way that dodges the issue. The White Paper says there will be a review body; that is fine, but the body will not be part of the discussion that takes place. So the review will take place after the mistakes have been made, when they have become apparent and it is too late. I urge the Government to recognise the need for a competitiveness analysis at the time of decision-making when people are looking at the industrial strategies of individual departments.
My second point is born of excellence. We are so good. We have proportionately far more than our fair share of the world’s great universities. We have wonderful schools, great teaching facilities and world-class training and skills facilities. The problem is the tail. There are too many people running organisations at the unacceptable bottom level of attainment in skills and schools. I am not making this up; this is merely to quote Ofsted reports, which are chilling. They indicate a degree of complacency across the country about the failure of schools in particular, although I think training colleges are now to be included as well. If this were the private sector, there would be no capability to tolerate 15% to 20% of your branches failing to deliver; that would be an end to your ability to run the company. In endless conversations that I have had up and down the country, the moment that you confront this issue, everyone knows where those schools are—their names are published—but when you ask, “Why do you not do something?”, they say, “Oh, it is the cuts … it is them … it is someone else … it is too difficult”, or whatever.
It is morally and economically unacceptable that we are training a proportion of people who will never produce the skills that we need to fill the gaps that already exist. That is doubly so if we are to obtain the supply of skilled labour that is now part of government policy.
Something needs to be done. This is not a debate about whether we have more or fewer grammars or whether the academies will do this or the other. This is looking at the individual schools that are failing and co-operating at local level—I would say with local enterprise partnerships and the newly elected mayors in the seven conurbations—for local communities to address the issue. It may mean that you will sack some governors. It may mean that you will get rid of some head teachers, but the acceptance of this level of failure in our skills provision is unacceptable in any language to do with world competitiveness.
My third point is the overcentralisation of our Administration. We all know that Governments take decisions in London which, by a variety of means, are spread out across the country. We have a local authority system that, let us be frank, was relevant when the horse and cart was the means of communication. The Redcliffe-Maud report of 1968, looking at this issue economically, stated that we needed about 60 self-contained autonomous authorities. We still have about 350.
I am the first to recognise the political arithmetic which means that we cannot get legislation through to streamline our local government arrangements. To that extent, and against that background, I must praise the Government for having managed to get seven conurbations with directly elected mayors. I say to the noble Baroness, Lady Randerson, that the reason why directly elected mayors are so important is that one person is accountable who is elected by the people and who can use their influence to make decisions on a far wider scale than the present councillor-led arrangements. That is one great thing that has happened: seven conurbations now have directly elected leaders, three led by Labour, four by the Conservatives. To answer the point made by the noble Lord, Lord Mandelson, that, at least, gives some hope that this will not become a party political divide: “What they did is wrong and we have to change it the moment we get in”. It looks as though we may now have found a way to move—rather late from 1968—to something like an objective analysis of where economic power should be shared.
My question for the Government is: if you look at what we have achieved in those seven areas—including Birmingham, Bristol, Liverpool, Manchester and London itself— what about the other conurbations? What is happening in Newcastle, Yorkshire, South Hampshire and the East Midlands—great areas of economic importance? What are the Government going to do to achieve what has been achieved in the seven conurbations in those that currently lag behind? It is politically charged—I am the first to recognise that—but the price that will be paid by those economies where people are not led effectively and do not enjoy sufficient local autonomy is politically unacceptable.
There is a very clear principle here. Central government must have the responsibility of determining what services are provided and the quality with which they are provided. The more they can delegate the execution and administration of those services to the people who live, eat and breathe the community of which they are members, the more effectively they will engender the support, enthusiasm and involvement in the partnerships that are central to getting the benefits that we want to a wider community.
I ask one final question of the Minister. Everyone knows that this is a long-term problem and that you have to start from where you are and keep at it. But is this White Paper the last one, or could we have one every year, just like every company provides, explaining how it got on? We are beginning on a journey of vast significance. It will be more enthusiastically monitored and pursued if we are told every year how well we did.
Baroness Valentine (CB)
I am honoured if somewhat hesitant to follow the noble Lord, Lord Heseltine, and I am pleased to say that I will pick up a few of those themes in my remarks.
I congratulate the Government on bringing forward their industrial strategy. I believe that it has largely struck the right balance in setting a post-Brexit economic direction and in recognising government’s role as a facilitator rather than a director of growth. However, as ever, the challenge will be in its implementation. As the 19th-century head of the Prussian army famously observed:
“No battle plan ever survives first contact with the enemy”.
I want to focus my remarks primarily on the chapter on places, but before doing so I particularly welcome two themes in the document. I have long been an advocate of transport investment facilitating economic development. I am now on the board of HS2 and see the benefit this is already bringing to Birmingham. More broadly, I believe it will create an economic and social spine for mainland Britain. It will improve national productivity by connecting businesses across the country to a wider source of skills, professional services, collaborators, supply chains, and finance and markets.
May I also encourage the Government to progress the long-awaited expansion of Heathrow? I should declare an interest as chair of Heathrow Southern Railway, which is seeking to build a railway line from the south, both aiding connectivity and reducing air pollution. Secondly, as a council member of UCL, I welcome the commitment to continuing investment in research and innovation. The uncertainty caused by our future exit from Europe provides challenges in attracting and retaining the international talent we need to lead this activity, but well-founded and stable investment in research funding can help diminish that risk.
Let me now turn to the chapter on places. The responsible business network, Business in the Community, has recently launched a “pride of place” initiative to bring businesses together with the local community, local government and stakeholders to tackle some of Britain’s forgotten areas. They have asked me to lead a pilot programme in Blackpool. From Blackpool’s perspective, a top-down industrial strategy is all very well but I ask myself: is it really going to make any difference? Without the commitment to “prosperous communities” across the UK in the final chapter on places, I am not sure it will. Even then, it will be a struggle to achieve—indeed a heroic struggle to achieve everywhere in Britain. So let me make a few general points about inclusive growth in left-behind areas, to use government vernacular.
I believe that to be successful the Government must: back local cross-sector leadership in natural socioeconomic geographies; maximise devolved decision-making and provide associated funding; and provide targeted investment, at the same time as confronting and addressing complex factors where Whitehall policy is causing problems locally.
I use Blackpool as an example to expand upon these points. Blackpool is one of the most deprived areas of the country. Among local authorities it has the most children in care and the highest rate of people too sick to work. It has poor-quality housing in its centre and its secondary schools are struggling. On the other hand, its tourism sector is seeing a resurgence, with visitor numbers increasing from 10 million to 17 million over the last decade. It is investing in a new conference centre and hotels and its sixth-form colleges are excellent.
In economically fragile places such as Blackpool, it is essential to take a holistic approach, working with the public, private and voluntary sectors. Social and economic issues go hand in hand and while the Government may focus on certain industrial sectors top down, going with the grain of what works locally is essential. I therefore welcome the aim of encouraging local industrial strategies. However, county council and local authority boundaries rarely reflect economic geographies. In Lancashire, there are in effect three: east Lancashire, the Preston area and the Fylde coast. Having worked in both Blackburn and Blackpool, I know how different they are. One has a large Asian minority, who came to the UK originally to work in textiles, while the other has a predominantly white community with a strong Victorian tourism legacy. Therefore, while I welcome the focus on local enterprise partnerships as a vehicle for local strategies, each natural socioeconomic geography needs its own leadership within this framework, and the Government need to have a way of providing a measure of devolved decision-making and funding to regions which do not fall into convenient boundaries or political structures.
Targeted investment which the Government could usefully make in Blackpool and the Fylde coast includes: in skills, backing an institute of technology and consolidating Civil Service jobs in a mini hub in Blackpool town centre; to support the tourism sector, providing tangible incentives for the private sector to invest in hotels, restaurants and attractions; and in infrastructure, reopening the railway line to the isolated town of Fleetwood and improving Blackpool North station once the welcome electrification of the main line is complete. All these investments put together would not be expensive in national terms and would indeed pay dividends. I welcome the existing investment in the opportunity area and urge the Government to continue to do everything they can to make sure that Blackpool and other opportunity areas have the best possible leaders in their secondary schools.
Conversely, Blackpool’s housing is an example of where amending unhelpful national policy could even save the Government money. Blackpool has at its heart a private sector slum, fuelled by public money. Properties in wards such as Claremont and Revoe are largely privately owned and their occupants are on benefits. From the landlords’ perspective, there is little incentive to keep the quality up but much incentive to house the maximum number of tenants with guaranteed housing benefit. As a result, Blackpool attracts, and landlords advertise for, a disproportionate number of people with complex needs from all round the UK. At the crux of the problem is housing benefit paid according to a Whitehall formula which would not reflect the real market rate for such poor-quality housing.
Although the problem is extreme in Blackpool, it is reflected in other seaside towns. This is a problem which government needs either to help solve or provide the tools for the local council to manage. If it remains unsolved, it is difficult to conceive of a successful and sustainable local industrial strategy. As a recent FT article put it:
“Blackpool is a net importer of ill health”,
and “unemployment”.
But turning to the positives, any industrial strategy for Blackpool would need to include tourism. The tourism sector always seems to be the Cinderella of government business sectors, yet with a burgeoning middle class in India and China it would seem an obvious candidate for exploiting post Brexit. Indeed, Blackpool hosts the world ballroom dancing festival, which attracts large numbers of Chinese, alongside, of course, “Strictly Come Dancing”.
I conclude by saying that Blackpool would be keen to be regarded as a tourism zone in any sector deal, provided of course that this comes with real incentives for private sector investment, as well as being considered for one of the first pilots for a local industrial strategy. Perhaps the Minister would kindly answer two questions in his summing up. First, how are the pilots for local industrial strategies being determined? Secondly, do the Government intend working with partners such as Business in the Community and the Big Lottery Fund, which both have place agendas and could help to bring business and the community to the table?
Lord Griffiths of Fforestfach (Con)
My Lords, it is a great pleasure to take part in this debate on this very important subject. I thank the Minister for enabling us to take part in it. The Government’s White Paper was an important document, ambitious, strategic and long term. If it is implemented successfully, recognising all the comments that the noble Lord, Lord Hollick, made, it clearly will lead to the long-term creation of jobs, to prosperity and higher wages in the UK economy. Yet to economists of my generation, the term industrial strategy is associated with failure not success—and I shall explain why.
You could say that the first industrial strategy that we had in the post-Second World War UK was the nationalisation of whole swathes of industry by Attlee, which was done so that business could more clearly, as state-owned enterprises, focus on satisfying the consumer. As has already been mentioned by a number of speakers, Harold Macmillan’s Government set up Neddy specifically to bring together business, trade unions and government. Neddy survived until John Major closed it down in 1992. It has been mentioned that Harold Wilson set up the Department of Economic Affairs, with George Brown as Minister, and developed in 1966 a national plan. Something that has not been mentioned is that in Ted Heath’s Government the Industry Act 1972 was passed, enabling the Government to give grants and funding to industries, particularly those in difficulties, and especially shipbuilding. In 1975, Tony Benn argued that there should be a compulsory agreement between the top 100 companies in Britain and the Government but, to avoid that, Harold Wilson deflected things by issuing a White Paper entitled An Approach to Industrial Strategy. So there is a sense of déjà vu.
Frankly, none of those initiatives was a great success. The nationalised industries ultimately had to be privatised because of low productivity and overmanning, and the national plan was soon scrapped, a year after it was published. As to picking winners, we might mention the success of Rolls-Royce—but it is thought of primarily in terms of British Leyland and Upper Clyde Shipbuilders. Therefore, I have to say that when I first heard that the Government were about to announce an industrial strategy, I was sceptical.
I feel that I am open-minded, and the question that I ask is, “Why is it different this time?”. It is different for several reasons. The first is that lessons have been learned from the failures of past initiatives. The Government are not pinning their hopes on state ownership. It is about supporting viable private sector companies. Next, it is not about financial assistance to bail out failing firms; it is about how to support high-growth, innovative firms. It is not about backing state monopolies or cartels, but it is committed to competition being at the heart of the industrial strategy. On page 21 of the White Paper it states:
“We believe in the power of the competitive market—competition, open financial markets, and the profit motive are the foundations of the success of the UK. Indeed the best way to improve productivity is to increase exposure to competition”.
In addition, it is not about backing existing technologies but about supporting the development of new ones at the cutting edge which require basic science and innovation. Finally, it is about supporting companies that are not being hampered by overpowerful trade unions, which so restricted the ability of companies to manage as they wished to manage. These reasons are sufficient to say that lessons have been learned. Although I believe strongly in an enterprise, open, competitive economy, this Government’s approach has nevertheless learned lessons from the past.
Another reason is that the Government have thrown everything at the industrial strategy, as the noble Lord, Lord Hollick, mentioned. Any policy which has any implication for the economy is part of the industrial strategy. That can be seen as a weakness but, on the other hand, it is a strength. The Government are trying to harness resources from all aspects—and it is a vast area—in order to tackle the problem. In that sense, this strategy is not just about support for business. It is not about bringing management and trade unions together. It is about drawing on all the resources of government.
The final reason for feeling that it is different this time has to do with one aspect of the industrial strategy—sector deals. When I first read the paper, this was the part that I was most sceptical about. I have really changed my mind as a result of being, with the noble Lord, Lord Kakkar, and the noble Baroness, Lady Young of Old Scone, a member of the Select Committee on Science and Technology and taking evidence for our review of life sciences in the UK and industrial strategy. What impressed me about the sector deal announced just before Christmas was, first, that private sector firms such as Novo Nordisk, MSD—known as Merck in America—and QIAGEN were making significant commitments to build research facilities in Oxford, London and Manchester, to pioneer medicines, diagnostics and genomics. Secondly, medical charities such as the Wellcome Trust, Cancer Research UK and so on are also making a real commitment. Then there is the Government: we have already heard about the role of the NHS, but there is also basic university science research; the post-Brexit immigration policy commitment which has been made; the infrastructure in clusters; and the Government’s commitment to developing the Oxford-Milton Keynes-Cambridge corridor and, as has already been mentioned, to digital innovation hubs.
There is a story underlying this industrial strategy which marks it out from those of the past. However, there are still questions to be answered. Might the sector deal end up supporting, or even subsidising, weaker firms in that sector? What if shareholders feel that the commitment made to research has not been matched by the financial returns they expected? Will they demand a quid pro quo on what the NHS should be purchasing from them? What about the tariff of prices negotiated for their products which are bought by the NHS? At present, pricing policy is outside the sector deal. Can it remain so? The industrial strategy is clearly a work in progress but, nevertheless, there is everything to play for and it is worth backing.
I will make three final points. First, what came out very clearly when the Select Committee took evidence from business people running pharmaceutical companies and from people involved in research, as well as from Sir John Bell—and at the launch of the life sciences industrial strategy at No. 10 Downing Street—was that senior businessmen from the US and the continent value the fact that we have world-class institutions, such as universities and medical schools, and world-class hospitals where clinical research is done. That is important. The noble Lord, Lord Kakkar, eloquently made that point in his speech.
Secondly, and nearer to home, one of the constant complaints from business is the lack of long-term capital. Here there are two suggestions. The first is from the Treasury committee on patient capital, which looked at the problem. We have pension funds and insurance companies in Britain that have assets of over £3 trillion. They clearly have a long-term investment horizon and, obviously, they have to manage their risk carefully. However, they tend to be quite short term because they have to follow the prudent person principle whereby investment advisers have to approach such matters from the stance of how “a prudent person” would look at them. Interestingly, in two countries, the US and France, they ask themselves, “Could we not continue with a prudent person principle yet allow long-term funds such as pensions and insurance companies to put a slightly greater proportion of their investment into unquoted equities?”. The conclusion of the Treasury’s patient capital review is that that should be examined and the Pensions Regulator should be asked to give advice on it. That is a great idea, and if it could be done, it is the one thing that could transform the supply of capital to innovative companies which want to grow in the UK.
The second suggestion is to do with quantitative easing and the Bank of England’s interest rate policy. I am all in favour of the Bank of England’s managing interest rates to keep inflation down and ensure financial stability. However, quantitative easing has had some quite horrific side effects in terms of the growth of consumer credit, excess credit and inflation, and the misallocation of capital to zombie firms. The OECD did a major study of firms, covering the period 2003 to 2013, that it defined as 10 years of age-plus but with constant problems in meeting interest payments. It concluded that zombie firms are,
“a drag on productivity growth as they congest markets and divert credit, investment and skills from flowing to more productive and successful firms and contribute to slowing down the diffusion of best practices and new technologies across our economies”.
When the Bank of England recently raised interest rates, for the first time in 10 years, it said that in future the rises would be,
“at a gradual pace and to a limited extent”.
I feel that, like the US, we could try to get back to more normal interest rates. That would ease up capital that could go into innovative firms.
The third point concerns the future—this is not something that I will dwell on—and the governance of the industrial strategy. There is a Cabinet committee headed by the Prime Minister and an industrial strategy council with people from the private sector. Beyond that, however, there is a great haziness concerning delivery. As regards the implementation of new policies, during my five and a half years in No. 10 Downing Street I always felt that the design of a new policy was 10% of the problem whereas the implementation—the delivery—was 90%.
In conclusion, this policy is different from what we have seen over the last number of decades. We also live in a different world, with the digital revolution. The industrial strategy is still a work in progress. However, I believe that if it is implemented, as well as striving to lower taxes, it will offer us the best possible way for a successful post-Brexit UK.
Baroness Young of Old Scone (Lab)
My Lords, I agree entirely with the last sentiments of the noble Lord, Lord Griffiths, about implementation. I am sure that the noble Lord, Lord Hennessy, will forgive me if I steal something he has already said in your Lordships’ House. He quite rightly pointed out that this is the ninth industrial strategy in his lifetime. In fact he said it was the eighth, but the noble Lord, Lord Mandelson, phoned him up and said that he had omitted his strategy of 20 years ago. The lesson from all these nine strategies, not all of which have been successful, is that implementation does not just happen. The Government’s Industrial Strategy that we are now considering lays out important implementation mechanisms: continued chairmanship by the PM of the Economy and Industrial Strategy Cabinet Committee and the creation of an independent industrial strategy council. I take seriously some of the reservations about the industrial strategy council that have been made. However, the overwhelming message is that these mechanisms must be designed to persist over many years to ensure that the strategy is delivered not just over an electoral cycle but over a decade and longer.
I am sure that the Minister will assure us that a wide range of other players will also shoulder the burden of implementation. Sector deals gave a key role to business players but are no substitute for sustained government leadership. Can the Minister also assure the House that sector deals will not overly rely on the established technologies of major incumbent firms but will support disruptive innovation which can create the industries of tomorrow?
I did not intend to talk about the work that the Select Committee on Science and Technology is doing on the examination of the Life Sciences Industrial Strategy and sector deal. However, having heard the noble Lord, Lord Griffiths, say that he was reassured by the evidence taken in the Select Committee hearings, I will take a contrary view and say that I am unutterably miserable about it. We are in a position where both nationally and internationally the National Health Service is seen as a huge asset to this country for driving innovation and its uptake and for the concomitant benefit to businesses in a global sense in the life sciences. However, in reality, the evidence given by witness after witness has been totally dispiriting, both from the private company and quoted company point of view, and from the point of view of the NHS itself, about the ability to ensure that the NHS uptakes innovation, implements best practice and reaps the benefits of substantial cost savings that many of these innovations would bring. It is dispiriting, and I hope that the Government can bite the bullet.
I know that I am probably at the radical end of the spectrum on the solutions which seem to me to be sensible but I have led health services for 20 years and been the chief executive of Diabetes UK, a major research-based patient group, and it seems that we have now reached the point when 1,000 flowers blooming is no longer the name of the game but mandation of uptake of best practice, which happens regularly in America through the insurance companies, has to happen.
However, I wanted to talk not about the NHS but about infrastructure. I very much welcome the more strategic approach to housing and transport that the Industrial Strategy White Paper talks about, but the reality on the ground is not hugely encouraging at the moment. Rather than recognising the need for the right housing in the right place, the dash for housing is causing real problems at a local level.
First, on housing quality and the quality of place, we are now building the smallest houses in Europe. I used to dread going to stay with my friends in Holland because they lived in a rather small, boxy house. I used to get severe claustrophobia and had to break out after a very short time. However, the reality is that we are now building houses even smaller than those built by the Dutch. Many housing developments lack amenities such as transport infrastructure and there are insufficient green spaces, with all the benefits for health and the environment that these bring.
I was privileged to sit on the ad hoc Select Committee on National Policy for the Built Environment, and I commend its report to your Lordships—it still stands. We are very much at risk of building the slums of the future if we do not take up the recommendations of that report. Also, insufficient affordable housing in a range of tenures is being built, and that will have an inevitable impact on the supply of workers who are vital to the industrial strategy.
There is not enough long-term planning to ensure that housing is for life and can cope with the stages of family growth through empty-nesting to, ultimately, older age. That is an important point in view of the fact that one of the four great challenges of the industrial strategy is ageing—a challenge which I am sure, as previous speakers have said, is of interest to your Lordships’ House.
Regarding transport infrastructure, which is fundamental to the industrial strategy, the White Paper focuses primarily on major strategic rail and road routes and ignores the smaller feeder systems, which are underinvested and congested but which will nevertheless still have the power to gum up the works in terms of industrial strategy development.
So where does the problem lie? There are a number of issues. One is that the dash for housing and the streamlining of the planning system, which we debated during the passage of successive planning Bills in your Lordships’ House, have had some serious repercussions. Planning authorities are now so driven by housing targets and by a fear of the sanctions that the Government can apply if an agreed local plan that both meets and delivers the housing targets is not in place that they are approving plans which are about not the right houses in the right places but the wrong houses in the wrong places. If local authorities fail to deliver a plan or the subsequent housing, developers can have a free run through to put things wherever they like, and government can take away planning powers and make decisions on behalf of local authorities. Local authorities simply do not wish that to happen.
In addition to local authorities making decisions on the run to avoid those sanctions, they are also very much weakened as planning authorities as a result of financial cuts and they are denuded of specialist staff. That, again, was a finding of the Select Committee on National Policy for the Built Environment. As a result, in working out the plans, they are hugely dependent on the analyses undertaken by the developers. Similarly, developers have the whip hand where viability assessments are used to challenge agreements made with them about their contribution to infrastructure and their commitment to affordable housing. In many cases, it is very much a David and Goliath situation. The chaps with sharp suits and sharp elbows—the planning consultants to major developers—roll in and put forward detailed cases demonstrating that it is simply no longer possible for developers to deliver on the infrastructure contributions and affordable housing numbers that they originally promised, and quite frankly the local authority has no means of seriously challenging that.
To make matters worse, these viability assessments are not in the public domain, being regarded as commercially confidential, so local people and local interest groups are unable to judge the calculations that underlie the decisions to short-change infrastructure contributions and affordable housing numbers. Therefore, I urge the Minister to consider how viability assessments can be routinely published in the future so that local people can judge whether their local authority is being robust in reflecting their interests. If that does not happen, we will have a backlash from many unhappy local communities across the country which see the reality of what is happening in the dash for housing.
The Industrial Strategy White Paper says:
“We want to support greater collaboration between councils, a more strategic approach to planning housing and infrastructure, more innovation and high quality design in new homes”.
I agree entirely with that sentiment but how will government shift the planning system from the sorry position it has been driven to, which certainly is not delivering the Government’s vital aspirations for housing and transport infrastructure at the heart of the industrial strategy
Baroness Coussins (CB)
My Lords, a major petrochemical company recently backed away from investing £4 million a year in jobs in Scotland because it was worried that it would not be able to recruit staff with the necessary foreign language skills. And that is just the tip of the iceberg. Research suggests that the UK economy is losing out on well over £50 billion a year in contracts because of a lack of language skills in the workforce. If you cannot read the initial tender documents, you cannot bid for the contract, and they are by no means always written in English. A British Council report published in November said that the top five languages needed by the UK for prosperity and influence post Brexit are Spanish, Mandarin, French, Arabic and German.
Before I go on, I should declare my interests as co-chair of the All-Party Parliamentary Group on Modern Languages and as vice-president of the Chartered Institute of Linguists.
It is a regrettable flaw in a strategy which has such exciting and ambitious objectives that no mention is made of language skills as one of the key ingredients for enabling the UK to innovate, trade, prosper and lead in a global economy. Important and vital though English is, it is a mistake to believe that English is enough. The standard excuse for Britain’s neglect of foreign languages is that English is the world’s lingua franca. What this really means is that English is the world’s preferred second language, not its first. In fact, only 6% of the world’s population are native English speakers, and in the 21st century speaking only English is as much of a disadvantage as speaking no English.
It is also a mistake to depend on artificial intelligence for language translation, and it is worrying that the only direct mention of language skills to be found in the White Paper is in the context of AI and technology. Of course AI can be useful here but it is no substitute for the interpersonal skills, sensitive translations and localisation of sales, marketing and communications provided by people, not algorithms.
We have robust evidence to illustrate the importance of languages for business and growth. One study of SME exporters showed that companies that invest in language skills are able to increase the ratio of exports to sales by 37%. By contrast, evidence also shows that UK businesses are largely in an Anglophone bubble, with 83% of SMEs operating only in English, even though half of them say that language skills would help expand business and build export growth. The British Chambers of Commerce says that the biggest language deficits are in the fastest-growing markets and that over three-quarters of the companies it surveyed had missed or lost business because of this.
The White Paper flags up a review of export strategy to report in spring this year. I ask the Minister to ensure that language skills form part of this review and that the Government’s GREAT website will give fuller advice on language skills and export growth. Could the Minister say also whether the network of nine UK trade commissioners to be established will have language skills as part of their remit? Relevant expertise is available, but it needs to be integrated and not just remembered as an afterthought. Under the former UKTI, one-to-one advice on language and cultural issues was provided—in 2015-16 to over 1,000 companies in one region alone. This service has now ceased in favour of regional contracts with the Department for International Trade, and it is not at all clear whether local businesses will still be able to access guidance on overcoming language and cultural barriers to trade.
The White Paper recognises regional disparities in the UK’s skills base. There are stark regional weaknesses in participation and attainment in foreign languages, which correlate with regions of poor productivity and low skill levels. For example, in the north-east in 2016, only 43% of pupils sat a GCSE in a language, compared to 65% in inner London, and this gap has been widening year on year. We also need Her Majesty’s Government to build languages into their plans for technical education. The national retraining scheme for targeting skills shortages is welcome, but can the Minister say whether modern foreign languages will be considered as a skill shortage in the next phase of the scheme? Over 70% of UK employers say that they are not happy with the foreign language skills of our school leavers or graduates, and are forced increasingly to recruit from overseas to meet their needs. Looking ahead to a post-Brexit world in which the UK aspires to be a leader in global free trade, it is rather shameful that only 9% of British 15 year-olds are competent in a first foreign language beyond a very basic level; that compares to 42% of teenagers across 14 other European countries.
The language industry is a sector not mentioned in the strategy, but in my view it would be an ideal candidate for the kind of sector deal envisaged in the Government’s thinking. The language industry encompasses interpreters, translators, teachers, researchers, people who write textbooks, apps, CDs and websites, people who do subtitling and dubbing for films and TV, and all manner of other experts. This sector is estimated to be worth over €20 billion across the EU and has a very high growth rate. As an English-speaking nation, we are surely uniquely well-placed to take strategic advantage of this expected further growth, not only in Europe but worldwide. I am aware of a proposal for a sector deal for the tourism industry, which acknowledges that language skills are vital for increasing the value of inbound tourism and hospitality. Specifically, it says that,
“language skills are an essential business requirement and a significant element of providing good customer service”.
We are not going to satisfy the needs of business or consumers if we do not act urgently to reverse the crisis in language education in the UK. Thanks to the EBacc, the number of GCSE entries is now stable, but A-level is in free fall. Since 2000, over 50 universities have scrapped some or all of their modern language degree courses. Uncertainty over the future of the Erasmus programme has seen applications dip even further, and so we are not producing enough languages graduates to meet even the teacher shortage, never mind the needs of the wider economy.
Report after report from significant bodies such as the British Council and the British Academy, as well as the all-party group, has called repeatedly for a cross-government national languages strategy, because this is not a crisis solely for the Department for Education. Will the Minister undertake to initiate discussions across all relevant departments, at ministerial level, to start shaping such a strategy? Without the glue of language skills, the different elements of the industrial strategy will not hang together.
I have been talking mainly about export growth, but prospective inward investors do not want a monolingual environment either. Over one-quarter of senior executives from top European companies rated access to multiple language skills as “absolutely essential” when considering where to locate their business. This has been a significant driver in London’s economic success.
I hope that the information I have provided this evening might trigger some revisions of this industrial strategy. Language skills are a key enabler of success. The language sector itself is an exemplar of innovation and leadership. By integrating these, the vision and objectives of the industrial strategy will be much more achievable.
Lord Prior of Brampton (Con)
My Lords, I am probably not the most objective commentator on this White Paper, having spent most of the past year working on it. However, I echo the words of the noble Lord, Lord Mandelson, who said he hoped that Greg Clark was at No. 10 today to be praised, not buried. I certainly hope that Greg Clark, my right honourable friend in the other place, is indeed back in the department.
Lord Prior of Brampton
I am delighted to hear that.
In my view, the White Paper is more of an hors d’oeuvre than a main course: it acknowledges specifically that it is a work in progress and not the final result of our labours. We have not yet won the argument that an industrial strategy should be central to all government policy-making and that, if not addressed, low productivity and low earnings pose existential questions for our way of life.
Other countries have grasped this to a greater extent than we have. Look at China’s One Belt, One Road strategy, Germany’s Industrie 4.0 and Japan’s Society 5.0—they are at the core of those countries’ economic, social and industrial policies. They are central, transformational and driven from the top of government. You can hardly pick up a Japanese newspaper without seeing the Japanese Prime Minister expounding on artificial intelligence, drones or new industrial techniques. Contrary to public belief and much political rhetoric, the US too has a long history of industrial strategy, beginning back in 1945 with the seminal work Science: The Endless Frontier, produced for President Roosevelt by Vannevar Bush. It marked the beginning of a massive investment by the federal Government in research, and saw the creation of DARPA, the NIH and other government research bodies. You need look no further than the Manhattan Project or the Apollo programme, or the more recent orphan drugs programme, to see the power of government in the US.
Yet part of British politics is still fighting the sterile, hopeless, outdated battle between those on the left who believe that public ownership is the answer to all evils and those on the right who deride and caricature all government involvement in industrial strategy as picking winners—by which, of course, they mean picking losers. This White Paper makes it absolutely clear that the Government have a critical role working with the private sector, universities and local government in driving the industrial strategy. This role goes beyond creating the right market or competitive environment, and beyond correcting market failure. It encompasses a much deeper, long-term partnership between government, universities, business and local civic institutions.
The noble Lord, Lord Hennessy, suggested I read for inspiration the Beveridge report, arguably one of the most influential reports written in 20th-century Britain. Beveridge declared war on the five giant evils of want, squalor, ignorance, disease and idleness. He wrote, which I thought was interesting, that:
“A revolutionary moment in the world’s history is a time for revolutions, not for patching”.
We are at a similar time in our country today. There are two giant evils: low productivity and inequality. They not only have a direct impact on the five great evils identified by Beveridge but, if not addressed, pose an existential threat to our liberal democracy. Already their influence can be seen with the rise of extreme politics and simplistic populism in the US and western Europe.
Productivity has slowed and, consequently, earnings have stagnated. Paul Krugman, the Nobel laureate for economics, said that productivity is not everything but in the long run it is almost everything. Globalisation has enriched billions of people in Asia and beyond but it has been partly at the expense of the middle classes in the west, especially in traditional manufacturing areas. Demographic change has exacerbated the problem. In the US, real median earnings have hardly moved since 1990. In the UK, earnings have stagnated since 2007. Paul Johnson, the director of the IFS stated at the end of last year:
“After taking into account inflation, average earnings remain below where they were in 2008. That’s unique in at least 150 years”.
The outlook for the next 10 years is not much better. It is likely for the first time since the Industrial Revolution started at the end of the 18th century that the next generation will be less well off than the preceding one. Millions of people have been left behind. The American dream has for many become a nightmare.
This is a far cry from the perceived wisdom back in the 1990s when Francis Fukuyama wrote “The End of History?”, concluding that,
“we may have reached the end point of mankind’s ideological evolution and the universalisation of Western liberal democracy as the final form of human government”.
If liberal democracy cannot deliver improving living standards, one is tempted to ask: what is the point of it or, at the very least, how long can it last?
However, low productivity and stagnant earnings are only half the problem. The other half is rising inequality. Between 1980 and 2016 the richest 1% of the population of the US took as much as the bottom 88% of the increase in real income. In the UK the top 1% took as much as the bottom 51%. Overall, the poorest 50% of the population of western Europe, the US and Canada over this period—some 30 years—took only 9% of the increase in real income. This level of inequality is not justifiable morally, politically or economically. It is not fair. It is simply not sustainable over a long period of time in a democracy.
These are the twin evils—low earnings and growing inequality—that any industrial strategy has to address. This industrial strategy takes a long-term view over more than 10 years. It is cross-party in its approach, building on the works of the noble Lords, Lord Heseltine and Lord Mandelson, Vince Cable, my noble friend Lord Willetts and the noble Lord, Lord Sainsbury. It is about the future not the past; it is about new disruptive technologies not incumbents; it is mission-oriented with the four grand challenges; it is built on the remarkable competitive advantage of our universities and research institutes; it builds in a cross-government delivery and measurement mechanism through the Cabinet committee, chaired by the Prime Minister, and the creation of the industrial strategy council; and it explicitly recognises the crucial partnership between government and the private sector as a driver of strategy—if I can put it this way, more Mariana Mazzucato than Milton Friedman, more UCL than Chicago. Perhaps most important, it recognises that the productivity and inequality evils cannot be addressed solely in London, important though London is. The revival of the northern powerhouse, the Midlands engine and our great industrial cities outside the golden triangle of London, Cambridge and Oxford is fundamental to the success of industrial strategy.
One of the most influential things that happened to me in the past year was going to Pittsburgh. I used to spend a lot of time in Pittsburgh in the 1980s, when it was a declining steel town, the rivers were polluted and crime was high. If you go back to Pittsburgh today you will see that, through the revival of the Carnegie Mellon University, the development of robotics and the cleaning up of the environment, it has completely changed. This is because the revival of strong local civic institutions has driven an extraordinary change in Pittsburgh. You can see this in Chicago, Cleveland and other great old American cities where they have strong elected mayors. I agree 100% with the words of the noble Lord, Lord Heseltine, that we can have a strong industrial strategy only if it devolves more power to accountable local leaders.
We have a saying in Norfolk that fine words butter no parsnips. The White Paper has fine words and we now have to deliver.
Lord Eatwell (Non-Afl)
My Lords, it is a great pleasure to follow the noble Lord, Lord Prior, particularly as I had set out to be critical of the White Paper. Having listened to him, I realise I must temper some of my criticisms.
Although the policy set out in the White Paper is a step in the right direction, the measures proposed are a pale imitation of the sort of programme of institutional reform that could produce a real industrial renaissance. One of the fundamental problems is the failure to recognise the sheer scale of the economic difficulties facing Britain. The White Paper begins with the statement:
“The UK is a fundamentally strong economy”.
That extraordinary statement confirms a myopia. It refers to an economy in which investment as a proportion of GDP is lower than in both the US and the European Union and is below the average of OECD countries. Corporate investment in fixed assets fell from 11% of GDP in 1997 to just 8% in 2014, which is below the rate of capital depreciation. In other words, the corporate capital stock is being eroded. As has been pointed out by many earlier speakers, research and development spending in the UK as a proportion of GDP is about half the level of that in the US or Germany. Productivity—a concept that has been referred to many times—is lower than in the US and all the major European economies; since the financial crisis a decade ago, productivity has barely grown at all.
Of even greater relevance is the long-run deterioration of the core competitiveness of the UK economy. Our share of world trade has halved in the past 40 years, while Germany’s has been stable. The result has been a continuous deterioration in the balance of payments, now a persistent deficit of 5% of GDP a year. In other words, about one-twentieth of our standard of living—our food, clothing, travel and shelter—is paid for by borrowing from foreigners. At the moment, Britain cannot pay its way and the idea that the country is on the verge of conquering new global markets is an ignorant fantasy. These long-term, baked-in trends have all worsened since the financial crisis and, in particular, since the 2010 imposition of austerity policies by the coalition of Conservatives and Liberal Democrats.
Indeed, a serious lacuna in the White Paper is the lack of a policy on demand to match its supply-side policies. The Government seem to have learned nothing from the enormous damage done to the British economy by austerity. If demand is not growing, it does not matter how big the tax incentives, how creative the government initiatives: no one is going to invest. If there is no demand for your product, why would you? Similarly, it does not matter how cheap money might be: there is no incentive to invest without the prospect of a growing market and a positive return. No wonder that these days, British businesses are accumulating and distributing cash, not spending on investment.
In essence, as the White Paper rightly suggests, there are three main tasks, and any policy proposals need to be judged against the template of how far they promise success in these tasks. First, Britain needs a competitive industrial base; this can be defined precisely as an industrial structure that delivers a positive balance of payments at high levels of income and employment. It is easy to have a positive balance of payments by impoverishing your own society sufficiently, but a positive balance of payments with high levels of income should be our goal. Secondly, it is absolutely right that to achieve this, Britain needs a significant increase in efficient investment in new technologies, capacity and people. Thirdly, Britain needs an economic policy framework that can be sustained over many years to turn around those 40 years of decline. This means that the programme must have strong political roots, involving, as it must, significant and sometimes disruptive change. There must be a broad social consensus behind the need for a programme of national economic renewal.
Instead of relying on the latest fashion in economic theory, we can turn to economic history for some insight into how this is done. In the mid-19th century, Germany, France and the United States faced the overwhelming industrial challenge of a dominant Britain. All three countries recognised explicitly their backwardness, and to compete, all three undertook fundamental institutional reforms focused on exactly the same goals I have referred to for Britain. Similarly, Japan and South Korea faced competitiveness problems after the war; once again, the reaction to backwardness was a major reform of institutions targeted on the three goals.
What are the institutional lessons for Britain? First, we must own up to the fact that the economy as a whole is in seriously poor shape. This recognition is undoubtedly hampered by the important point, emphasised in the White Paper, that Britain does have some world-beating companies, but we do not have enough of them and focusing on these exceptions obscures the underlying problems. Secondly, we must recognise that little or no good will be done by new tax incentives and various investment initiatives if the country’s fundamental institutional structure is not up to the job of overcoming our competitive backwardness.
What institutional reforms would at least start to tackle the job? First, research by the Bank of England has shown that the UK’s capital markets are more short-termist than they used to be and more so than those of other countries. There has been an observable increase in the priority that investors give to short-term returns over long-term returns. The result is that over the past quarter of a century, the proportion of profit that UK companies have been distributing to shareholders, rather than reinvesting in their businesses, has been increasing. The interaction between British finance and British corporate governance is resulting in exactly the wrong sort of incentives.
In many ways, of course, the UK finance sector is a great success story. In terms of its size, exports, employment and profits, it is one of the most successful in the world. However, that international success has been bought at a price. The financial sector injects international instability and risk into the domestic economy, as was so evident in 2008. No wonder there is an emphasis on short-term liquidity, a ubiquitous desire for exit and an unwillingness to commit to the long term when that long term is regularly punctured by financial disorder. There were attempts to address these failings in the ring-fencing provisions of the Financial Services (Banking Reform) Act 2013—a pale imitation of the 1930s Glass-Steagall Act in the US. That was relevant to America, but the reforms in the UK failed to take into account the reality of the British economy. Once the real structure of British finance is taken into account, it becomes clear that the ring-fence is in the wrong place. It should be between domestic finance and international finance. The stability of comprehensive financial services for UK firms should be rigorously enforced, while our booming, if unstable, international financial sector should be encouraged to do what it does best: selling outstanding services to the rest of the world.
Secondly, a stable domestic financial system would provide the motivation for and the possibility of a reform of corporate law, including the regulation of mergers, to incentivise the long-term investment culture that Britain so desperately needs. The current corporate structure, with its emphasis on the primacy of the shareholder—an individual whose commitment to any one company is totally transient—has to go.
Thirdly, we need new ways of tackling the long tails of very poor companies that exist in just about every industrial sector. The White Paper refers to the creation of sector deals, but again these are a rather weak version of what should be done. What is needed is an industrial reorganisation corporation with real powers to tackle the long, unproductive tails of inefficient companies that blight our economy.
Fourthly, in addition to financial reform, corporate law reform and industrial reorganisation, the rescue of the British economy from its uncompetitive quagmire will require an entirely new approach to research and development. As the White Paper acknowledges, in Britain we are fortunate to have some of the finest research universities in the world, but the Government seem intent on ruining the sector with their ideological pursuit of the marketisation of higher education. In both Germany and the United States, publicly funded R&D underpins their superior innovative performance. As my former pupil, Mariana Mazzucato, has pointed out, every significant innovation that went into the iPhone was developed in the public sector. In Germany, where 58% of companies invest in academic research, publicly funded R&D—much of its content stimulated by the private sector—underpins the country’s remarkable competitiveness in manufacturing. Long-term public support is a crucial component of long-term R&D success.
Fifthly, we need a complete rethink of the ridiculous “Britain is up for sale” strategy that the Government falsely identify with being an open economy. How many times in recent years have we seen successful companies, many of them built on the foundations of public investment in education, research and skills, sold off to foreign interests as soon as they reach a decent scale? No other country pursues such a foolish and short-sighted policy—when will it stop? When will we have a policy on mergers and acquisitions based on the national interest?
Sixthly, these changes will not work unless the prospect of stable and growing demand provides a sustained incentive to invest: growing demand at home and growing demand from abroad. At home, government commitments to their own increased infrastructure spending must lead the way. Internationally, the fall in the pound provides an opportunity to recover lost markets, just as long as the competitive boost is not squandered on increased consumption. Monetary policy must ensure that the gains from the low value of sterling are sustained over the medium to long term.
Finally, as argued by the noble Lord, Lord Prior, any campaign of national economic renewal must be a truly national campaign that benefits all the people in all the regions of this country. Again, the White Paper puts a brave face on the issue of regional inequality, but it fails to address adequately the more important issue of personal inequality of income and opportunity. As noted already, successful national renewal, particularly in an era of remarkable technological innovation, will involve disruptive change. People whose lives are disrupted in this way should not be paying the price for the nation’s renewal, and they should not be living on handouts either. As part of the reconstruction programme, there must be a comprehensive and supportive programme of training and retraining for decent, well-paid jobs.
In summary, the state of the UK economy requires that all government policies should be directed towards the long-term recovery of British competitiveness. There should not be a revival of the tired old argument about the role of the market and of the state. Of course the state can be inefficient, but as we in this country know only too well, markets and the private sector can be massively inefficient too. A programme of national renewal is not about creating a socialist utopia or a libertarian capitalist utopia, but reconstructing our market economy to achieve national goals. This White Paper could be a small and significant step in the right direction, but it could also do significant damage if we end up thinking that it represents all that needs to be done.
Lord Howell of Guildford (Con)
My Lords, I most strongly agree with those last remarks of the noble Lord, Lord Eatwell, on the need to bring benefits to all, not just to limited sections of society. Indeed, the White Paper contains many excellent proposals and ambitions, particularly the emphasis on research and innovation, design and the life sciences, and many other things.
Nevertheless, I confess that I started out with very limited enthusiasm for this kind of project. This is not just because industrial strategies have great difficulty keeping up with rapidly evolving markets and technologies, let alone political events. Past ones have usually disappointed, as my noble friend Lord Griffiths reminded us, and as the noble Lord, Lord Hennessy, reminded us in an earlier debate and no doubt will repeat in a few moments when he speaks. I know this personally from being a member of Neddy way back, on which I was very enthusiastic indeed. In the end it was all very disappointing; there was something missing. It is not just those sceptical past reasons, but this: for the reasons that the noble Lord, Lord Mandelson, touched on in his very telling and encouraging speech, and those touched on by my noble friend Lord Prior, I wonder whether the priorities set out in the White Paper are entirely the right ones for the revolutionary era we have entered, in which we face conditions completely different from anything that has gone before. History is not much of a guide to where we should turn.
Despite plenty of references in the White Paper to the digital age, artificial intelligence, the cyber revolution and so on, I still feel that in a way—perhaps this is unfair—it was drafted by people with a 20th century mindset. In the 21st century, successful industrial progress is part of a much wider constellation of forces than this document seems to recognise: the drive for change begins more than ever in the home and deep in social structures. The authors of the White Paper should have perhaps paid more attention to things such as my right honourable friend Sir Oliver Letwin’s book Hearts and Minds, in which he emphasised, looking back on what was missing, the need to focus not just on the market economy but on the social market economy. Perhaps they should have looked at that before they drafted. It is the social bit and the more difficult to measure but fundamental bit that seems to have got left out of this kind document, which probably should have come not merely in the document, but first.
For a start, there is a central question of measuring productivity. Everyone is talking about low productivity. We just heard some remarks on it. All the economists seem to be convinced that it is the great issue. Yet everyone also knows that the old measures of productivity are far too narrow and do not tell an adequate productivity story. Nor, for that matter, does the Office for Budget Responsibility’s spuriously scientific forecasts of where the growth of GDP will be in a year or two’s time, when they capture only the market value of goods and services and ignore all other forms of output. I do not think that this will wash any more in modern economic conditions. For example, how do you measure or compare increased productivity—or, for that matter, GDP growth—in the creative arts, media, sport and entertainment, in nail bars or home delivery services, in more comfortable buses and quicker taxi services, faster book printing, aspects of education, health and social care, whether public or private, or infinitely quicker linkages between businesses and individuals? They do not come into any of the official statistics at all. The truth is, it cannot be done. The more we live in an overwhelmingly service economy, as we do, the harder it becomes to measure.
As to the list of priorities and challenges for more industrial success, the “people” section in the document should, of course, come first. By that one means not just people in industry, but everyone who makes daily life and society work. I agree that they are in the strategy document, but they are not at the top of the list where they should be. In an economy that is meant to work for all, the need is not just for priority for schools, well-paid teachers, plentiful technical and vocational courses and colleges, and strong universities, which are there in the strategy document, on which it is rather good. It also means taking account of the real determinants of economic progress that lie at its very foundations—within the home, the household, and in all the human impulses and incentives to share and co-operate, which are very strong in the whole community—and of social relations and attitudes in the surrounding environment and in the routine but essential dealings and requirements of daily and family life, on which everything else depends.
Are these not precisely the core areas that shape the national mood and determine the country’s industrial strength—or weakness—with industrial peace and partnership on the one hand or bad relations, non-co-operation, and inefficient and failed investment on the other? Are they not what decides whether an economy pulls together with a motivated workforce, or slows down to torpor and stagnation levels and falls apart? Yet these are just the considerations and measurements that, I am afraid, almost all economists for the last century, since the days of Marshall and before—with some brave exceptions—have completely ignored. Too many economists have taken a wrong turn and offer a flawed and implausibly narrow base on which to build an industrial strategy, as some of us have been arguing for the past 30 years.
The other priority condition for industrial success, which gets a fleeting mention at the beginning of the strategy but again ought to come near the very top, is the imperative need for a strong sense of fairness in society, and in economic and monetary systems that spread the proceeds of new wealth—not concentrate them—in a redistributive economy, not just one that statistically adds growth via GNP statistics. We need a radical overhaul of the monetary system to bring this about and bring the dignity and security of capital ownership to millions of households. If wages and benefits are just not adequate to provide security and reasonably stress-free living, and instead leave millions of households just not managing, you can say goodbye to industrial dynamism and competitive growth.
Next, I am sorry that the strategy authors still seem unable to resist the old error of picking some winners. Driverless cars may or may not be the next big thing, even though we are told they will not work in cities, in which most people live. In truth, we have no idea at all which ways new technology and innovation will take us, nor which constantly evolving and fluidised needs and wants will emerge. Most predictions on this front will almost certainly be wrong and very expensive. Manufacturing industries are now constantly transforming and are increasingly part of complex producer networks, spanning the globe and blurring sector classifications, as the noble Lord, Lord Mandelson, reminded us. It is simply not given to humans, and certainly not to government officials, to know how these systems and subsystems will work out.
While we need energy to be low carbon as far as possible, we also need it to be cheap, which it is not in this economy—it is some of the most expensive in Europe—and reliable, which it is in danger of not becoming, as well as making warm homes affordable. Without that, industrial growth will be hobbled. The sections in the White Paper on energy and climate seem to have forgotten about that basic requirement.
Perhaps above all we need from the top a narrative and a national purpose to motivate everybody, whether in the home or at work—especially in these confused and very dangerous times. Her Majesty the Queen spoke at Christmas about a vibrant Commonwealth. It may just be that, in a world of networks and algorithms driving everything, the Commonwealth network helps to give us new purpose and direction. Industry and competition will not thrive without a strong sense of where we are heading in the entirely new international conditions, both economic and political, which now prevail.
Finally, while efficient markets are of course important, if the focus on free markets and “growth” leads not just to competition and satisfying the consumer but to immense capital concentrations, massive global monopolies and disequilibrium throughout the planet, as looks suspiciously like happening right now, it is not the right strategy. We need as never before to distinguish between the quantity and the quality of production, growth and productivity. An unhealthy, brittle, unbalanced and divided society will in the end produce none of these.
Lord Bhattacharyya (Lab)
My Lords, I declare my interest as chairman of WMG at the University of Warwick, as set out in the Register of Lords’ Interests. It is fitting that the first debate of the year is on the industrial strategy; 2018 is, after all, the Government’s Year of Engineering. Being an engineer, I shall concentrate just on the engineering sector of industry.
The industrial strategy is most welcome. I am sure that the challenge fund, increased tax credits and the national retraining scheme will make a real difference in the short term. The five foundations are broadly right; the grand challenges are all important. But however welcome, an industrial strategy needs more than good immediate announcements and exciting challenges.
In our previous debate on the industrial strategy, the noble Lord, Lord Hennessy, pointed out that this is the eighth attempt at an industrial strategy since the war—I think that somebody else said that it was the ninth. The sheer number of strategies shows the disconnect between them and demonstrates the core problem of Britain’s approach to industrial policy. We focus on the short term and not the long view. We do not review success, revise targets or refine our approach. We just rip it up and start again from scratch a few years later.
The consequences can be disastrous. We have had many White Papers on skills—just to give one example—but there has been no consistency in implementation and no stability in institutions. We have gone from levy to grant to levy, from training boards to skills councils and back. These changes have often been confusing and chaotic. It is no surprise then that we have a near-permanent skills crisis. With all the money that has been spent on it during the past 20 years, nothing has happened.
I have one big hope for this strategy: that it lasts longer than the others. A short-term industrial strategy can never succeed. You need time to implement it on the ground, time to bed in institutions and time to build partnerships, but we do not give a strategy much time before we decide that it is time for a change of plan. This is especially true for Ministers. We have already lost the noble Lord, Lord Prior, and I think that we nearly lost our Secretary of State, Greg Clark, between today’s opening and closing speeches. I hope that he is still there.
Lord Bhattacharyya
Oh, hi.
The turnover of people is matched by changes of policy. For many years, everything was seen as interventionist. Even research and science budgets were reduced—it was not the job of government. I remember that the first thing done by the Blair Government was to put back the science budget because it was in a terrible state. However, the research institutions that worked with industry had closed, so we had to reinvent them. I hope that the next industrial strategy is an update and not a reboot.
Another reason to focus on implementation is to keep our focus on delivery and then fixing where we fall short. For example, we have one of the lowest rates for business R&D, both within firms and in collaborative research. The Government have as a target for total R&D spending 2.4% of GDP in 10 years. It is a good target, and we want to hit it, but in 2004, the target was 2.5% of GDP, also in 10 years. Fourteen years later, total R&D spending as a share of GDP is largely unchanged, and the target is still 10 years away.
Is it a total policy failure? Not at all. Some sectors have made outstanding progress. Automotive businesses in this country disappeared completely. Today, automotive businesses have more than trebled R&D spend in a decade, from £1 billion to £3 billion a year. As a result, exports have doubled in a decade. Ninety per cent of that growth happened before Brexit devalued the pound. Imagine what would have happened if we had stayed in Europe. The challenge is replicating that success. It is the result of years of hard graft. When the great recession hit, the automotive sector struggled to get the help it needed to survive. As I said, “industrial strategy” and “intervention” had been anathema in government, so car makers chose to manufacture one. We started with a sector-wide Automotive Council so that the industry spoke with a single voice. We used this to secure support from government. The greatest success in BEIS today is what is happening with the Automotive Council, with all the industries together working with government. That led to collaborative investment in lightweight materials, low-carbon and connected and autonomous vehicles, all ideas which would completely change transport.
We built collaborative research centres to work on industry priorities, from battery technology and improving welding to data security. Big data analytics are completely changing the way in which cars are designed. Crucially, we persuaded global R&D leaders such as my friend, Ratan Tata, to invest in Britain. That put us in the right position to make a case for further investment, with money from government and industry together. This is where the regional policy comes into being. Our new mayor, Andy Street, and the local authorities—some are Labour, some are Conservative—have come together and we are now in a position to create 30,000 to 40,000 employment opportunities in the Midlands sub-region which had completely disappeared. That was one reason why the £80 million Faraday Institution for battery research was announced by the Secretary of State in October. There is also the business-funded, £150 million National Automotive Innovation Centre at Warwick, which will have a budget of about £1 billion within the next five years. On top of that, because there has been a big skills problem, we decided jointly with the LEP to fund a big apprenticeship centre, which will have 1,000 higher apprentices by the end of this decade.
Unless we have all such bodies joined up and the local authorities and regions working together, nothing will happen. It is the firm foundation that allows us to raise our ambitions. The challenge now is to encourage more business R&D in other sectors and increase our innovation intensity. We can use one successful sector to lead the way for others. In Britain, people used to say, “Oh, well, the automotive industry has disappeared. We should not be a manufacturing nation. We should only be a service sector; we should only be in the financial sector”. Let us now imagine it: the sector that died and lost tens of thousands of people in employment has come back within a matter of eight years. We have the skills in this country; we have the R&D base in this country; we have just to get our act together and it happens.
I shall give another example. The pressure on the automotive sector for lightweight vehicles has led to a challenge for our steel and materials industry. The noble Lord, Lord Prior, knows all about this. We need to reduce vehicle mass by 15% percent; if not, the Chinese will kill us. As a result of low-carbon vehicle targets, the UK steel sector needs net shape facilities. In this sector now, Port Talbot has been rescued without very much money from government, but with government support, including government moral support and, again, making the regions come together, with the Welsh authorities, with a LEP there and various other authorities coming together to save Port Talbot. I am pretty sure that in five years it will be one of the best steel plants in Europe.
We can do this because success breeds success. If we do not do research in that area we will again fall behind the Chinese and the Germans—even the Germans have struggled with the Chinese—and again have a sector where the raw materials will be coming from other countries. This is what this strategy is all about and it leads me to a crucial point. A strategy for the long term does not exist in a vacuum. Our industrial strategy needs to inform the rest of government policy. Our steel industry needs to invest in areas where the car industry has a market for it. All these sectors are not so independent that each can have its own sectoral industrial policy.
I give another example. We need to be very careful when we change behaviour with tax incentives. The Treasury encouraged Britain to buy diesel cars because they have the lowest emissions. Now British cars have the lowest emission tariffs. So what does the Treasury do? It raises duties and overnight the market collapses, because of the perception that it is raising duties because eventually the Government will ban diesel cars. This is another enormous waste, when one part does not know what the other part is doing. I hope that the Government understand that the right hand needs to know what the left hand is doing. It is no use having the integrated strategy that the noble Lord, Lord Heseltine, has mentioned many times if, within the Government, there is no integration. So I welcome this strategy. It is not perfect—nothing is—but it is a very good start and we should give it time in order to make it work.
Lord Wrigglesworth (LD)
My Lords, I am very pleased to follow the noble Lord, Lord Bhattacharyya. I very much agree with what he said, and I very much welcome this debate and the publication of the Government’s White Paper. It deserves support right across the spectrum, and that is what I want to talk about. Before I came into this place, I spent quite a lot of years as the chairman of one of our biggest ports and more than 20 years building industrial estates, largely in the north of England. That experience shows—and many other industries demonstrate the same thing—that you need long-term investment, long-term decision-making and certainty. You will not always be able to get all of those things, but the more you can get, the more successful you can be. I hope that this White Paper will bring certainty to people in all the sectors that have been mentioned.
There have been some excellent proposals for strengthening the White Paper during the course of this debate, not least the suggestion of strengthening the languages sector, and others as well. What has bedevilled our industrial strategy and a large section of our economic policy over the past 50 years and more has been the ideological divide that has split the political community and divided the community in the country. I do not share the view of the noble Lord, Lord Heseltine, and one or two others, that that divide has gone away. Indeed, if Greg Clark has been reappointed as Secretary of State I am absolutely delighted because I think he has been a very good Secretary of State. I have to say that he canvassed for me when he was an SDP member and got me returned to Parliament in 1983, so I have a certain prejudice in his favour. This represents what I believe is a consensus view right across the spectrum among most people.
Looking back over the period, the noble Lord, Lord Hennessy, estimated how many industrial strategies there had been. It was one of my predecessors as the Member for Stockton, Harold Macmillan, who first introduced Neddy, the NEDC, and the little Neddies that followed. We have had a succession of industrial strategies and attempts to develop our industry and economy over all those years, and they have been held up, stopped and done damage, in some instances, because there has not been a consensus behind them. I fear that that consensus is still not there. People forget that the Secretary of State’s predecessor, Mr Sajid Javid, took a very different view on these matters from that of Greg Clark. He started rolling back with great verve all that Vince Cable had done in the previous five years. Vince Cable was the longest serving Secretary of State since Peter Thorneycroft in the 1950s, but Sajid Javid wanted to reject any idea of “picking winners”. He was using all the old verbiage of the past that has been referred to by other speakers in the debate, other noble Lords. It just demonstrates that those ideological views that undermine a White Paper such as this are still around.
We are confronted with the possibility of a Labour Party, now led by a Marxist, returning to nationalisation and causing, again, the polarisation that, in my view, caused such damage to our industrial policy in the 1950s, 1960s and 1970s and, indeed, to some crucial industries, such as the steel industry, pitched backwards and forwards between the public sector and the private sector. We must not go back to that again. If we are to get certainty and long-term planning, there needs to be a political consensus. My appeal is that those in this Chamber and elsewhere in politics seek to bring that consensus behind the White Paper so that we can make a success of it. That also applies—this is something I have spent most of my life involved in—to that devolvement to the regions in which the noble Lord, Lord Heseltine, has played an enormous, very positive and successful role.
When I look at what has happened in the northern region during my time, 40 or 50 years ago we had the North of England Development Council, then we went on to the Northern Development Company, then we went on to the regional development agencies and now we have gone on to the LEPs. It has been change, change, change and division, division, division. That has not helped the development of that regional economy. We have a very good position on Teesside now, again helped by the noble Lord, Lord Heseltine, and all the work that the department, helped by him, has done. We now have a combined authority there, a Conservative mayor on Teesside, co-operating closely with Labour local authorities and really making a difference.
However, up the road from there, on Tyneside, we have complete chaos, where the Labour local authorities cannot agree with one another what should happen. North of the river, they are talking about setting up a combined authority, but all the authorities on the south side of the river want nothing to do with it. The port of which I was chairman, on Tyneside, has interests on both sides of the river: an international passenger terminal and a cruise terminal on one side of the river and lots of other facilities and big docks on the other side. One side would be in a combined authority, the other will be in different authorities on the other side of the river. It is going to make it much more difficult for that organisation—a big and important economic unit in the north-east—to function effectively and efficiently.
Yes, we want what the White Paper is saying—to devolve power down—and, yes, it has been successful in many areas, as the noble Lord said, but there is much further to go, and we will go further only if we can bring about that political consensus, at both local and national level, to give us the certainty in the long term that the success of this policy can bring. I hope that everything will be done by Members in this Chamber, the other Chamber and elsewhere in politics to try to unite people around this policy. It has many useful assets. The balance between the public sector and the private sector is laid out extremely well. The noble Lord, Lord Prior, put as powerful a case for an industrial strategy as you could find. There is a tremendous amount of evidence and of well-defined activity in the White Paper, which, if it is carried out, can be of enormous benefit to the country, but we need the support of all parties and all people to make a success of it.
Lord Hennessy of Nympsfield (CB)
My Lords, why has it proved so tough for successive Governments to shape a successful industrial strategy that inspires, bites and, above all, endures? It is as if the framers of such strategies have been so many sculptors gazing at a rough-hewn piece of marble and discerning in it the outline of a beautifully cut statue, there for the crafting, but the resulting piece of work never quite fulfils the hopes of those who created it.
However, it is a fine and, indeed, noble ambition. As other noble Lords have reminded me, the White Paper before us is the eighth attempt at achieving it since the Second World War. One of the great treats of the debate has been hearing the grandfathers of previous ones explaining what they did, and why and how they did it. I remember as a young journalist on the Times following the political career of the noble Lord, Lord Heseltine, from department to department and noticing that he created an industrial strategy in every department he touched, whether or not it was the policy of the Cabinet to have one in the first place. I watched with great admiration how he did that. The impulse has been within him, I suspect, since school. I would not know; maybe he will tell us.
All the strategies since the war, in their different ways, have involved the best and the brightest in the ministerial suites and policy divisions of Whitehall, as well as those called to the colours from the worlds of industry, commerce, education, science and technology, to help find the multiple and interlocking elements that might lift our economy on to a higher trajectory of performance and growth. Surely, amid the mixture of activities in factory, lab, school and university over the past 71 years since the Attlee Government set up the Central Economic Planning Staff, somehow we could have found the elixir needed to reach, for example, the 4% annual growth rate to which both mainstream political parties pledged themselves—how we would settle for that today—in the early days of NEDO in the early 1960s. We never achieved it, apart from the odd short-lived spurt.
The key ingredients of the problem, which have been well rehearsed by your Lordships today, have been known and analysed, from the Attlee/Morrison/Cripps model of the late 1940s right through to today’s White Paper. They have been poked at and prodded in all the strategies in between as well. What are these deeply ingrained and highly resistant problems that have held back both our society and our economy? There have been three of them and they are interlocked. Several noble Lords have covered the terrain already.
The first is the shortfall in technical skills compared to our needs at home and our competitors abroad. This has been recognised as a UK problem for at least 150 years. The parliamentary commission on endowed schools was hugely impressed by the technical high schools of Prussia. Reporting in 1868, it said that,
“we are bound to add that our evidence appears to show that our industrial classes have not even that basis of sound general education on which alone technical education can rest … and unless we remedy this want, we shall gradually but surely find that our undeniable superiority in wealth and perhaps in energy will not save us from decline”.
What extraordinary prescience.
I cherish the memory of Rab Butler, a great and decent man, but the single greatest missed opportunity was probably the remarkable Education Act 1944, of which I am very fond—it gave me a superb grammar school education—and many others would not be in this Chamber without it. But in it was the provision that, above all, might have avoided the need for this White Paper and this debate. It was for technical education to take off but the technical schools never flourished. They never taught more than 2% of the age group in the post-war years. As for the county colleges, which were going to be set up for FE training—sandwich courses, as we now call them: part-time day release—they were never set up. There within the provisions of the Education Act 1944 was the key remedy on the skills and technical front, but it was not to be.
The second ingrained problem is the difficulty we so often find in industrialising our top-flight science and research. One might call it the “thought in Britain but not made in Britain” syndrome.
The third factor is the low productivity that results from the other two, which leaves us so often trailing in the wake of the world’s leading industrial nations. According to the White Paper, we have but 12 years to break these malign talismans of economic underperformance. As the White Paper says in its concluding section, “Britain and the World”:
“Our aim is that by 2030 we will have transformed productivity and earning power across the UK to become the world’s most innovative economy and the best place to start and grow a business, with upgraded infrastructure and prosperous communities across the country”.
Amen to that shining set of aspirations. I think it is the only one that we can all sign up to, whatever our political or non-political affiliations, our economic philosophy or our leaver or remainer instincts. I was delighted when the noble Lord, Lord Mandelson, indicated that there was, with luck, a consensus waiting across the political Benches on this very question, if on no others.
It is a rarity in our current political landscape to find the possibility of genuine consensus on anything. Our Brexit-infected political ecology has left us, as a very wise friend of mine puts it, as a people seemingly on permanent grudge watch—always looking for things to fall out over rather than to fall in about. This White Paper could be the great shining exception. But signing up to an aspiration is one thing, dancing the multiple steps needed to achieve it quite another. The proposed industrial strategy council, the creation of which I warmly applaud, will need to keep a close watch on all the moving parts of the strategy and the ills it is designed to combat, especially those three horsemen of economic underperformance on which I have concentrated.
I hope that this White Paper might be seen by posterity as one of the master policy documents, such as the Beveridge report on welfare in 1942 or the Robbins report on higher education in 1963, but it has to shine—quickly—as the charter of a great shared national endeavour, because that is what we need it to be, with a dash of real inspiration that reaches into boardroom and production line, trade union and trade association, classroom and lab alike. In so many ways it is a question of spirit, optimism and, above all, tenacity. How we need it to work. The margins within which we are going to operate as a people, a society and an economy are tight and tightening, as the noble Lord, Lord Heseltine, so eloquently warned us earlier. Much, though not all, of the remedy lies in our own hands, in our hearts and our minds, and in our skills and our ingenuity. It is time for all of us to rise to the level of events and finally find that elusive statue lurking in the marble.
Lord Flight (Con)
My Lords, I very much agreed with what the noble Lords, Lord Griffiths and Lord Bhattacharyya, had to say. I had reservations that yet again we were going to see fine words but whether they would turn out to deliver the goods was another matter, but I am comfortable to support such a national effort, as has just been referred to. It is a much better framework than the previous frameworks. At a tangent, I also point to the productivity leadership group convened by Sir Charlie Mayfield, chairman of John Lewis, to provide help and advice on implementing productivity improvement, particularly in the retail sector, which I will come to. That sort of organisation is healthy and sometimes has the ability to achieve things which Governments cannot achieve.
Of the government activities, I greatly welcome the transformation sector deal for life sciences, with 25 organisations taking over an important part of our economy, as the noble Lord, Lord Kakkar, pointed out. I too make the observation that it was a tragedy that the technical schools envisaged in the Butler Act never really flourished but I would point out their brave, continuing supporter in the form of my noble friend Lord Baker, who has now put in university technical colleges, which in the main are doing extremely well in producing the skills that we need and do not necessarily have.
This debate, to my mind, is essentially about our productivity and I would like to focus on five practical issues which, in aggregate, point us to why our productivity is probably understated in comparison with other economies. The first point is that if you subsidise pay, which is what tax credits do, you are bound to affect productivity. If labour is cheap and subsidised it encourages overemployment and the use of labour, rather than capital investment. That is the very opposite of France, where no firm wants to take on more labour than it can possibly avoid doing because it is so difficult to get rid of it; in the UK, we have had the reverse. Socially, that was a good thing following the financial crisis but we have gone beyond a time when it is positive. I note that the noble Lord, Lord Darling, has effectively made the same comment.
The second point has been touched on by a number of noble Lords today but not, I think, made specifically: one of our real problems has been an inadequate savings rate for 50 years and more. In the Keynesian sense, savings and investment must equal each other and inadequate saving has underpinned inadequate investment, very much in the way that has been referred to.
My third point is about the rather interesting study by Mark Price—now my noble friend Lord Price—on the importance of happiness in work and its effect on productivity and output. His measurements showed that the most satisfactory sectors were those of fast-moving consumer goods, hospitality and entertainment, while the least happy sectors were construction, transport, very much the public sector, engineering and architecture. The happiest people were the group aged 65-plus and the least happy those aged 19 to 24. It was interesting to read that John Lewis was established very much on the basis of that being important to the creation of an efficient business, and on the huge importance of employee ownership. I have always believed in that very much: when I built the Guinness Flight business, it was based on employee ownership.
John Lewis is to be a leader in addressing how to improve productivity in the retail sector—one of the sectors that has made the figures look so disappointing. There are over 3 million people employed in the retail sector. Where we have been in advance of other economies is in moving to online, which now represents over 20% of retail sales. Some extremely useful work has been done here by Gary Channon, the CEO of the fund managers Phoenix Asset Management. What has really been happening is that when we go to shops, if we buy things and take them home, that taking home is not in any way included in GDP figures. However, when you buy online, a whole range of activities—storing, packing up, delivering to the house in question—add considerable costs.
The figures look something like this: there should have been a reduction of towards 1 million people in traditional retailing to match the more than 20% that has gone to online delivery but it has not happened. However, online has created some 300,000 jobs and the combination of the two has, in the short term, hit productivity pretty seriously. That is why it is extremely important that our leading retailer, the John Lewis business, is focusing on this and making its own changes. A McKinsey report suggests that there could be 900,000 fewer jobs in retailing by 2020 and sees 53% of retail sales having scope for automation. John Lewis has also invested £500 million in its Magna Park national distribution centre. It has taken on 500 apprentices this year and looks to take a huge quantity of them by 2020. If you like, it is the lead business in how to improve and sort out the productivity of retailing in the greatly changing climate of having much more online business.
I also point, in parallel, to the financial services sector. I declare my interest in terms of my ongoing involvements in that sector. Since the credit crunch 10 years ago output has been stagnant and as a result the sector, which has been the biggest industry in the country, has fallen from having 9% of GDP to 7%. You would have thought that would result in a significant reduction in the number of people employed in the sector but not at all; rather, if anything, the numbers have increased with the enormous volume of new regulation and compliance that the industry has to face. Quite a lot of this, such as MiFID II, strikes me as contributing little or nothing and as extremely unhelpful to certain sectors, particularly private client fund management. Anyway, the net result of all that has been a big drop in financial services’ profitability.
The practical point I am making is that on a five-year view of these specific little areas, which are capable of being addressed relatively quickly, more recovery in productivity is likely to come from sorting out such areas than the big picture of the Government’s plan. But to go back to the beginning, they have my support. I had concerns initially that the plan reminded me of the Wilson Government’s national plan, but that is unfair for the reasons put forward by a number of excellent speakers today.
This territory needs cross-party national commitment. There is a lot going on in this country which is extremely good news, such as leading in tech sectors and the huge volume of younger people who are entrepreneurial and starting new businesses. But, for the reasons that my noble friend Lord Prior pointed out, it is absolutely essential that we improve our productivity and living standards if we want an open, democratic system to continue.
Lord Bird (CB)
My Lords, I am very happy to be talking about industrial strategy, which is kind of strange. I am known as Mr Homeless or the Poverty Man—the “Buddy, can you spare me a dime?” sort of chap—so your Lordships may not think I would be interested in industrial strategy. However, I am interested in it because I am interested in productivity and in all the things that make possible a generosity of spirit and give us the opportunity to intervene in the lives of people in need and to help prevent those people who may fall into need from doing so.
I am not in any way looking on this as a slight, but it is interesting that there is nobody from the Church of England here. There are no right reverend Prelates in today. Is it the Bishops’ day off?
Lord Bird
There is nobody from the Church on the speakers list. I make that point because the Church, or religion, is the backbone where generosity comes from. Most of us learn about generosity through school, religion or the message of Christ. But if there was no industrial strategy, if there were no people going to work and earning money, then we would have no opportunity at all to be generous to each other. We would have absolutely nothing in the kitty.
I want to make a plea for social enterprise, which is not mentioned at all in this industrial strategy. I have to declare an interest in that I started one 26 years ago called the Big Issue, which was all based on the principle of getting people to work and giving them a hand up, not a handout. When I was asked about the nature of the work I was doing, I said it was a business response to a social crisis and was not simply extending another handout. We built the business among the most troubled, harmed and self-harming members of the community. We built a relatively tidy business out of that: we do not make a lot of money, and what comes in goes out, but it is a social business. It has spread all over the world: you cannot go to many cities that have not taken up the model that the Big Issue created. Wherever there is the problem of people who are hard up, we give them the opportunity of trading and of earning some honest money so that they do not have to do anything dishonest.
Social enterprise is the area that I started in and have worked in over the last 26 years. About 11 years ago we invented something called Big Issue Invest, which is a prevention mechanism that tries to work with people to stop them falling into crime and wrongdoing. We have created a number of social enterprises by investing. For example, when a local hospital in Salford wanted to privatise a sector, and the managers took over the business, we put money in and bought nurseries for them. They made all sorts of clever innovations, such as putting very young people with very old people. Big Issue Invest has invested in 300 social businesses. I want people to buy into the idea that, even though we are only about 2% of the activity, if the Government were to get behind social enterprises, put an enormous amount of effort in and take us from a niche into the mainstream, that would do all sorts of wonderful things. For instance, we work largely in areas of deprivation and need, and it would help to transform these areas, because it involves the people themselves in their problems. It is not something that simply comes down from the top but something that grows up from the community.
However, the real problem for me when we talk about industrial strategy is that I am working in the areas where the laws of unintended consequences apply. For instance, the Thatcher Government removed all the subsidies for all of these industries, most of which, with the exception of the car industry and parts of the steel industry, had never made a profit in the 20th century and had been subsidised since the First World War. When they went, those jobs were not replaced with the kind of skilled work that would take a lot of people and move them forward, skilling them up instead of having them rely on social security. Many ended up doing that for generations, with the sluice gates opening for social security so that you could take in 11,000 people in Sunderland’s job exchange on the Monday, when on the previous Friday there had been only about 55. You get those kind of weird distortions.
Social enterprise—the work we do—is about going into those areas and trying to make up for the deficit of thinking, of strategy and of government involvement. I know that there have been some really top-notch, Rolls-Royce innovations. We are very good in Britain at producing pilots and wonderful little inventions in particular parts of the country, but we are not very good at making a whole strategy. We have to grow up a bit. Every time we mention industrial strategy, we talk about Germany, which is brilliant, but we have to be truthful and ask what the Germans do, in a big way, that we have never done. The Government lead in social and business innovation. All the big companies that made it possible for Germany to run the First World War survived, and carried on even after the Second World War. All the big innovations were made by government under Bismarck at the end of the 19th century and they lived on.
Why do we not accept that government should be one of the most brilliant means of investing in and creating new industries? That is what they do. Go to California, talk to the people in Silicon Valley and ask them where they were 20 or 30 years ago when the innovations that created their businesses were being invented by the military and in our universities with public money. When are we going to start getting real and accept the fact that most of the big changes that have taken place in the world and have created new industries have been led by the use of public money?
Lord Cavendish of Furness (Con)
My Lords, what a pleasure to follow the noble Lord, Lord Bird, whose own generosity of spirit has borne fruit wonderfully.
I now see that I am not alone in having had a sinking heart when talk of a new industrial strategy first entered the realm of public discussion. “Here we go again,” I thought, “another exercise in picking winners, shielding inefficient business and offering grand promises to those who prosper least in our society”. I was wrong, or at least I am persuaded that my cynicism was misplaced. I heartily congratulate the Government on their industrial strategy White Paper, and I thank with equal enthusiasm my noble friend Lord Henley on his excellent speech that opened this important debate. Under consideration is a hugely ambitious set of proposals. I asked myself if perhaps it was too ambitious and indeed unrealistic in its scope. On reflection, I concluded that past failures by Governments seeking to improve economic performance stemmed in part from too little ambition rather than too much, and from a narrowness of scope that resulted in flawed delivery.
I found the White Paper an exciting read, if not a page turner. It is unusually thoughtful and has an especially winning feature from my point of view: everyone can feel justified in feeling that their particular circumstance is being taken into account. We are invited, in effect, to participate in something intended to improve the lot of each one of us in every part of the UK. Although I always listen to my noble friend Lord Howell with the greatest respect, I take issue with his rather gloomy outlook here. Both the nation’s children and its ageing population are discussed, as are town and country, while the devolved Administrations and large and small businesses all get a hearing. It is pleasing to read in a document about industrial strategy that the environment and the fascinating concept of “natural capital” find a place. It anticipates Britain’s departure from the EU but it is not at the expense of anything else.
The comprehensive nature of this White Paper is really encouraging. I first got wind of the fact that thought and vision had found their way into a government White Paper when I read the debate in another place following the Statement on 27 November in vol. 632 of Hansard. It was delivered by Mr Greg Clark and I join other noble Lords in being extremely pleased that he remains in office. With very few exceptions, the Statement was well received in the other place and constructively debated. It is fair to say that the same could be said of the press coverage that followed the announcement, and I feel that the same has happened here in this debate. The House should be extremely grateful to the noble Lord, Lord Mandelson, for the even-handedness of his introduction and its tone, which was impressive as well as authoritative. I particularly hope we will come back to his anxiety that institutionally this country has great difficulty in thinking in the very long term—or what in business we would just call “the long term”—because that does great damage.
As a Conservative, it comes naturally to me to challenge any and all extensions of government interference in such areas of industry. Indeed, the White Paper commendably acknowledges that risks are attached to the Government’s approach. There are risks, and one would need to be a great optimist to expect all these great ideas to materialise as planned. We should take to heart my noble friend Lord Heseltine’s warnings in that respect. Broadly speaking, though, there has been a great deal of consultation leading up to the publication of the White Paper, and the very fact of continuing devolution suggests to me that the Government of the day need in reality to be an active participant in the nation’s economic development. The Government’s dominant role in providing such areas as health, welfare and education lead me to exactly the same conclusion.
If I understand it right, the paper suggests that the delivery of these proposals will rely heavily on partnership. I applaud that aspiration, with the proviso that the partnership has to be genuine and mechanisms will need to be in place—through, I suppose, the independent commission—to ensure that it does not become one-sided. One should never underestimate the capacity of Governments to bully when they feel they hold all the cards. I was especially pleased to read of the Government’s intention to ensure that 60% of contracts for major projects will be awarded to the SME sector. Living as I do alongside very dominant tier 1 companies, I am very familiar with supply-chain promises that fail utterly to materialise in practice. I urge the Government to make a reality of this pledge and take seriously my noble friend Lord Maude’s remarks about supply chains.
I do not think I have ever risen to speak in your Lordships’ House unless I have felt that at least most of what I had to say stemmed from personal experience. When a debate of this nature is listed I try also to consult local friends and acquaintances engaged in entrepreneurial activity. Perhaps I should declare my own interests as listed in the register of Members’ interests. In a word, after 10 years of international trading, my work has been in a highly varied family business based in Cumbria, with some 200 souls on the payroll.
The White Paper leaves me in no doubt that cities and areas of the UK that conform to modern best practice in terms of governance are and will be ahead in the queue to benefit from the proposals that we are discussing. It is not clear to me that the county that the Minister and I have the privilege of living in has quite got up to speed in this regard. I remember a senior civil servant telling me in exasperation, “Your trouble in Cumbria is that you are overgoverned and underled”. Again and again the White Paper lays stress on the importance of local leadership if its proposals are to bear fruit. I hope we in Cumbria will take note of that and will be given time for amendment of life. I wonder whether the Minister has any thoughts not just on our lovely county but on other places that need rather a different approach if the people who live there can expect to benefit from the really exciting prospects that the White Paper lays before us. It is, in essence, the same question that my noble friend Lord Heseltine asked the Minister.
While I understand that the Government wish to demonstrate ownership of this thoughtful White Paper, I confess to being a little surprised by how little the private sector is involved financially. In a recent debate I drew attention to a CapX article by Mr George Trefgarne suggesting that infrastructure projects could be financed privately through the means of what in Victorian times were called project bonds. A faintly related idea subsequently surfaced in the patient capital review, and tucked away in the White Paper is mention of the possibility of pension funds being enabled to enjoy slightly greater investment flexibility. Huge sums of money are stashed away in this country—or so I am told—looking for a home, a point made by my noble friend Lord Griffiths. I am at a loss to understand the apparent reluctance of the Government to encourage private sector participation in infrastructure projects. I wonder again if the Minister might be in a position to comment on that.
I turn to a paragraph in the paper that suggests that UK taxation levels are “competitive”. I am sure that statement, whatever it is meant to mean, is capable of being defended. I merely make the point that even if headline rates appear reasonable, taxation is still very high overall, and damagingly so. There may be good reasons why relatively high levels of taxation exist as part of repairing the country’s finances. However, as I have said before in your Lordships’ House, burdensome regulation, high taxation and an enduring perception that the Government and their agencies are hostile combine to be a serious disincentive to investment, especially regarding the impact on the SME sector. It is because of these disincentives—I say this with great sadness—that my own family business has recently deferred, perhaps indefinitely, what amounts to a very substantial investment for a small company. It is very difficult to measure what I would describe as public sector hostility. I have encountered it with planning authorities, a wide range of regulators, quangos and, on occasion, even the police. In recent months, I may have detected some improvement in public sector culture. Indeed, I am much encouraged by the collaborative tone of the White Paper, which suggests that maybe some lessons have been learned.
A close neighbour of mine in Cumbria has built up a small business in his backyard that manufactures subsea acoustic navigational equipment for military customers and search-and-rescue divers. This splendid pioneering young man acknowledges gratefully the help that he receives, especially R&D incentives and the measures that protect his intellectual property. However, he writes:
“UK manufacturers are bombarded by European compliance legislation that is applied with very little thought to type or quantity produced. Some of this legislation such as CE marking (Conformité Européenne) and WEEE (Waste Electrical and Electronic Equipment) compliance are extremely difficult and onerous to achieve and are very effectively pricing us out of the market. In theory, if we were asked to design and manufacture just one small batch of product it would need to conform to all the same red tape put in place for mass manufacturers”.
My talented friend suffers also from tier 1 neighbours who breed huge salary competition, creating skills vacuums for smaller enterprises. What he has yet to encounter, as I have, is the grotesque practice by some big companies which lobby EU officials to add burdens to compliance and thus disadvantage their agile, small competitors.
These serious imperfections in the current business climate facing SMEs need to be addressed, and I hope that they will be, but that is not to suggest that they diminish in any way the opportunities outlined in the visionary White Paper. My hope is that the strategy will take account of inherited flaws in the present system.
The White Paper touches everybody and seeks to better the lives of all of us. It captures the new mood that free trade is a moral as well as an economic imperative. It equips our country with the means to prosper in a global market, free from resort to protectionism. It speaks of innovation and advanced technology not in terms of profit and balance sheets alone; it speaks with rather unusual warmth and humanity of how we and those who follow us might live happier, more fulfilled and contented lives.
Viscount Hanworth (Lab)
My Lords, the Government’s industrial strategy cannot be adequately appraised in the short time available to an individual speaker. The Green Paper of January 2017 raised the matters of concern. The White Paper of November 2017 sets forth the Government’s intentions.
The White Paper ignores many of the issues raised by the Green Paper. There is, however, a surprising element in it that I can only describe as political cross-dressing. Lip service is now being paid to some of the critiques and proposals that have long been part of the message and agenda of the Labour Party. There is now dawning recognition that many of the central tenets of an enduring Conservative ideology, such as the nostrums of free enterprise and privatisation, have run their course. These are no longer fresh ideas; nowadays, they are associated with some of the worst dysfunctions of our economy.
A brief mention is made in the Green Paper of the failure of the industrial interventions of previous Governments. We may recall that in the 1960s and 1970s, and even thereafter, these interventions were mainly in support of troubled and senescent industries. The industrial policies pursued by our competitors were aimed primarily at supporting growing industries. In consequence of their investment in newer technologies and manufacturing equipment and with the advantage of cheaper labour, these industries were able to outcompete our comparable industries.
A reaction of Margaret Thatcher and of Keith Joseph, who was her Secretary of State for Industry, to the failed industrial policies of the 1960s and 1970s was to declare that lame-duck industries should no longer be supported by government but should be allowed to fail. The Conservative Party developed an aversion to industrial intervention that has endured from that time to the present, as have many of its other attitudes towards industry that arose in that era.
The policy of privatisation and the allied failure to use government procurement to support our native industries are both parts of Thatcher’s enduring legacy. An object lesson has been provided by our electricity supply industry, which passed into private ownership at a time when the French nationalised electricity industry was investing heavily in nuclear power generation. When the electricity industry passed into private ownership, which has become preponderantly foreign ownership, the building of large power stations—whether powered by nuclear or by fossil fuels—ceased, as did the demand for the generating equipment.
Instead, the newly privatised industry resorted to building combined-cycle gas turbine power plants for which the equipment was supplied by foreign companies. The leading British engineering firms that had supplied steam turbines and generators to the erstwhile Central Electricity Generating Board fell into decline. The gas turbines that power the combined-cycle plants are aero-engine derivatives. Thus, it might have been expected that the two branches of the British turbine industry would combine to exploit the opportunities for equipping the new CCGT power stations.
It would have required an initiative from central government to make this happen, but none was forthcoming. The electricity industry is now in want of major investments to meet the demands of decarbonisation and of electrified transport. These investments will not be forthcoming from private industry. However, it seems that the Government persist in thinking that they can and ought to be financed by private capital. Moreover, the Government have failed adequately to support our native nuclear industry, which would be well placed to capture an international market in small modular nuclear reactors for use in generating electricity.
Another free-market principle of the Conservative Party is that Governments should not interfere, via the operations of the central bank, in determining our rate of exchange with foreign currencies. This nostrum arose in consequence of the experience of our brief participation in the European exchange rate mechanism in 1992. The ERM was a prelude to the establishment of the euro currency. Britain joined the ERM with an overvalued currency at a rate that it was unable to sustain, despite the expenditure of a large proportion of its foreign currency reserves. An overvalued currency, which has made exporting our industrial products difficult and unprofitable, has been one of the prime causes of the failure of our industries.
Recently, the principle of non-intervention was restated firmly in this House by the erstwhile Parliamentary Secretary to the Treasury—the noble Lord, Lord Young of Cookham—when the Government were being enjoined to take steps to reduce the value of the pound relative to other currencies. In consequence of their assessment of the prospects of Brexit, foreigners are no longer as keen to purchase the pound, which has recently fallen markedly in value. We now have a currency that is enabling parts of our much-diminished industrial sector to respond to some renewed export opportunities. It is ironic that this devaluation is a consequence of a policy that threatens to inflict major damage on the economy. The Brexit enterprise has served to divert the Government’s attention away from the social and economic problems that are afflicting us so acutely. That is why many critics regard the Government’s industrial strategy as a dead letter, although it has been proclaimed as a necessary adjunct of Brexit.
If we look back in time, we see that an overvalued currency which has inhibited our exports has been an affliction of British industry throughout the period since the Second World War. We emerged from the war with massive overseas debts and a currency that was still a principal medium of international trade and financial transactions. This international status ensured a high demand and high value for the pound, which was locked in place by the Bretton Woods system of international exchange.
Successive Governments felt compelled to maintain sterling’s rate of exchange for fear of what was described as a run on the pound, which was expected to result from any hint of sterling’s impending devaluation. The pound is no longer a major international currency. Nevertheless, the activities of our inflated financial sector have served to maintain its overvaluation. This crippling effect is barely recognised in any of the Government’s documents.
The financial sector has been largely responsible for the so-called inward financial investment of which both the White Paper and the Green Paper boast. This inward investment, which has served to maintain the demand for the pound and heighten its value, would be better described as divestment, since it has entailed the sale of British companies to overseas enterprises and investors.
We have sold our public utilities, including our water and electricity industries, our sea and air ports. We have placed the running of our rail network in the hands of foreign operators, which are typically nationalised industries. We are being charged grossly for the use of what ought to be our native facilities. This is bad enough, but the divestment has also made large inroads into our manufacturing industries, including our automotive and aviation industries. Our pharmaceuticals industry has narrowly avoided falling into the hands of overseas predators. We have recently divested ourselves of a key component of our electronics industry, which is the ARM chip manufacturer. I could greatly expand this list.
Not only has the value of the pound been sustained by these sales, but fortunes have been made by the financial institutions that have mediated the sales. This has given an illusion of high productivity within the sector, which has been extolled in the Government’s documents.
British companies that are in foreign ownership are not the most appropriate beneficiaries of a policy aimed at the regeneration of our industrial sector. They are liable to be treated by their foreign owners far less favourably than their home enterprises. These foreign-owned companies are liable to be the buffers that suffer the disinvestments and the redundancies that accompany the downturns of global economic activity. This so-called inward investment is liable to be considerably reduced in future, given that so little of British industry remains to be sold abroad.
I shall conclude this account with another aspersion against the financial sector, which has been recognised in the Green Paper but which has not been mentioned in the White Paper. This is the failure of our commercial banks to serve the needs of small enterprises. The enduring scandal of the treatment by the Royal Bank of Scotland of its business clients is a stark reminder of this failure. The unwillingness of banks to lend to businesses, allied with the limited prospects for growth through the sale of their products abroad, has meant that, for many years, our industries have failed adequately to invest in modern technology and equipment. I cannot see much chance of these prospects improving. Therefore, I fear that nothing will come of the Government’s industrial strategy.
Lord Mountevans (CB)
My Lords, notwithstanding the rather gloomy look on things by the noble Viscount, as an international shipping specialist for my entire career, and a former Lord Mayor of London, I see much to applaud in the industrial strategy. The proposals are wide-reaching, ambitious and full of purpose. There is no shortage of proposals, and the five foundations and four grand challenges under which they are grouped reflect the thoughts and concerns of many employers. Indeed these are matters which are of the utmost importance for us all.
That is why the strategy was welcomed in the City by firms that know how crucial automation, the physical and business environments, and infrastructure are to sustainable growth. Building on the point made by the noble Lord, Lord Heseltine, and taking up the point made by the noble Lord, Lord Prior, competitiveness should be central to this strategy, which, as the noble Lord, Lord Prior, said, is a work in progress.
It is true that the strategy has little to say on two key sectors. If we, as a nation, are to play as important a role in the 21st century as we did in the 20th century, we need also to recognise and maximise our existing competitive advantages, such as the financial and professional services firms that already employ 2.2 million people around the UK—two-thirds of them outside London. This sector is surely a vital ingredient in the future success of the industrial strategy and of the nation as a key facilitator of business.
While I welcomed the Government’s recognition in their industrial strategy Green Paper of the UK’s position as,
“a world leader in financial services”,
I was disappointed to see that the White Paper makes scant mention of the financial and professional services sector. A report commissioned by the City of London Corporation, where my involvement is on the register, and produced by PwC on the total tax contribution of UK financial services showed that financial services alone contributed an estimated £72.1 billion to the Exchequer—the equivalent of 11% of all UK tax receipts in the year to March 2017. Furthermore, financial services provide crucial support to businesses across the UK through access to capital, underpinning the financing of a significant number of British industries. The sector also provides the country’s largest trade surplus—a trade surplus greater than all other net exporting industries combined.
Across the UK, 21 towns and cities beyond London each have more than 10,000 people employed in the industry. Six cities have more than 30,000 people. These centres are aligned to the financial centres of excellence programme, promoted by the Government and launched by the former UKTI in 2015-16 with the support of TheCityUK. It is vital that in order to encourage these centres to grow and fulfil their role in supporting and enabling the UK economy, there is the right support for this vital and facilitating industry.
This is an industry where Britain is number one in the world, but our world—and, of course, European—leadership in this sector cannot be taken for granted. We face increasing international competition. TheCityUK, in partnership with PwC, has already set out its plans for the industry and a road map to implement them. The report looks at themes such as building regional financial centres and the growth of digitalisation. It estimates that if its vision for a transformed industry were to be realised, the economic benefit to the UK could be as high as £43 billion, with 70% of this growth taking place outside London.
During my time as Lord Mayor of the City of London, I witnessed first hand the efforts made to ensure that the UK remains a key destination for trade in financial services and a centre for innovation in products such as Fintech and green finance. However—here I nod to the ongoing Brexit negotiations—if the Government intend to attract new investment into the sector, as well as to retain and grow existing investment, increase financial services exports and promote job creation, clarity must be provided on three issues: transition, trade and talent. As TheCityUK recommended recently, the single most important thing is collaboration between industry, government and regulators, likely to be overseen by the Treasury, possibly as one of the sector deals floated in the industrial strategy, but definitely arranged to maximise the industry’s contribution to national prosperity.
The second industry which I suggest deserves a place in this strategy is maritime—a subject which your Lordships will be aware has occupied most of my professional life. I was privileged to be asked by the Government in 2015 to chair the Maritime Growth Study, which made a number of recommendations for keeping the UK maritime sector competitive. My involvements in maritime are on the register. This is another area where the UK is a world leader. The growth study highlighted our role as a one-stop maritime shop that exports worldwide and encourages inward investment.
The UK maritime sector is of strategic importance to the UK in two distinct ways. First, in its own right, it is a major economic contributor, with its net benefit to the country close to £40 billion and supporting just under 1 million jobs. Secondly, as an island nation, Britain transports 95% of its exports and imports by sea, making its maritime supply chain critical to its economic and social well-being. For both these reasons our maritime sector—again a key business and trade facilitator—will continue to underpin the future success of the country in a post-Brexit world in which global trading opportunities will never have been more important.
Under Maritime UK, which brings together the principal trade associations and other interests in this wide and diverse sector, the industry has been working closely with government to implement the Maritime Growth Study report and sees the industrial strategy, and an ambitious maritime sector deal, which we are working on, as powerful tools to increase the pace of this work. The aim is to ensure that the UK maritime sector which includes our vital ports, ship-owning, and I am pleased to report that the UK register is growing once more, resurgent shipbuilding, partly reflecting defence work, of course, and vibrant boat building, innovative marine engineering and world-leading professional services, universities and training establishments is best-placed to serve the rest of the economy, and enhance its role as a competitive, innovative and dynamic world-leading sector.
I do not propose to list all the initiatives under way that can, I hope, result in sector status for maritime. Many of the world’s leading maritime industry research and training institutions, manufacturers and service providers are located in the UK. The sector features globally recognised and industry-leading brands that drive forward key developments in equipment, product design and technical innovation. Research and development in the maritime sector is extensive, supported by the world-class capabilities of UK universities and research institutes. The UK’s maritime research landscape is further enriched as a result of the large number of small and medium-sized enterprises at the forefront of R&D innovation.
The UK has the potential to be a leading player in maritime autonomy and therefore the emphasis the Government’s strategy places on robotics and artificial intelligence is most welcome. Indeed, maritime autonomy is an area where we are considering a sector deal bid. Skills implications will be a key part of this discussion, and, on skills, I particularly commend the industry’s request for additional funding for the SMarT Plus officer training scheme.
Industry and academia have developed proposals for the creation of maritime research and innovation UK, to bring together the UK’s excellent academic and research institutions with industry to address the demands for applied R&D. In recognition of the existence of a number of highly valued bodies around the country, the centre should be based on a hub and spoke model, similar to that of the High Value Manufacturing Catapult or the composites catapult in Bristol, fully to utilise the substantial infrastructure which currently exists in the UK, and there will be more.
Our ports remain a global success and a local necessity. It is vital that when looking at the infrastructure investment under the strategy, the connectivity of our ports is improved. Recent research confirmed that coastal towns are among the most deprived, so ports such as Felixstowe, Grimsby, Dover, Glasgow and elsewhere provide employment for local people who often do not have an array of other opportunities. Greater support for the UK’s maritime sector—for example, by developing the skills base—would, therefore, represent an investment in the prosperity of some of its most challenged regions.
In conclusion, while I strongly commend the Government’s efforts to produce a framework for a much-needed modern industrial strategy, I urge the Minister to consider the benefits of widening the scope of this plan. The importance of sectors such as financial and professional services and maritime—both great bastions of British industry—cannot be underestimated if we are serious about,
“building a Britain fit for the future”.
Therefore, I take my hat off to the Government for their work so far, but invite them to extend the breadth and range of the sectors that might be included.
The Earl of Lindsay (Con)
My Lords, I welcome the publication of the White Paper and the Government’s commitment to boosting productivity and earning power across the UK.
As many noble Lords have mentioned, there are a number of positives, such as the strategy’s recognition of the importance of collaboration and partnerships and the Government’s increased commitment to R&D and innovative technologies.
Proposals to upgrade the United Kingdom’s infrastructure are another positive. I noted that my noble friend said in introducing the debate that high-quality infrastructure is vital, referring to digital and physical infrastructure. However, there is an important omission in the White Paper’s references to infrastructure. In drawing attention to this omission, I should declare an interest as chairman of the UK Accreditation Service and president of the Chartered Quality Institute.
One of the essential factors underpinning productivity, earning power, innovation and competitiveness is a framework of quality standards, accreditation, measurement and regulations which ensures that when businesses and consumers buy or receive something they get exactly what they expect. For standards, accreditation, measurement and regulations to be fully effective, they must be designed and implemented rigorously and consistently to give a high level of confidence in the outcome. The importance of achieving this consistent quality and rigour has led to the concept of a national quality infrastructure in the United Kingdom and, indeed, in a number of other leading economies.
A national quality infrastructure has four core components: standardisation, which creates the national and international standards that specify good practice in how products are made or services are provided; conformity assessment, which involves testing and certification to ensure that the quality, performance, reliability or safety of products and services meet the required specifications and standards; accreditation, which ensures that those who carry out conformity assessments such as testing, certification and inspection do so in a way that is competent, consistent and impartial; and finally and importantly, measurement, which ensures accuracy, validity and consistency.
A national quality infrastructure that commands confidence is vital to earning power, productivity, research, development and new technologies. Indeed a national quality infrastructure is vital for any industry and any modern economy. Furthermore, and of especial relevance as we prepare to leave the EU, a recognised national quality infrastructure also supports international trade and is an essential component of any free trade agreement; hence the use of national quality infrastructures to underpin WTO rules on eliminating technical barriers to trade through the acceptance of international standards and the mutual recognition of accredited conformity assessment results and regulatory equivalence.
The UK’s national quality infrastructure is largely delivered by four long-established and internationally respected institutions: the British Standards Institution, or BSI, which is the UK’s national standards body responsible for producing national and international standards; the National Physical Laboratory, or NPL, which is the UK’s national measurement institute; Regulatory Delivery, or RD, which is the part of the Department for Business, Energy and Industrial Strategy. that provides the regulatory and market surveillance infrastructure that enables businesses to export goods globally; and the United Kingdom Accreditation Service, which is the UK’s national accreditation body. As the UK’s national quality infrastructure, their combined contribution to productivity, earning power, industry and the economy should not be underestimated.
Independent research on the economic contribution of standards to the UK economy found that around 37% of UK productivity growth and 28% of annual UK GDP growth can be attributed to standards, the latter figure being equivalent to £8.2 billion per annum, and that standards also account for £6.1 billion of additional UK exports per annum. The benefits of accreditation to the UK economy are worth over £600 million in terms of those commercial benefits that can be measured against financial indicators, but this figure is probably closer to £1 billion per annum once unquantified trade and productivity benefits are taken into account.
In short, the wider benefits to the UK of our widely trusted and internationally respected national quality infrastructure include: improved business productivity and performance; increased domestic commercial activity; more innovation and faster commercialisation of innovation, creating new markets at home and abroad for UK businesses; better, safer, more sustainable and more tradeable products; increased competitiveness in international markets; reduced costs of international trade, and increased confidence on the part of non-UK investors in the United Kingdom market.
I therefore believe that the White Paper should have explicitly recognised the role of the United Kingdom’s quality infrastructure, and that my noble friend should have referred to not just a digital and physical infrastructure but to a digital, physical and quality infrastructure. Quality underpins confidence, confidence underpins investment and investment underpins productivity, growth, jobs, new technologies, exports and a lot more besides. A culture, commitment and reputation for quality, manifested through a robust national quality infrastructure, are essential to a successful industrial strategy and a successful economy. With this in mind, I urge the Government to ensure that the new independent industrial strategy council, which I welcome, includes among its membership an understanding of the vital role performed by the United Kingdom’s national quality infrastructure and the valuable contribution it can make in the future.
Lord Stunell (LD)
My Lords, it is a pleasure to take part in this debate. I also welcome the production of the industrial strategy. I am pleased to follow the noble Earl, Lord Lindsay, with his strong emphasis on the need for quality infrastructure—a point to which I shall return in just a moment or two. I shall also draw in from one of the other threads of the debate what my noble friend Lady Randerson said, when she identified the 4 million shortfall in skilled workers that the UK economy faces in the near future. I also pick up what the noble Lord, Lord Maude, said, when he said to remember to talk to the small companies. I shall just weave in that social enterprises will not, I hope, be left out of that consideration as well.
Some of the strands of this debate have looked at whether the strategy is just repackaging or whether it is chasing the moon—but I shall take it at its face value as being a new and very important contribution to setting the UK economy in the right direction. The foundations set out are broad but sensible ideas, with much more to come on research, innovation and people, to develop a world-class skills training to match higher education. That is a very big objective to achieve, as many speakers have pointed out. There is to be an enhanced business environment so that companies can start, grow and prosper, as well as investment in infrastructure, particularly in transport, housing and the digital environment—and, in places, levelling up growth and providing job opportunities in every part of the kingdom. Those are very big and broad objectives.
The report talks of the grand challenges of artificial intelligence and big data, green growth and mobility, and of an ageing society. I suggest to your Lordships that as well as those four big challenges there is one missing challenge necessary to be met before the five foundations can be delivered, the challenge of a shrinking labour force and a reducing capacity to deliver in the one industry that is central to the delivery of all of that—the construction industry. That is not just a nice-to-have industry, but a vital one. If you want the ideas foundation, you will need laboratories and workshops, and they will need to be built. If you want world-class skills training to match higher education you will need buildings to conduct it in, and you will need laboratories, workshops and, possibly, a revamping of many of our colleges of further education. If you want a business environment where companies can readily start, grow and prosper, you will need the construction industry to deliver.
I could go on—but let us just take housing. If you are going to double housing production, in very broad terms you need to double the construction force building those homes. I am sure that the Minister will talk about modern methods of construction, but not I think a 50% improvement in productivity in the next two years. If you want to level up growth across the country, whether it is with the northern powerhouse or any other of the regional development strategies, that also requires the construction industry. I labour that point because I welcome the planned construction sector deal as far as it goes, but I put to the Minister that it lacks urgency and a means of delivery, and it underestimates the size of the task.
Page 24 of the strategy states:
“There will, inevitably, be uncertainty while we determine the precise nature of our future trading arrangement with the EU. To minimise this, we are seeking to agree an implementation period, of around two years, to allow business time to adapt to the new arrangements”.
The bit of that that I take issue with is the suggestion that there is any uncertainty. Actually, there is a considerable degree of certainty about what will happen in relation to the construction industry. We know, for instance, that 8% of its workforce is currently from the EU 27 and, in London, 50% of the workforce in construction is from the EU 27. The ICE, supported by KPMG, produced a report submitted to the Exiting the European Union Committee in the Commons, which showed that, if the kind of infrastructure investment which I have just outlined and which is outlined in the Government’s strategy is going to be delivered, the construction industry needs an increase in capacity of 35%, whereas, if Brexit goes ahead and the Government are successful in reducing inward migration, as they clearly intend they should be, the capacity of the industry may shrink by 8% and by much more in London.
It is instructive to read the Government’s own impact assessment, so-called. Obviously, I cannot reveal in this place what I read when I went there; I am sure that the Minister will have read it and will be familiar with it. It is a very good primer on what the construction industry does, how it is organised and how the legislative framework runs round it. That is section 1—section 2 outlines the sector’s fears over what will happen with Brexit, and what will happen with labour. Then section 3, where the analysis, proposals and alternatives come, is absolutely and completely blank. I apologise for revealing that to the House when I swore that I would not do so. But I make it clear that the Government’s own assessment of the industry makes it clear that these are real problems. In case that is not sufficient, there is the construction industry’s own Brexit manifestos and the Construction Industry Training Board White Paper—and, of course, just before Christmas, the Home Builders Federation produced a report along the same lines.
I think that the Minister will say, “Yes, we’ve listened to all that, and we’re working with the Construction Leadership Council to make construction one of the first sector deals of this industrial strategy”. That is okay, as far as it goes, but the industry is now, this year—or last year, anyway—losing 70,000 people from its labour force by retirements, and is recruiting from UK residents fewer than 40,000 people per year. It is topping that up by inward migration, predominantly, at 90%, from the EU 27. People might think, as a caricature, that it is bricklayers and plumbers—but the RIBA says that 25% of the registered architects practising in London are from the EU 27 countries. So this is a problem that will affect the construction industry and the Government’s capacity to deliver their whole industrial strategy from top to bottom.
The Government have a problem, because they want to do two things. They want to stop inward migration. Perhaps the Minister does not want to—and there may be some caveats about that—but it is a fundamental driver to reduce inward migration. At the same time, the strategy will increase the need for the construction industry to deliver by 35%. Slowing down the flow in and expanding the delivery, all in time for the next general election, sounds like a pretty tall order to me. The measures here, and the construction deal in its embryonic form, are no match for the task of supporting an expanded and strengthened construction industry that could deliver on the industrial strategy’s five foundations or meet the four grand challenges.
What is needed first is world-class skills training. Let us suppose that this can be begun in September this year. It surely cannot start earlier than the new autumn term. That means that the first apprentice from this will be available on site and in the design offices in June 2022. The first engineers and architects will be available in June 2023 and 2024. Assuming that everything goes to plan and people can be recruited, people with the high level of skills needed will not be available until 2022, 2023 and 2024. This means that the absolute priority for the construction industry has got to be retaining the existing EU 27 workers who are currently in the workforce and making sure that there is a long-term, simple and cheap transition period for the industry to fill the gap in the meantime. The possibilities of expanding the workforce both by volume and by period of time are vital issues to be addressed.
Having, I hope, convinced the Minister of the need for that long transition deal and easy access to EU 27 labour, the second need is for a strong and stable pipeline of public investment. Picking up on what the noble Lord, Lord Maude, said, 90,000 small companies are delivering almost half the output of the construction industry. Some 86% of those are very small companies with fewer than two employees. They have low incentives to engage in training. They have an unworkable apprenticeship levy to handle. If you are a bigger company, there is no incentive to spend on research, innovation or modern methods of construction or to build productivity unless there is a long-term commitment of public investment in the construction industry.
Thirdly, we clearly have to double skills training. That means retaining trainees in the existing training programmes. Eight out of 10 building trade apprenticeships which start do not result in people going into the construction industry; only two out of 10 of them do. This is, of course, because other offers come along and the construction industry is not seen as very high status. We have to appeal to the whole workforce, only 9% of whom are women. As my noble friend Lord Addington very ably demonstrated, a significant slice of people are excluded from ready entry to such apprenticeships because they do not have the statements to which he referred or the capacity to participate in the standard tests which apply at the moment. Interestingly, one of the largest building contractors that I have been speaking to said that his recruits last year were gamers. They are now looking for people who understand three dimensions and artificial environments when they are designing.
Finally, it is good that the Government have got an industrial strategy and that construction features in it. However, the Minister needs to recognise that construction cannot deliver what the strategy sets out without a huge step change. It cannot deliver 1 million homes and the infrastructure for that export-led boom will remain unbuilt unless the Government pick up the challenges to the construction industry which should have been in this report.
Lord Mair (CB)
My Lords, I give a warm welcome to the Industrial Strategy White Paper. I will focus my remarks on its infrastructure aspects and the construction sector deal. I fully support the concerns expressed by the noble Lord, Lord Stunell, on the shortage of skills in the construction industry and the implications for it of Brexit.
I declare my interests as head of the Centre for Smart Infrastructure and Construction at Cambridge University, president of the Institution of Civil Engineers, and chairman of the Department for Transport’s Science Advisory Council.
The White Paper has much in it to be applauded and many important aspects. It is—like the Green Paper—a much needed document, and gives strong emphasis to collaboration between government, business, science and technology. The test is whether it has the capacity to make a powerful difference. I recently chaired an event at the Institution of Civil Engineers, soon after the White Paper was published, at which three new infrastructure reports were launched. The Treasury’s Infrastructure and Projects Authority and the Department for Transport joined together to launch these reports to form the Government’s future agenda for infrastructure delivery. These were: Transforming Infrastructure Performance; Transport Infrastructure Efficiency Strategy; and an update to the National Infrastructure and Construction Pipeline. Put together with the White Paper, we now have four substantive documents from three government departments. All of these recognise the urgent need to improve the performance of our infrastructure to help boost the productivity of the industry and deliver better outcomes for society.
The White Paper also considers the broader societal outcomes from infrastructure investment, and their influence on decision making. This will go some way to address the more chronic problems of regional imbalances, low wage growth and weakness in skills. The confirmed increase in size of the National Productivity Investment Fund—the NPIF—will help to address these problems, but this must be done in a transparent and considered way to maximise the benefits from the investment. Infrastructure covers eight government departments and 26 Ministers. It is a sector that for every £1 billion spent increases overall economic activity by around £2.8 billion. It is therefore of the utmost importance for the Government to work across all their departments and the industry to ensure that the NPIF is spent on projects that will maximise this return.
I praise the Construction Leadership Council’s efforts to ensure that the construction sector deal was in the first round of such deals to be announced in the White Paper. It has real potential to make a powerful difference not only to the infrastructure sector but to the UK’s economy and productivity. Underpinning the sector deal will be three key strategic themes that will potentially transform the construction industry. The first is digital: delivering better, more certain outcomes using digital technologies, particularly building information modelling. We are in the midst of a digital revolution that must be fully exploited, including artificial intelligence and machine learning.
The second strategic theme is manufacturing: improving productivity, quality and safety by increasing the use of off-site manufacturing. This also has the potential to rebalance jobs more equitably throughout the country, improve value for money from public investment and minimise disruption to local communities during the construction process. An excellent illustration of this is a comparison of two stations being built for Crossrail. At Tottenham Court Road, the platforms were built using conventional in-situ concrete technology—casting concrete on site—whereas at Liverpool Street station the platforms were built using off-site manufacture, the key concrete components being cast in a factory in the Midlands, brought to London and assembled on site. This off-site manufacture resulted in hugely increased productivity. The Government have made off-site manufacture for construction an immediate priority as the delivery mechanism of choice for five government departments. This is to be welcomed.
The third strategic theme of the construction-sector deal is whole-life performance: getting more out of both new and existing infrastructure through the use of smart technologies, especially sensors and data analytics. This “smart infrastructure” will certainly lead to improved and more economic designs. It will also revolutionise asset management: data generated by sensors will enable continuous monitoring of an infrastructure asset throughout its life, providing information for more rational maintenance and repair strategies. We will be able to understand exactly how a building, tunnel, bridge or railway line is performing during construction and throughout its lifetime. This will substantially reduce infrastructure operating costs. Importantly, it will also enable much more rational prioritisation of the nation’s infrastructure requirements.
Close to £500 million will support the construction sector deal. Part of this investment will support the new Centre for Digital Built Britain, based at Cambridge University. This will develop and commercialise the digital technologies behind the smart systems at the heart of tomorrow’s homes, as well as new and innovative construction techniques. This should mean housing, schools and hospitals that are not only quicker and cheaper to build but cost less to run and are more energy efficient.
Finally, it is important that we do not look at the Industrial Strategy White Paper as one stand-alone document from one stand-alone government department. As emphasised by the noble Lords, Lord Mandelson and Lord Heseltine, it should be a working document that does not stand still in time. It should catalyse continuous collaboration between all relevant government departments, industry and trade bodies. This includes working with the National Infrastructure Commission to ensure that its national infrastructure assessment is incorporated in the future development of the White Paper, together with the Institution of Civil Engineers’ National Needs Assessment.
In his introduction to this debate, the Minister rightly emphasised that if we want to be a world-class economy, we need world-class infrastructure. To achieve this we need drive, vision and expertise, as envisaged in the construction sector deal. The timing of an industrial strategy that transforms our infrastructure could not be more appropriate—2018 is the Year of Engineering, as has already been pointed out by my fellow engineer, the noble Lord, Lord Bhattacharyya. It is also the 200th anniversary of the founding of the Institution of Civil Engineers, the oldest professional engineering body in the world. The engineers of the past knew how to build and operate effective infrastructure for society. We must exploit innovative, modern technology and continue this great tradition.
Lord Horam (Con)
My Lords, my first experience of a debate on industrial strategy was rather dramatic. In the early 1960s, I was a young reporter with the Financial Times, and in that capacity I was sent up to Scarborough for the Labour Party conference. Jim Callaghan was Chancellor of the Exchequer and made his big Chancellor’s speech. Half way through, Hugh Scanlon—a name to conjure with then but perhaps forgotten now; he and Jack Jones were the two great trade union leaders—got up and said, “But Jim, where’s the plan?”. Jim Callaghan looked a bit nonplussed for a second or two, but sitting next to him on the platform was George Brown, Secretary of State for Economic Affairs at the time, with the economic document that his department had produced. Jim grabbed it, held it up to Hugh and said, “Hughie, there’s the plan—that’s what we’ll do”. It was a great rhetorical moment and it brought the house down with cheers. I still do not know whether it was planned between Hugh Scanlon and Jim Callaghan or whether it was indeed an entirely spontaneous reaction to Hugh Scanlon’s impromptu remark, and I will not find out now. None the less, it was an example of that period of economic planning, of which the noble Lord, Lord Hennessy, will be well aware.
We come back to this again and again. As my noble friend Lord Heseltine made the point in his own document Industrial Strategy, this is the 10th time since the war that we have come back to an industrial strategy of some kind. There is a good reason for this. The fact is that government inevitably has a huge effect on industry and the economy generally through procurement, financing research and development, education and training, the defence department, technology and all such things. Therefore it makes total sense, even in a de minimis way, to get it all together in a mature and sensible way and to give it sensible leadership so that it can support the market economy in a sensible, professional and valuable way. That is why we have to do it. In addition, as was pointed out by my noble friends Lord Prior and Lord Heseltine, other countries are doing it ruthlessly—for example, China, which has a huge economy, and a tiny economy such as Singapore, which now has a higher standard of living per head of population than we do, because it has done that in spades. Even Saudi Arabia, for heaven’s sake, is now getting its act together with the rather more forceful leader it now has, and, as my noble friend Lord Prior points out, even the USA also does it—rather less obviously than the other countries, but it does it. The fact is that we need a properly thought-through industrial strategy if we are to survive and prosper in the world. Therefore, it is simply a question of whether we have the right priorities and whether we are going about it in the right way.
Surely a central priority that has come out again and again in this debate is investment in infrastructure, as the noble Lord, Lord Mair, has just pointed out, and in skills—a point made very clearly by the noble Lord, Lord Stunell. On page 172 of the document there is a shocking table showing fixed capital investment as a percentage of GDP. For every year from 2005 to 2017, the UK is consistently at the bottom—not just bottom in one year but in all the years mentioned. Even Italy is ahead of us. Germany is at 20%, we are at 15% to 18%, France is at 23% and so on.
Along with the huge problem of low infrastructure spending, we have problems with the digital economy, as pointed out by the noble Lord, Lord Mair. On page 152 of the document, there is another appalling table showing broadband speeds among the G7. For once, we are not at the bottom, but we are very low down and far from the top. This problem lies with BT. What is BT doing? It is depriving us of the facility to watch Champions League football and the Ashes test matches, although at the moment that is not a bad thing, given our performance. None the less, it is depriving us of the chance to watch these things for free, while it is not doing its job of getting speedy broadband distributed to rural areas throughout the country. Indeed, some urban areas do not have satisfactory broadband.
I am pleased that the Government will shortly put into law the right of every consumer to have high-speed broadband by 2020. They were right to face down the industry, which wanted a voluntary arrangement, and to go for a legal requirement by that year, but to liven up BT in this area they need to back that up with further recognition that more competition is needed. Plenty of people are willing to provide the competition and there is plenty of investment that recognises that this is a good area into which to put cash.
Another important area is skills. Technical education has been a Cinderella subject throughout my lifetime. The noble Lord, Lord Hennessy, made the point that people were talking about this 150 years ago, but the fact is that we are still failing in this area. In 2016, only 1,800 18 year-old school leavers in the entire country started higher apprenticeships. That is an astonishing and appalling figure. The latest statistics on apprenticeships show a 60% drop in the take-up of apprenticeships. Clearly something is going wrong here. The fact is that the bureaucracy is not delivering on a very aspirational and sensible policy. Therefore, I hope that whoever is the new Secretary of State—I have not heard the news today on whether the Secretary of State is to carry on or whether there will be a new one—
Lord Horam
Splendid. I hope the Education Secretary makes technical education a top priority. For far too long we have given priority to academic education; we now need to help the non-academic children in our society.
Finally, as a Cambridge economist, I agree with the point made by the noble Lord, Lord Eatwell, about the trade gap. The fact is that this has been bad, it is bad and it is getting worse. We pay for the trade gap only by borrowing or selling off assets. At the moment, exports account for only 25% of our GDP. In Germany, the figure is 45%. Even France and Italy are ahead of us in exports as a percentage of GDP. Only 10% of all the companies in this country are in the export field. Admittedly, most companies are small and therefore do not export. The figure is higher among medium-sized companies and 40% of large companies export, but the figure is still not that high.
If I may boast for a moment, I started an economic consultancy after leaving Cambridge and shortly after leaving the Financial Times. It is a medium-sized company, with 250 employees, and we export 92% of all our product. I have never seen a trade agreement—I do not know what they are. If you have a good product and a good marketing system, you can export; there is no problem with doing that. Therefore, this is clearly something to which we have to pay attention.
Finally, we should also be careful about selling off too many of our national assets. Alex Brummer’s book, Britain for Sale, points to the dangers of that. Foreign ownership often brings in efficiency and competence, which we need, but all too often national interests are not really followed by the new owners of these organisations. Therefore, I think we need a national interest test as well as the security and consumer tests that we have in relation to foreign takeovers.
I am sure that in these tumultuous and uncertain times we need an industrial strategy. This time, I hope that the one we have started will be sustained.
Viscount Chandos (Lab)
My Lords, at this late stage in the evening, I will try to speak briefly, with other noble Lords having already made many interesting contributions in response to the “compendium”, as the noble Lord, Lord Maude, has called the White Paper. I start by drawing the attention of the House to my entry in the register of interests.
“Every government has an industrial strategy however it is articulated”,
wrote Anna Valero and Richard Davies of the LSE in a recent paper. On that basis, perhaps even the nine different strategies that my noble friend Lady Young has counted are an underestimate. But the articulation of a strategy is important and, as the noble Lord, Lord Wrigglesworth, said, over the years—from Sajid Javid back to Nicholas Ridley, who in the Thatcher Government saw his role as Secretary of State to abolish the Department of Trade and Industry—there have been periods of industrial policy minimalism. So we should perhaps welcome the recognition by the current Prime Minister of an articulated industrial strategy. However, to adapt Dr Johnson, I feel churlishly that a Conservative industrial strategy is like the dog walking on its hind legs: it is not done well but you are surprised to find it done at all.
As the co-founder 30 years ago this year of the Social Market Foundation, I was heartened by the advocacy of the social market by the noble Lord, Lord Howell. Indeed, the noble Lord, Lord Wrigglesworth, invoked the Social Democratic Party, for which the social market economy was a central policy. It seems that the noble Lord, the Secretary of State, the noble Lord, Lord Horam, and I have all drunk together from that cup. In a social market, the Government’s duty is to intervene when there is market failure—but only then, whether that failure is on the one hand the abuse of oligopolistic power, or on the other hand underinvestment.
On the terms of the White Paper, I would like to talk principally about ideas and the business environment, and in particular the importance of venture capital. Last week, the Secretary of State for Transport talked about his confidence that the UK could be a world leader in autonomous vehicles, based on technological excellence and regulatory liberalism, if not laxness. If Mr Grayling is still Secretary of State, he seems to have been a victim earlier today of some faulty autonomous tweeting. I draw his attention to the advice of the noble Lord, Lord Heseltine, not to confuse healthy ambition with unrealistic assumptions. The network effect is likely to give a huge advantage to companies with scale, such as Waymo and Baidu. I hope and believe that the UK can contribute significantly to autonomous driving and other emerging technologies, but I am not sure it is helpful to couch it in terms of market leadership.
Autonomous driving will rely heavily on artificial intelligence and deep learning, another area of innovation highlighted in the White Paper. It may be worth bearing in mind in this context that 43% of all academic papers ever written on AI have had at least one author who is Chinese. As the noble Lord, Lord Heseltine, said, we face formidable competition. I hope the argument that students should not be included in the main migration figures, which the Prime Minister has so far ignored, even from within her own Cabinet, might yet succeed.
Another way of illustrating the scale of the challenge that the UK faces is to consider the availability of venture capital investment to support early-stage high-technology companies. I think it was Professor Ronald Gilson of Stanford and Columbia Universities who wrote that:
“Venture capital … is widely recognized as a powerful engine that can drive a nation’s innovation, job creation, knowledge economy, and macroeconomic growth”.
In 2015, $36 billion of venture capital funds were raised in the US and $30 billion in China, where the figure is up six times in 10 years. In Europe as a whole, only around $6 billion equivalent was raised. The British Venture Capital Association records only the funds raised by its members, so underestimates to some degree the size of the total UK market. Its figure for 2015 was only $700 million equivalent.
The White Paper and the November Budget drew on the patient capital review, commissioned in 2016. One of the recommendations from the industry panel was for a patient capital investment vehicle capable of co-investing £1 billion per annum in knowledge economy companies. In the event, the Government have announced a £2.5 billion fund over 10 years, to be run by the British Business Bank. That is around one-quarter of the amount recommended and it is to be floated or sold as soon as is possible—and this at a time when UK venture capital funds will be losing, in all likelihood, up to £400 million per annum of investment from the European Investment Fund, the SME arm of the EIB.
Why has the UK, with its powerful position in financial services, been so weak in the development of a venture capital industry in keeping with its academic, technological and entrepreneurial strengths? There is a clue perhaps in an article from Forbes magazine in April 2016. Forbes is not a magazine for bleeding-heart liberals, nor, I suspect, is it even the second-favourite reading of my right honourable friend the shadow Chancellor, but the headline of the article read: “How the UK’s Growth Businesses Became Addicted to Tax Relief”. The article was reporting on research commissioned by Her Majesty’s Treasury from Ipsos MORI that found that 40% of all investment under tax-advantaged EIS and VCT schemes would, in the view of the investors and the investee company, still have happened without any tax relief. Seventy-nine per cent of investors said that the principal reason for investing was to gain the tax relief. In 2012-13, £2 billion of EIS and VCT investments were made, implying the loss or deferral of tax revenues of between £600 million and £1 billion. The Government have in the November budget proposed some tightening of the rules for EIS and VCT eligibility to prevent, they hope, low-risk investments benefiting from tax relief as they have done in recent years.
However, this is a never-ending treadmill, remembering similar initiatives as far back as the 1980s and 1990s. Up-front tax breaks will invariably attract risk-averse investors and ingenious intermediaries. Even for risk investments there may be little or no additionality yet, at the same time as tightening the eligibility, the Government propose a doubling of annual limits for both investors and companies.
There are two adverse consequences of this: one is the loss of tax revenue and the other, arguably even more important, is the distortion of the market. Thirty years of tax-advantaged investing in unlisted shares—unique in major economies—has contributed significantly to the stunting of a professional institutional venture capital industry on the scale necessary to support our knowledge economy and comparable with those in our principal competing centres.
Breaking an addiction can involve cold turkey, not an appetising prospect for any of us—particularly at this time of year—so I accept that, even if this argument is regarded as valid, any further changes may have to be phased in. However, the Government have a long way to go before there is an effective venture capital industry to support the knowledge economy.
Lord Willetts (Con)
My Lords, I declare the interests that appear in my entry in the register of this House. I refer particularly to my role on the board of UKRI, which allocates research and innovation funding.
It has been an excellent debate on industrial strategy, opened effectively by the Minister. One reason it has been such a good debate is that the White Paper we are debating is a substantial and comprehensive document which has had, broadly, a welcome from all sides of the House. Some omissions have been identified. The noble Baroness, Lady Coussins, made a good point about foreign languages and, more widely, education, a key British export service industry of the 21st century, is underplayed in the White Paper. Of course there are challenges to come, most notably delivering on the great ambitions in the White Paper. As we heard in several powerful interventions, that must involve genuinely cross-government working; it cannot simply be the responsibility of one department.
Perhaps I may briefly challenge some of the assumptions behind one of the most widely repeated assertions during this debate, coming from that fountainhead of constitutional knowledge, the noble Lord, Lord Hennessy, which is that we have had eight, nine or 10 industrial strategies. Behind that is a set of assumptions: we cannot do it in Britain, we are always chopping and changing, and nothing lasts. If we are to make the case for an industrial strategy, the assumption that since the war Britain has been incapable of pursuing an industrial strategy is really rather an important challenge. If eight or nine White Papers have come and gone without making any difference whatever, one is entitled to ask why it should be different this time. My view, however, is that the reference to eight, nine or 10 White Papers is not accurate. I do not know how many White Papers there have been on pensions policy or transport. Especially from the 1980s onwards, it seems pretty clear that in key industrial sectors Britain has had sustained industrial strategies that have delivered conspicuous results. I should like to give three or four examples.
The first example is that of the automotive industry. We saw the virtual collapse of the British automotive industry and, after years of trying to protect it, the disappearance of our indigenous, domestically owned automotive industry. In the early 1980s we embarked on a strategy to recreate an automotive industry in the UK. It involved a deliberate attempt to attract overseas investment, beginning with Japan and shifting to the US and then India. It involved exploiting the advantages provided by that great Thatcherite project, the single market, to promote manufacturing in the UK as part of Europe-wide supply chains. It involved the systematic use of financial incentives to attract overseas manufacturing facilities here. It also involved integrated skills training. All those assertions that we have no vocational or technical skills rest on another misunderstanding. We have a large amount of technical and vocational training, and a lot of it happens in universities. The Universities of Sunderland and Teesside are dedicated to training automotive engineers to work in the local Japanese car plants, just as not only Warwick University but also the Universities of Coventry and Hertfordshire are training automotive engineers to work in the Midlands engineering industry. As a result of that policy, sustained by successive Governments of different political persuasions, we have seen in 20 to 30 years Britain develop a very successful and large-scale automotive industry. This was the result of a sustained industrial strategy.
My second example is that of the life sciences. The UK has great strengths in the life sciences, although of course there are challenges. We have seen a combination of sustained funding from the Medical Research Council allied with enlightened policies from the leading medical charities. We have had smart policies specifically targeting investment in medical technologies where our American competitors are at a disadvantage. Because of the power of the evangelical Christian movement in the US, there are considerable constraints on public funding for research in cell therapies. Therefore we have put money particularly into cell therapies, where we have a comparative advantage as the result of a crass US regime. We were the leaders in discovering genetic sequencing technologies and we successfully ensured that the sequencing of the human genome became public property and is not something that can be commercialised exclusively by US entities. As a result we have two very large pharmaceutical companies and a dynamic life sciences sector. There certainly are problems in getting the NHS to adopt innovation and purchase from our innovative companies, but I would nevertheless regard UK medical research and life sciences as the second example of a successful industrial strategy.
My third example is mobile phones. The rise of Vodafone as Europe’s leading mobile phone operator would not have been possible without a smart, carefully considered industrial strategy, notably through the EU writing regulations for mobile phone telephony that favoured the UK company Vodafone, which was not obvious in the early 1980s. It required sustained engagement in international standard-setting bodies, and then using European standards to access a global market, combined with a very enlightened regime from Ofcom. When we look at what gives us a comparative advantage in our industrial strategy today, a trusted, effective and nimble regulator is one of the best advantages we have. Moreover, the UK is fortunate in having several such regulators, which is why the ambitions in the White Paper for the UK to play a leading role in 5G and the internet of things are not absurd if Ofcom is as skilled in writing the regulations for those technologies as it was in writing the regulations for mobile phones.
Finally, the most conspicuous example, though we may all now be ambivalent about it, is the sustained support for the financial services industry—a deliberate decision that this was an area where we had a comparative advantage that we would invest in, where the regulations would favour it and the standard setting in Europe would be influenced heavily by us so as to favour it. Even the physical infrastructure—the extension of the Jubilee line to Canary Wharf—was done to favour this key sector.
So we should not go around saying that Britain cannot do industrial strategy, that we have never done industrial strategy and that it is always chopping and changing. Those are four examples of sustained, successful industrial strategy. We can do it. We have done it partly because the strategies were sustained across Governments of different persuasions. We have had powerful interventions in this House from a Labour former Secretary of State and from a Conservative former Secretary of State—two people who undoubtedly drove industrial strategy. It was a privilege for me to work alongside a Liberal Democrat Secretary of State. These policies have been sustained and delivered. We should not beat up on the British political system as being incapable of doing this. It is perfectly capable of doing it, but you have to look behind the flow of White Papers to observe sustained, coherent understanding of what you need to promote a technology or a sector.
There are challenges for the future. Although we have this extraordinary achievement of raising the growth rate of a mature industrial economy between about 1980 and the financial crash—a 25 to 30-year project in which all three political parties played a role—we now have challenges at both the top and the bottom ends. At the top end we need to do more to extract value from our high-quality research base. Again, we have had several references to the quality of this research and the golden triangle of Oxford, Cambridge and London. The golden triangle is not some happy accident or some bit of historical chance we happen to have. We have a golden triangle that is rivalled only by the US west and east coasts because of sustained public policy: the way research assessment exercises have been conducted to drive improvements in research performance, the way our research councils allocate funding, and the planning regime. This is not an accident; this is partly the consequence of sustained policies on a cross-party basis.
However, we need to do more and better. We have too many small companies emerging from universities too soon, often either vulnerable and insufficiently funded to survive or sold far too early to the US. That is certainly a British problem. Some of it is to do with our public funding having tended to be for upstream research and there not having been sufficient funding for the application of this research in big general-purpose technologies. That is an area where the industrial strategy White Paper signals that there will be significantly more effort, but we have Innovate UK, previously the TSB—an entity created by the previous Labour Government—which has now functioned for more than a decade and is plugging that gap very successfully. Of course, in the White Paper, although I do not believe it has been much referred to, there is this extraordinary commitment to move to 2.4% of GDP going into R&D and, beyond that, 3%, which would be transformational. Very large amounts and very large increases in public funding are already being delivered.
That is the challenge of the top end. The challenge at the bottom end is the underperforming tail that several noble Lords have referred to. Too many of our businesses underperform. Again, there is increasing evidence of what the problem is: managers who are insufficiently trained and educated to run a business successfully; hereditary companies, where owner-managers from a second or third generation tend to be associated with very low levels of productivity; and a set of rules on infrastructure investment that rewards places that already have economic activity and do enormous damage to places that do not. So there is a model of cost-benefit analysis that says that if you already have it there will be high returns for more infrastructure investment. That is at last being changed with amendments to the Treasury rules, so that we can take a strategic view of places that need infrastructure investment, even if they currently have low levels of economic activity.
Of course there are challenges, which the White Paper tries to address, but it would be a mistake for us to think that these are challenges that will defeat us because they have defeated British Governments in the past. We should take rather more pride in our historic achievements over the past 30 years than has been in evidence so far in the debate.
Lord Crisp (CB)
My Lords, it is a great pleasure to follow on from the noble Lord, Lord Willetts, and I shall pick up one or two of the points that he made. I shall talk mainly about biomedical and life sciences. I shall also try to be brief, partly because I am batting at No. 30 but partly because I am aware that my noble friend Lord Kakkar has already covered a great deal of this territory and I will try not to repeat what he said.
I had better declare an interest, as I am involved in various ways in the life sciences. Perhaps I should also mention that my son has recently benefited from changes, having become an innovation fellow of UK Research and Innovation at the Laboratory of Molecular Biology in Cambridge. The LMB is an extraordinary symbol of the strength of the UK’s biomedical and life sciences. It is said that it has a Nobel Prize winner on every floor and it has more than one floor—I think that it has had 19 to date.
I welcome this strategy and approach. There have been some significant changes in this area already, but I want to refer to three concerns. My noble friend Lord Kakkar and I are part of the All-Party Parliamentary Group on Global Health. The APPG mapped out the UK’s contribution to global health in four areas: in academia, commerce, government and the NGO sector. It demonstrated what we knew: that the UK was a global leader in these areas and that in academia, on some measures it beat the US as well as everybody else. There are some 4,800 biomedical companies, with a turnover of £55 billion. In Cambridge alone, there are 431 biomedical companies, already employing around 13,000 people. However, as we wrote the report, we came across the problem which the noble Lord, Lord Heseltine, referred to in that we began to worry that we were simply mapping out the high points, the point at which historians might say that the UK was at its best in biomedical and life sciences, so we urged urgent action.
There has been some. Developments since then include Sir John Bell’s excellent report on a life sciences strategy. I know that my noble friend Lord Kakkar talked about that, so I will not. It and we argued for synergy across these sectors—between academia, commerce, government and NGOs—and asked how we could maximise that synergy.
The particular area that I will talk about, and my first concern, is the NHS. The NHS appears at the moment to be in decline, and it must be seen as part of the solution and not as a problem. There are three aspects here. First, the NHS should be a test bed for developments within the life sciences. It could accelerate adoption and be used in ways about which the noble Lord, Lord Mandelson, spoke early on in this debate. There is a second role that the NHS plays in life sciences and biomedical research, which is about training and developing the talent. The clinical researchers who go on to work elsewhere have trained in the NHS. It provides massive strength as a foundation to this whole sector. The third aspect is that a healthy population is a boost to productivity. So the NHS is vital to the sector, yet it appears to be in decline. It is going the wrong way. There is a danger that the NHS will be blamed for not innovating when it is in this situation.
I was struck by what the noble Lord, Lord Heseltine, said about it not being surprising that Secretaries of State did not concentrate on industrial strategy because they were concerned with the issues of the day. That is even more the case, I suspect, for chief executives, chairmen and leading clinicians: their first problem is dealing with survival, particularly at the moment. My first concern is therefore whether the NHS is being supported enough to be able to support this industrial strategy.
My second concern links to that and to a wider point, which is the alignment of the strategy generally with the domestic policy agenda, which the British Chambers of Commerce has talked about that. That does not just mean alignment with education but includes some of the points that noble Lord, Lord Howell of Guildford, made about morale, what society is like, who benefits, wider cultural issues and social enterprise. We have to go further, I suspect, in all those areas. We cannot concentrate on industrial strategy to the exclusion of others. I was struck by the way that the noble Lord, Lord Prior, pointed out that they should be same thing and there should be real alignment between these various areas of strategy. We see successful countries doing that. I was struck on a recent visit to Singapore by how it was focusing very much on the whole range of policy as it develops its strategy for the future.
On my third concern, staffing and migration policy, I shall simply quote from Sir John Bell’s report, which says that we should:
“Establish a migration system that allows us to recruit the best international talent”,
which,
“allows recruitment and retention of highly skilled workers from the EU and beyond, and does not impede intra-company transfers”,
when people are already in this country.
I am very positive about this strategy, and in many ways I see it as being very energising. Knowing people in the world of biomedicine and life sciences, I can see people being energised by recent developments, but I think there are three possible seeds of failures in what I have described here: in an NHS apparently in decline, in the non-alignment with all of our domestic policy and in immigration policy. I would be interested to hear the Minister address these three points.
Baroness Rawlings (Con)
My Lords, this has been without doubt an important and fascinating debate, demonstrated not least by so many distinguished, knowledgeable speakers. I read with great care the challenging response published last November by my noble friend Lord Heseltine. It had serious ideas, as did his speech, of course. It was inspirational and prompted me to put my name down to speak today. I welcome the White Paper, which concentrated on five foundations and grand challenges. They were covered eloquently by noble Lords, so I will not go into details.
However, there is one challenge that has troubled me for some time. It concerns artificial intelligence and the data revolution, and how vitally these two relate to our freedom and security. The Minister mentioned the importance of the safe and ethical use of data. I have just one question for my noble friend regarding data and national security.
Many people probably had difficulty understanding the complexities of the industrial revolution in the early 19th century, but today’s data revolution, progressing at lighting speed, is even harder for many to understand. For example, the noble Lord, Lord Kakkar, described clearly how vital data is today in the National Health Service and why it has to be secure. I am sure that many noble Lords know that one of the largest industries in the United States, and growing fast, is data centre storage. In 1998 our data centre storage in warehouses was British-owned and controlled. Worryingly, it seems that it is now in foreign hands. The noble Lord, Lord Mountevans, questioned wide foreign ownership in many industries, but is data storage not a risk too far?
Some people think that all data is held in the sky, in the cloud. This is not the case. These data centre warehouses are on land and store all our data, confidential or not. It is a colossal business and as such should surely be included in our industrial strategy. Nigel Evans has raised concerns on this in the other place, as did Dan Jarvis, who sits on the Joint Committee on the National Security Strategy. He said:
“We would never countenance replacing the Royal Marine Fleet Protection Group that guards our nuclear weapons with a foreign-owned security company”.
However, the Government, when questioned recently on data centre storage security, answered that this was a commercial matter. Bearing in mind all the positive points made so eloquently by my noble friend Lord Willetts, can the Minister reassure your Lordships that the foreign ownership of data centre storage will not have a detrimental effect on our industrial strategy? I would be more than happy with a written answer in due course.
This debate is not only about the future prosperity of our country; our future also depends on our freedom and security. As Karl Popper said in 1945, and it is as important today as it was then:
“We must plan for freedom, and not only for security, if for no other reason than that only freedom can make security secure”.
That is the climate for our industrial strategy to succeed and flourish.
Lord Fox (LD)
My Lords, I, too, welcome this debate and the White Paper. I refer Members to my declared interests. The debate has been far-ranging, with much wisdom and experience. Your Lordships will be relieved to hear that I will not try to distil the whole debate in my speech. But I note, as others have, the commonality and the coming together of the language that noble Lords have used in describing an industrial strategy. As many have noted, from the noble Lord, Lord Heseltine, to the noble Lord, Lord Mandelson, to the coalition, through to today’s White Paper, the curriculum has begun to come together.
However, before we become too self-congratulatory about that, the White Paper is designed to, and does, paint big pictures—pictures that many noble Lords can pick up and take something from. As the noble Lord, Lord Prior, pointed out, the harder part is the next step—the implementation. That is where the nitty-gritty—the friction—will come. We heard some preludes to that from the noble Lords, Lord Heseltine, Lord Wrigglesworth and Lord Stunell, who started to set out some of those challenges. For this reason, I will unapologetically focus in on some of the nitty-gritty in that implementation. I trust that if the Minister is unable to answer today, he will provide a written answer. Looking at the paper in front of him, I suspect that he has rather a lot of questions to answer already.
During the launch of the White Paper, very little was said about how the strategy would be driven, measured and assessed. As other noble Lords have pointed out, it was announced that the Cabinet committee chaired by the PM would be at the apex of the strategy. Can the Minister tell us when, if and how often this committee will meet, and who else will be involved?
Moving on, we talked about the industrial strategy council. The noble Lord, Lord Hollick, brought that into focus, saying that it has to be focused on outcomes. How will it be funded? What metrics and benchmarks will it hold the strategy to? How will it hold the Government to account? Will it be at Cabinet level or Select Committee level? Who will be on it and how will members be selected? In other words, how will it maintain an independent view? Actually, will it be able to maintain an independent view as an OBR-type organisation? Perhaps the desire of the noble Lord, Lord Heseltine, to have an organisation that can look ahead as well as back may be possible within that, but a lot depends on the questions I have just asked.
As to delivery at local level, a lot has been said by many people. The challenge of place is important, not least around the equality issue that a number of noble Lords on both sides of the House made very strong points about. The challenge of overlapping responsibility, as illustrated by the noble Lord, Lord Heseltine, is huge. For example, in terms of training and small business development, there are 133 organisations doing small business development in Cheshire alone. This level of duplication and lack of focus really will get in the way of a meaningful delivery of local industrial strategies, so how are the Government going to develop that necessary focus?
We also talked about civic leadership. Beyond the seven mayoral areas, my noble friend Lady Randerson pointed out that we need to find ways of developing that civic leadership in areas where there is no mayoral leadership.
Local enterprise partnerships have been mentioned. The paradox here is that they are generally weakest in the places where we most need what they might do. How are the Government going to address that issue if we do not have a single, unitary focus? LEPs are going to be an important part of it so where do they feature in the Government’s thinking and what are they going to do to make them work where we need them most? The noble Baroness, Lady Valentine, raised a relevant query about how local industrial strategies will be trialled and where. Again, we need more details around how that will come.
Regarding funding, on the positive side, to date the Treasury has signalled support for the research and innovation elements of the strategy. That has been extremely positive and I agree with the noble Lord, Lord Willetts, that we should all be behind that process. The industrial strategy challenge fund has been a focus, and the noble Lord, Lord Kakkar, and others have made it clear that we have to ensure that basic research also gets the necessary funds and that it is not all going through a challenge route, because that basic competence is the magnet that draws so much to the United Kingdom. Going back to the challenge fund, I think that wave 2 funding has been decided. Can the Minister explain how that decision process will be in train for further and future waves? Perhaps he can also help us with some maths and tell us, after the money which has so far been announced by the Government, how much money is now left for future challenges.
More widely, some examples within the White Paper which highlight and demonstrate the Government’s commitment are actually partially, or largely, funded by the European Regional Development Fund. We have not seen guarantees of where and how all that ERDF funding is going to be replaced. We would like some indication about that because there is a danger of it leaving some very important projects in limbo. That would hardly signal the long-term approach that the White Paper promised. Perhaps the Minister will be able to address that issue.
As many noble Lords noted, including the Minister himself, a meaningful industrial strategy has to encompass and embrace industry 4.0—the automation, digital and robot revolution. I was surprised and perhaps a bit disappointed that neither the Minister nor anyone else mentioned the Made Smarter Review, which the Government commissioned and contains some very strong and specific recommendations. The last time that the Minister and I engaged on this subject was the day after he took over. I hope he has now had a chance to study the report and can let us know where he feels some of those important recommendations should come. Now is not the time and place to go through them all but one was about a national adoption mechanism, which starts to address the long-tail issue mentioned by a number of noble Lords. There is a very long tail of small and medium-sized businesses for which embracing industry 4.0 or the digital age is going to be difficult. Frankly, they are not going to be much driven by it. The Made Smarter Review put together a strategy on how the Government can start to lead that process, bringing that long tail up to speed. So far the Government have passed on opportunities to fund it, the most recent Budget being the most recent opportunity. Perhaps the Minister will say where that lies in the firmament of opportunities to invest in items.
Many words have been spoken today about training and skills. The noble Lord, Lord Bhattacharyya, highlighted what I think he called the skills mess. However the Government, and certainly the Minister, presented a very rose-tinted view of where we are on training and skills in the White Paper. If there is any part of the White Paper that I would urge the Government to go back into, it is that one. There are huge challenges, some of which have been outlined by noble Lords. I will pick up on a couple.
One is the terrible outflow already of EU 27 talent. We are seeing it from academia and from industry, and the Government need to find a way of staunching that now, as well as embracing some of the issues that the noble Lord, Lord Maude, brought up around free movement and ways of making sure we can remain the magnet for talent that we have become within the European Union. We have to find a way of doing that.
The second point, highlighted by the noble Lord, Lord Horam, is the apprentice system and, frankly, the disarray that we currently find it in. All of us hope that this disarray is temporary and is about the apprentice levy being worked through, but there is a suspicion that there have been quite a lot of dropped balls when it comes to the implementation of this. It has also impacted other areas, particularly vocational training and other colleges where accreditation has been interfered with by the system. I would ask the Government to redouble their efforts to clear up the mess that appears to have been created around the apprentice levy.
We have not talked a lot about teachers, but the STEM teachers of the future come from the student body we have. That is a lot of pressure on teaching. Teacher recruitment has constantly missed targets, which have generally, a bit like in the construction industry, been filled by recruits from other EU countries. Clearly, the possibility of Brexit is already creating uncertainty for those potential recruits. At the same time, the number of domestic recruits has plummeted. The Minister has some big challenges here around skills. There is a real danger that this industrial strategy could be dead in the water from the outset due to the absence of the people to actually deliver it. The Minister needs to acknowledge that and perhaps tell us how the White Paper, and certainly its implementation, can address that challenge.
We clearly have a long way to travel: as the noble Lord, Lord Prior, said, this is the hors d’oeuvre, and we have a great deal of hard work to get to the nuts and port. However, the fact that the Government and all those in opposition are debating this on the same terms should be taken as a positive. We are using the same language, which has a big benefit. Wise Peers have noted that we need to develop, engender and move forward that consensus in order to smooth this delivery process. I agree with that. We face an uncertain future and, as the Minister said, we are at a critical point.
Lord Mendelsohn (Lab)
My Lords, we have had a quite outstanding debate, with a very encouraging level of consensus. We have heard some very forthright comments, a litany of lessons learned, and some very thoughtful challenges and criticisms. Indeed, nowhere is the chequered history of how the industrial strategies have been described better known and understood than in this place. We have had the pleasure of hearing from some of the people who have been the architects of industrial policies and of great things in our country how they did it. It has been an extraordinary debate and one I felt hugely privileged to be part of. I am also extremely pleased I am not the Minister who has to respond to it.
One thing that I felt during the course of the debate was best expressed by that character Yogi Berra—the US baseball star who played for the New York Yankees from the 1940s to the 1960s and was well-known not just for his great play but for his impromptu pithy comments, malapropisms and seemingly unintentional witticisms—when he said, “It’s déjà vu all over again”. Here we have another debate about the industrial strategy, but the times are very different and there is a very important context in which we are doing this. It is understood, here and in other parts of the world, as a reaction to the issues that have arisen as a result of the financial crisis and the problems of growth and the squeeze in wages felt across many parts of the world.
There have been many evolving views, crystallised in the lessons of past failures of the time. I recall that the noble Lord, Lord Turner, said in 2013, based on his understanding of the financial services collapse and what it meant, that there was no clear evidence that the growth in the scale and complexity of the financial system in the developed world over the previous 20 to 30 years had driven increased growth or stability. So we have come to believe that there is no surprise that a wider acceptance of the role that the state can play in stimulating private companies to create innovations can be actively and purposefully used. We have also decided to believe in some quarters that the role that the state can play in creating demand can be a good thing. There is also a role for the state in rebalancing the economy, not just in strengthening locally based manufacturing but in preparing industries for the future. This is an important context, and the challenge is still greater with the likely economic tribulations and opportunities of Brexit.
The context of the UK’s general economic position has not been particularly benign. We have had problems of imbalances, regional problems, problems of infrastructure investment and other issues that have been pointed out by many during this debate. However, we have also had failures—for example, failures to maximise our advantages when we have had great successes but have been unable to commercialise some of our great research facilities, and failures to address matters where there has been success but we have created long tails of problems, including corporate governance.
So here we are, looking at a White Paper and wondering, “Do we have the right policy approach? Can an industrial strategy be something to everyone, a framework by which everyone can get what they want put into something?”. This White Paper certainly has its merits, and it has made a successful change from Green Paper to White Paper. At its very core, the industrial strategy should always be seen as a framework rather than a collection of specific industrial policies. I agree with the noble Lord, Lord Maude, that it is a compendium. Its evolution from 10 pillars to five foundations and four grand challenges has probably combined focus with ensuring that long-term issues can be addressed at the same time. The importance of goals or objectives—or, as they are more popularly described, “missions”—is a central shift to ensure that we have a focus in the industrial strategy. Dealing with productivity has been the greatest advance in the process from the Green Paper to the White Paper, finally focusing on a meaningful challenge. That is to be warmly welcomed. In a previous debate, the noble Lord, Lord Prior, made a point, as he did today, about the importance of productivity and the challenge that it provides over the next decade. It is utterly proper that the industrial strategy now mainly focuses on addressing that and embraces all the other opportunities that we have.
The problem is not just with inequality; it is also about the crisis of confidence that the economy will work for everyone, whether the next generation will look forward to greater prosperity, the challenge for people in gaining the employment conditions they need, and the problems of insecurity caused by some aspects of the flexible labour market at the moment. These are the types of problems regarding confidence in markets and the market system that will cause us great long-term problems if we do not address them now. They will certainly seriously undermine the values underpinning our society.
I was prepared to accept a very poor industrial strategy because I thought it more important than anything else that we had an industrial strategy at all. However, this is not a poor industrial strategy but a welcome, important and useful foundation, and the White Paper is to be congratulated on that. As I say, this paper is a significant improvement on the Green Paper. However, the White Paper is unlikely in and of itself to move the dial significantly, although it will undoubtedly do good things. There is strong agreement that this is a crucial start but what will be essential is what happens next in its delivery and development. Here there are a great series of challenges that we have to be alive to.
It is important also to agree that, as my noble friend Lord Mandelson said early in the debate, this is more than just having to tweak the policy dial. The noble Lord, Lord Griffiths, made an important point when he said that the design of this is usually 10% in government and 90% in implementation. To meet the test of not just doing business and industrial policy better but making a more profound impact to achieve meaningful growth outcomes and improve productivity, we must ensure that we have the foundations to get it absolutely right.
We must have targets. I strongly believe that you cannot manage what you cannot measure, and if you cannot measure, you cannot improve. The introduction of productivity as a main focus is important, but we need to ensure that the targets are stretching, or at least allow us to achieve our goals. The Government have made an important contribution in saying that we wish to grow research as a proportion of GDP to 2.4% by 2027, but that is still only the average today. High-performing countries are already at between 3% and 4%, but the top of our ambition is 3%.
Targets are significant. As the noble Lord, Lord Horam, said, when we established broadband targets it was important that we had a minimum statutory requirement, but when we started by requiring 10 megabytes, everyone lowered their ambitions in their business models. If we had said 30 megabytes, business models would have been different. Setting targets is extremely important, but we have to set the right targets. They should stretch, they should be aspirational, but they should be deliverable. That is crucial.
We need some sense of what it will mean when we talk about becoming the world’s most innovative economy by 2030: what definitions we are using to determine whether we have achieved good jobs and greater earning power for all, and how we will finally be able to establish through the industrial policy whether the UK has become the best place to start and grow a business. We also have a great challenge to ensure that we put in the right level of resource—the funds that we commit. It is certainly to be applauded that the national productivity and investment fund has been increased, but it is still 2.9% of GDP, whereas the OECD average is 3.5%. As a businessman, if you are to invest in something, you put a dollop of money in: you put big money behind a commitment. That tells people what you are doing; it shows that you believe it will have a significant benefit. The level of resource we are putting in is a challenge the Government need to address at some stage. I am not expecting the Minister to reply to all these points; these are long-term industrial strategy challenges, not short-term considerations.
My noble friend Lord Eatwell made the point extremely well that we need to be frank and honest about our ills, because if we are not, we will be unable to solve them. We should also be clear that the challenges we will face will not be easy. How we trade with the rest of the world will not be straightforward. We will not discover something that no one else has. As the noble Lord, Lord Prior, said, most other countries are still either in the midst of significant industrial strategy policies—they have institutions or long-term policies—or are adopting them. The same is true of trade. Everyone is in the same competitive position.
There are challenges across government. We have the Cabinet committee. We have a key role for other departments that are sponsors of industry. They must be able to take on those roles properly. There is the question of how the role and function of the Treasury is balanced with that of other departments. Those are important challenges that will require evolution. We have an important challenge inside BEIS itself in the organisation and leadership office. I was concerned. I saw the job advert for head of industrial strategy and delivery—the person responsible for delivery; for implementing the White Paper commitments; for ensuring delivery and making a difference; for setting up and delivering the governance structures of the external review body; for cross-government and cross-departmental engagement; and for strategy and policy development. This is someone deep within the business and science group of the department who is meant to be managing possibly five to 10 people. If that is the person ultimately responsible, do they have the weight and heft? How does that work in the context of the department? If this person is a senior civil servant on pay band 1, there is an imbalance. If they come from the private sector, they start on £65,000. If they are an official, they can move up to £117,000. What is the people strategy to make sure we have the right team working on this? It is a crucial challenge.
I also think we have a huge challenge with the industrial strategy board, which will require further thinking from the Government on whether the advisory council will be sufficiently independent and will have the sort of function required to make sure the industrial strategy is properly assessed. The Government might wish to reconsider: if they create a body rather more on the model of the OBR, they might have a more successful opportunity to embed the industrial strategy into the routine agendas of future Governments.
The most crucial part of this is that it is not resolved on place—on the role of regions, the role of local authorities and the role of mayors. The points made during the debate are crucial, and we can see how things have developed in local areas—the success of local government and the difference that local government can make to this. It is important to have continuity of policy, building the right plans across different political parties and adjusting policies to make sure that we have things and institutions that can endure—ones that can go beyond the occasional moments, such as those with which the noble Lord, Lord Willetts, so graphically punctuated his contribution. We also need to make sure that we build on this cross-party, political and economic consensus—indeed on things such as the productivity leadership board, mentioned by the noble Lord, Lord Flight, so that in the sectors themselves there is the creation of a national consensus and national bodies where that will work.
We also need to accept that change is not a failure but a likely outcome of getting better. As the noble Lord, Lord Prior, said, this is an hors d’oeuvre and the main course is still to come. If the Government were to set out a list of the next things to do, they would do well to read the speech of the noble Lord, Lord Eatwell, which contained a large measure of them. But now is not necessarily the time for that. The Government have to accept that getting it wrong will not make them weaker and will not make the case for an industrial strategy weaker; it will provide the platform to make it better.
As Yogi Berra also said, you can observe a lot by watching. Those noble Lords who have debated in this House today, who believe that we can do something together and more meaningfully for this country, will be watching this process very carefully. They will reflect the desire to do more together if the Government are more open about the opportunities ahead.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, it seems a long time since 3 pm, but I am pleased to say that my right honourable friend the Secretary of State for Business, Energy and Industrial Strategy is still in place, and was able to come here and be greeted by the noble Lord, Lord Bhattacharyya, some hours ago.
In saying that, I pay tribute to my right honourable friend. It was a little over a year ago that he launched his Green Paper on industrial strategy. He then listened to some 2,000 responses to it, including from my noble friend Lord Heseltine, whose response came some time in November, just after I joined the department. I make the point that it was my right honourable friend, plus my noble friend Lord Prior and others, who worked together in the department with officials and other colleagues across government in distilling that Green Paper and its responses into the White Paper that has been broadly welcomed by many on all sides of the House.
Given the coverage of this debate, it will be impossible for me to try to distil its essence, as the noble Lord, Lord Fox, put it, or even to respond to a mere tithe of the points made. However, I hope to write to all noble Lords in due course. I cannot respond to all the points made due to the sheer range of the debate and the fact that it extended way beyond the remit of the Department for Business, Energy and Industrial Strategy. I make no complaint about that as it is quite right that it should have done so. As my right honourable friend made clear in his original Statement, this is a matter for not just BEIS but the whole of government. As noble Lords will be well aware, that is why we have had to respond to issues around migration policy and regional and local government.
Regional and local government was mentioned by my noble friend Lord Cavendish, when he talked about Cumbria, and by the noble Lord, Lord Wrigglesworth, who talked about the rather more successful position in Teesside compared with the less successful transfluvial problems—if that is the right word—in Tyneside. These are matters that I think most of us would hope that some of the local authorities, particularly in Cumbria, would deal with. However, the noble Lord was right to talk about the situation in Tyneside. If the local authorities could get their act together—to use that expression—those matters might be addressed. However, I also note what my noble friend Lord Heseltine said about regional matters and the need to move on from the seven directly elected mayors and possibly see further reforms. However, as I said, it has to be for some of the local authorities to come together, think about how they could improve things and, possibly in some cases, as a result, reduce the number of councils that my noble friend talked about.
As I said, we have covered a very wide range of subjects. I think there has been broad agreement about the direction of the industrial strategy but, as I said, we moved on to talk about education and place. The noble Baroness, Lady Valentine, talked about Blackpool. I think that most of us on both sides of this House have been to Blackpool many times. We have not been for some years but perhaps the time to do so will come again. Again, it would for Blackpool to sort these things out. There might come a time when we will go back to Blackpool again in the future.
The noble Baroness, Lady Coussins, talked about language skills, some possible omissions in the White Paper and whether more needs to be done in that area. We heard about social enterprise from the noble Lord, Lord Bird. My noble friend Lord Flight mentioned possible miscalculations in how we estimate our levels of productivity. We heard the natural optimists speaking. I refer to my noble friend Lord Willetts and the noble Lord, Lord Bhattacharyya, who talked about what has happened in the automotive industry. I am very grateful that there have been optimists in this debate. Dare I say that in the noble Lord, Lord Eatwell, and possibly the noble Viscount, Lord Chandos, we had some more “Eeyoreish” representations? The noble Lord, Lord Eatwell, does not like that word, but I do not think that he was quite so optimistic in his evaluation of the White Paper as some other speakers.
I would like to go back to two of the earlier speakers. It is rather a terrifying position to be in, to follow both the grandfather of industrial strategies, if I can refer to my noble friend Lord Heseltine in that way, and the godfather of industrial strategies, as he was referred to, in the noble Lord, Lord Mandelson—he now gives a rather godfatherly little smile; I do not know what it means. I was very grateful to both of them for their broad welcome. I want to pick up some of the points, and particularly what the noble Lord, Lord Mandelson, said, which was echoed by others—I am thinking particularly of my noble friend Lord Griffiths—on delivery and what happens next. I could easily repeat what I said in my opening remarks, but that was broadly about what has happened and the launch of the White Paper.
The noble Lord, Lord Mandelson, made it clear—I think that I have got him right—that he wants three things. He wants all Ministers—the whole of the Government—to take ownership of the industrial strategy. I give him an assurance that that will happen and that all Ministers have been involved in it. That is why the debate itself has gone so wide. He also made it clear that he felt that publishing it is not the job done, and that we need follow-up and continuity, a point echoed by the noble Lord, Lord Mair. Again, I give him the assurance that that will happen and that, with the creation of the industrial strategy council and with the Cabinet committee chaired by my right honourable friend the Prime Minister already in place, we hope to see the continuity and drive to continue with the White Paper. I cannot give detail about the remit of the industrial strategy council as the noble Lord, Lord Fox, would like, but in due course that will come, and I may be able to help him in writing. I hope that there will be further announcements as we move on into the spring, and so on.
My noble friend Lord Heseltine also made those three points about how we should move on. He felt that it was very important that there was a competitive unit in the Cabinet Office. However, I felt that he was rather dismissive—I hope that I have got him wrong—about what the industrial strategy council might be able to offer to that. He felt that it was merely going to react to events rather than being there to inform as well as to evaluate our industrial strategy. I hope that my noble friend will observe what happens in future and that it will bring him some satisfaction.
Again, my noble friend—and this was echoed by so many others in the course of the debate—spoke about the need for education and training, and about the long tail that exists in our schools and in all other teaching institutions, which is not very adequate. There have been considerable improvements over the last few years, particularly in certain areas. For example, if he looked at education in London, he would find that there have been very major increases—and again this is not merely a matter of this Government or of the coalition Government; it has been happening gradually throughout all Governments. As my right honourable friend said when he originally launched the White Paper, the important thing is to remember the regional imbalances that exist in this area. Certainly, we want to look at the tail as it exists not in London but in other parts of the country. Those of us from the north-east—I am myself from the north-west—know just where those areas are, but we are talking about not only the north but other parts of the country. We want to see those changes in education there that we have seen in London. The same is true for training and in all other respects.
His third point was about overcentralisation. He praised the seven directly elected mayors and wanted to see more. I could not agree more. What I said about local government reform and what local government itself can do applies in that area. I hope that both my noble friend and the noble Lord, Lord Mandelson, will accept that we are absolutely committed to making sure that we can see progress with the White Paper, that all Ministers will play their part in driving it forward, and that, with the creation of the industrial strategy council, we will see progress in this area.
I want to cover one or two other points in the short time available, in particular some of the matters dealt with by the noble Baronesses, Lady Young and Lady Randerson, relating to inequalities in regional infrastructure and transport. We have already announced quite a lot of investment in transport. The noble Lord, Lord Fox, asked me to do some sums and say how much was left. I am afraid I cannot do that and am not sure if such a sum is available. However, there have been announcements of further funds of £840 million going to the mayoral combined authorities for transport infrastructure through the Transforming Cities Fund. We are also rebalancing the toolkit that will provide a framework for support with high-value transport investments in the less productive parts of the country.
Moving on from inequalities and the problems we have in regional infrastructure, the noble Lord, Lord Hollick, quite rightly made a point, which I fully accept, about not investing enough in digital infrastructure to meet the challenge. We are seeking action to improve connectivity, and this is very important for all businesses and consumers in the United Kingdom. We are working, as far as we can, with industry and Ofcom to ensure that connectivity is there where people live and work and—just as importantly—when they travel. We have announced additional funds for digital infrastructure and hope to make progress in that area.
That brings me on to the sector deals, which I will say a little about. They were first raised by the noble Lord, Lord Kakkar, who talked about the life sciences industry and its sector deal. He made a reference—though it was possibly the noble Lord, Lord Crisp—to the excellent report by Sir John Bell in this area, which I commend. It was almost the first thing I read when I arrived in the department, with the exception of the Made Smarter report referred to by the noble Lord, Lord Fox, which I have read most of, although I have to admit I have not got up to the 256th page. We very much welcome Sir John Bell’s report and accept that, through the life sciences sector deal, we are boosting the pretty good position of our world-leading research base and making use of the NHS’s status as the biggest single player in the healthcare system. We will also be able to make use of all that NHS data—another advantage that this country has—while making it important to respect patients’ privacy.
Moving on to the construction industry sector deal, I was grateful for what the noble Lord, Lord Mair, said. Again, he took a positive approach, as he did in the example he gave us—which, again, I remember was given to me very early when I arrived in the department—of the difference between the construction of the Tottenham Court Road and Liverpool Street Crossrail stations. One was built on-site and the other off-site, and enormous productivity gains were made as a result of building the Liverpool Street station, in effect, somewhere up in Derby and then shipping it down. We also had praise for the sector deals from my noble friend Lord Griffiths. There is a good story to tell there, which marks this strategy out from previous industrial strategies.
I do not know whether at this stage I should go on much further in trying to answer questions or whether I should stick to that offer of a promise to write to all noble Lords. However, if I go back to the noble Lord, Lord Mandelson, who used the expression—if I remember it correctly—“A good White Paper; now what?”. It is a significant milestone but it is not, as I said, the end point. It sets out what I hope will be a clear ambition and a clear framework with a series of policies that support it. It is up to us in government, and in politics more generally, to work with businesses, academia and civic society to do what we can to boost productivity and earning power and to reduce those inequalities that we talk about and which we refer to in our White Paper, and to ensure that we can rapidly respond to the changes in the economy. The White Paper sets out the framework for that delivery. We are now aiming to implement the policies set out, including those four grand challenges I mentioned earlier and the local industrial strategies and sector deals. There are a whole host of ways to be involved, but the Government’s programme is ambitious. It is a modern industrial strategy, however many industrial strategies we have had in the past—I leave it to the noble Lord, Lord Hennessy, to count up and decide whether he thinks there are eight, nine or even 10, or whether he accepts the more optimistic view of my noble friend Lord Willetts, who talked about some of the more effective industrial strategies, such as that in the automotive industry, and the others there have been over the last 30 years.
We have a long-term plan, which is to boost productivity and the earning power of people throughout the United Kingdom. We also have significant economic strengths on which we can build—again, despite what the noble Lord, Lord Eatwell, had to say—but we also need to do more. We will boost productivity and our earning power across the country by focusing on those five foundations of productivity: ideas, people, infrastructure, business environment and places.